I have had to wait a few days in order to calm down. I want to avoid potential defamation claims.
So the Government have suddenly decided to increase the small claims limit to £5,000 for personal injury claims.
Now I am a glass is half full sort of person but even I am somewhat sceptical about the timing of this sudden u-turn. The Legal Aid Sentencing and Punishment of Offenders Bill was given Royal Assent after a rough ride through the Lords recently. Deals were struck during the passage of the bill to exclude mesothelioma cases. Many Lords were also assured by the announcement in February that, following a review, the Government would be keeping the small claims court limit at £1,000 for PI claims due to their inherent complexity and so voted with the Government.
Then what happens? The day the bill hits the statute book, the Ministry of Justice has a cosy conference about whiplash with the defendant insurers and suddenly announces that the small claims court limit will rise 5-fold to £5k.
Do you think they were considering this change whilst the LASPO bill was being debated? Do you think their announcement in February was genuine? I am sure you can guess my view.
So let's see shall we. The reason for this about turn are the apparent large number of fraudulent claims for whiplash. Now presumably the Government accept that there are at least some genuine claims out there - surely there can't be over half a million crooks making bogus claims each year. So the way to deal with let's say 10% of bogus claims is to punish the 90% genuine claimants is it? The genuine claimants will now have to go it alone against the big insurers and all of their legal clout or they will have to forgo a fair chunk of their damages by paying a solicitor. Will this stop the bogus claimant? Will the thought of them having to pay perhaps 25% of their damages to a solicitor put them off? I doubt it.
In effect therefore, the defendants have managed to persuade the Government to remove payment of legal costs on 60% to 70% of road accident claims. Nice saving this.
This has been decided by insurers (who have a lot of money) and Government Ministers who, let's face it, aren't short of a bob or two. For most people, being in an accident where they have lost their car (let's say £2000), been injured and off work for 2 weeks (let's say £1000) could mean they are out of pocket by £3000 before you think about compensation. This sort of claim would probably have to proceed in the small claims court which is daunting to most people. So this man on the street is going to be injured and out of pocket with no easy way to get compensation. For the insurers and Government Ministers, £3000 is chicken feed. For voters, it isn't.
The Labour Party have already said they will reverse many of theses changes if they come back to power. The local elections indicate that the man in the street may have had about enough of these underhand tactics by the Government.
With the massive costs savings that the insurers will experience however, at least we will have some benefits:
- Fewer defendant solicitors
- Fewer defendant costs muppets
- Much lower car insurance premiums
So every cloud does have a silver lining.
UPDATE: Made a mistake with point 3 - meant to say Higher Dividends for Insurance companies