May 31 marked the long-awaited launch of the portal for minor RTA claims. As the industry enters a post reform world, Shirley Woolham, Minster Law CEO, shares her thoughts on what lies ahead for customers, insurers and law firms.
May 31 marked the long-awaited launch of the portal for minor RTA claims. The portal, built for the government by the insurance industry, is designed to enable injured people with a claim worth less than £5,000 to register and settle their claim online.
It ends a six-year government reform process to tackle fraud and reduce the cost of motor insurance. Claimants with injuries worth less than £5,000 cannot claim their legal costs back from the fault party. That, plus a tariff for injuries which is far below current sums offered, means considerable savings should be made.
Claimants now face the choice of navigating the new portal as a LiP, or seek legal support in return for a proportion of their damages, or claiming of their legal expenses insurance.
The industry faced a last-minute dash to get ready. The government published the pre-action protocols and practice directions in March. The MoJ ‘Guide to Making a Claim’ for LiPs, published in April, is 64 pages long and has been described as ‘legal treacle’ by one consumer organisation.
There are, however, some predictable challenges ahead, making it likely that the portal will need further reform to avoid consumer detriment.
Notwithstanding the sharp reduction in motor claims as a result of the pandemic, there were almost 500,000 motor injury claims registered last year (most falling into the sub-£5K category). There are no plans for a consumer-awareness campaign to inform the public of the changes to their rights in tort.
An April survey found 89 per cent of the public are unaware of the changes introduced and an unfamiliar process will compel claimants to seek professional representation when making a claim.
Some predict the complexity will result in up to 95 per cent of claimants looking to law firms or claims companies for assistance. Minor personal injury claimants will often need witness statements, police reports and to recover non-vehicle costs such as vehicle repairs and rehabilitation through the portal. Liability will often be denied or challenged, raising the prospect of one or more court visits.
Those attempting to claim as a LiP will need to meet such challenges as well as arranging their own medical appointments and treatment. Should their case end up in court, they will be up against professional insurance lawyers, well-versed in injury case law.
Little wonder that the claims industry is gearing up to represent most accident victims. The sector is rapidly evolving into two distinct segments: large volume players heavily invested in digital claims who can manage low-value injury claims; and the rest targeting higher-value claims or others which haven’t been as affected by the reforms, such as vulnerable road users.
Fears that a flood of claims management companies (CMCs) will enter the market have largely dissipated, now that the sector is regulated by the Financial Conduct Authority, but that doesn’t mean some CMCs won’t be competing for custom alongside traditional law firms.
An immediate challenge is how to assess the value of injuries in the portal which are not covered by the new whiplash tariff. There is no guidance from the MoJ, and the issue presents an insurmountable challenge to LiPs in valuing the full extent of all their injuries. As many as one in three portal cases could be impacted.
The government has indicated it would support a test case to provide clarity on how to assess damages in such hybrid, ‘tariff/non-tariff’ cases, but it could be 18 months before this happens, as the process will require a first instance determination and then an appeal, which might be heard in 2023.
In the meantime, the industry will need to find ways of working more collaboratively or face dealing with a large volume of disputed cases. Some claimant firms argue that there will be an in-built incentive for insurers to dispute liability, causing the claim to drop out of the new portal, preventing access to medical treatment and requiring liability to be determined by an already backlogged court system. The risk being that claimants will simply give up and have to live with their injuries without recourse.
There is therefore growing appetite for alternative dispute resolution (ADR) tools for disputed cases, either through bilateral agreements between insurers and claimant firm, or via independent third-party arbitration. Minster Law is currently piloting ADR for low-value injury cases.
The senior judiciary want to see technology more widely applied in civil justice, and it can be a matter of time before a workable solution is agreed and built into the claims journey.
In fact, ADR has the potential to make the new portal redundant altogether. The pandemic has increased public acceptance of technology in managing their lives, including in the justice system, for example via online courts.
Given a choice between a rapid settlement of their injury claim via ADR, or a 12-month wait for a court hearing if proceedings are issued, most claimants will plump for the technology.
In fact, the pandemic has rendered the reforms unnecessary. Motor claims have fallen over a quarter in two years, and digital technology promises to supplant the cumbersome and consumer-unfriendly portal process altogether.
Forward-thinking law firms have invested in their own digital services and customer experience programmes which offer a more enhanced and personalised claims experience than the new portal.
In its place, it is obvious that industry-wide collaboration to develop a self-sustaining ADR model that is much less adversarial will offer consumers better outcomes than a six-year-old policy whim.