A new Bill, known as the Civil Liability Bill, is currently making its way through Parliament and on 23rd October 2018 it passed the second debating stage in the House of Commons. It is now being referred back to the House of Lords for amendments before the Bill becomes law which is expected to be in April 2020. It is an important piece of legislation for both higher value and low value personal injury claims as well as for road traffic accident (RTA) claims where the injuries are soft tissue in nature (such as a whiplash injury).

An aim of the Bill is to reduce the number and cost of compensation for claims. It is also aimed at reforming the way in which the personal injury discount rate is set, which is relevant for the calculation of future losses in larger value serious injury claims.The discount rate is intended to ensure those who suffer life changing injuries receive to meet their future needs. The rate is set based upon assumptions about how claimants can be expected to invest their rewards when they are taken to lump sums for compensation for future losses. Insurers argue that the discount rate is currently too generous for injured claimants. The Civil Liability Bill sets out provision for regular re-assessments of the discount rate.

A major impact of the Bill will affect minor road traffic accident claims. Government research reveals that around 650,000 RTA related personal injury claims were made in 2017/18 (nearly 190,000 more than in 2005/06), this is despite a fall in reported accidents and improvements in the safety of vehicles. In 2016/17 whiplash related claims accounted for around 85% of all RTA personal injury claims.

The new Bill will provide for a tariff of compensation for whiplash injuries with a duration of up to two years. It also seeks to raise the small claims track limit to £5,000 for road traffic accident related claims and £2,000 for all other personal injury claims. The reforms are aimed at reducing the high number and cost of whiplash claims. These are measures which will effectively operate to remove lawyers from the claim process. The proposed whiplash compensation tariffs will reduce awards for pain and suffering. Currently a whiplash claim with pain and suffering lasting up to three months has an estimated value of up to £2,150. Under the new tariff the payment award for an injury lasting less then three months will be set at just £235. Current claim values for minor soft tissue injury of up to 2 years duration is in the region of £6,920, but under the new tariff this will be reduced to £3,910.

Increasing the small claims limit will also impact Claimants. The current small claims limit for all personal injury claims is £1,000. This means that injured claimants who instruct a solicitor to pursue their claim for them will be able to recover solicitors costs from the third party insurers provided the injury element of the claim is worth more than £1,000. Under the new proposed legislation the impact of increasing the small claim limit to £5,000 for Road Traffic Accident claims means that solicitors costs will not be paid by the third party insurers for claims with a value of less then £5,000. In many of these types of cases it will not therefore be viable or economic for an injured claimant to instruct a solicitor to pursue the claim for them and they will have to consider pursuing the matter themselves without legal representation.

As you can imagine there has been considerable debate and fierce argument about the reforms and the impact. There is no doubt however that when the legislation is made law there will be considerable savings for insurers both in the reduction of claim payouts and reduced legal costs they will have to pay.