Update: The Whiplash Tariff Review and Potential Impact of the General Election

In our alert of 24 May we outlined some of the possibilities for publication of the whiplash tariff review report. We have since received further intel from the Ministry of Justice (MoJ) whiplash team which we set out and consider below:

Background

The Civil Liability Act 2018 mandates that the Lord Chancellor reviews the whiplash tariff every three years. The first review was due no later than 31 May 2024. On 22nd May, the Lord Chancellor, Alex Chalk, announced the completion of his review, stating that a report would be laid in Parliament after the Whitsun recess. However, the Prime Minister's call for a General Election later that day led to the dissolution of Parliament, delaying the report's publication. 

Insights from the Ministry of Justice

In response to our inquiry as to the future process for the laying of the report and implementation of its recommendations, the MoJ have clarified that the report could not be laid until after the election and the appointment of a new Lord Chancellor, as was anticipated. There has also been speculation that whilst the report cannot be laid in Parliament it may still be published. It seems from the intel we have received from the MoJ that this is unlikely to happen, and we won’t have sight of the report until Parliament sits again following the General Election. While the Civil Liability Act requires a review to be completed by 31 May and a report to be laid in Parliament, it is silent on the timeline for implementing recommendations. Thus, incoming Ministers have several options as we understand it from our own views and the opinions expressed recently by the MoJ:

1. Accept and Implement the Report: The new Government may accept the completed report and implement its recommendations as is.
2. Modify Recommendations: The new Government could lay the report in Parliament but implement modified recommendations.
3. Selective Implementation: The report may be laid, but only some recommendations might be implemented, and others abandoned entirely.
4. New Immediate Review: The new Government might lay the report, however reject the recommendations contained within it entirely and initiate an immediate fresh review.
5. Accept and Commence an Earlier Next Review:  The new Government might lay the report, accepting all of its recommendations (though with narrative surrounding it opposing the recommendations and blaming them on the previous administration) and setting out intentions for a sooner future review with a timescale of say 6-12 months, allowing the new Government to concentrate on other pressing matters of business.

Potential Scenarios Influencing a Labour Government

If Labour wins the general election, several factors could influence their approach to the whiplash tariff review:

• Competing Priorities: Labour will have many pressing issues to address post-election, which may delay immediate action on the whiplash tariff. The Lord Chancellor will have a need to turn their attention to the ever pressing issues of a lack of prison space and an increasing court backlog. There is also the matter of Part II of the CLA 2018, which stipulates that the next review of the personal injury discount rate be commenced by 15 July 2024 (i.e. a mere ten days after the general election result is announced).
• Motor Insurance Cost Review: Labour has announced plans to review the cost of motor insurance, calling in the Regulators to ascertain the cause of increasing premiums. An increase in the whiplash tariff could impact premiums, making this issue a higher priority.

Timings for publication of the report/implementation of recommendations if Labour are successful at the General Election

• Summer recess had been scheduled for 23 July under the Conservative Government

• Expectation is that Labour may shift this back to end of July/early August and shorten to a 4-week recess

• This will still only allow a very short window of time for a report to be published prior to recess

• With the Lord Chancellor presumably needing time to review the report and consider the need for any amendment or indeed a fresh review, we consider it unlikely that we will see the report/implementation of the recommendations until sometime after recess - likely end of summer/early Autumn

Immediate Considerations for Insurers

1. Stay Informed: Monitor updates from Keoghs, the Ministry of Justice and the incoming Government regarding the whiplash tariff review.
2. Scenario Planning: Prepare for various outcomes, including potential increases in the whiplash tariff and their impact on premiums.
3. Engage with Policymakers: Engage with the new Government to educate them on the impact of an increase to the whiplash tariffs (including on the current Small Claims Track limit), advocating for a balanced approach that considers both consumer protection and the sustainability of the insurance sector.

We will continue to provide updates as more information becomes available. Should you have any questions or require further insights, please do not hesitate to contact our team.