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Lower damages on the way, Professor Fenn warns

Jackson's 10 per cent increase in damages not enough to compensate clients

13 May 2013

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Professor Paul Fenn has warned that the Jackson reforms and extension of the RTA portal will result in lower damages for clients.

The professor, well known for his research for the MoJ on personal injury costs, said there would be "earlier and lower settlements of undisputed claims, but a greater tendency to litigate because of the higher costs available outside the portal."

Fenn, Aviva chair of insurance studies at Nottingham University, said the 10 per cent increase in general damages intended to soften the blow for claimants would not be enough to make up for the fall in damages received by clients.

Speaking at this morning's Westminster Legal Policy Forum on the impact of the Jackson reforms, he said lower costs for insurers may lead to lower insurance premiums, but he was not convinced.

"It may lead defendants to dispute liability more often, which I don't think would be a good thing. Lower damages may lead to a lower propensity to claim."

The professor said data should be collected on the impact of the Jackson reforms and portal changes.

He welcomed Mr Justice Ramsey's comment earlier in the day, that the need for "statistical information" would be pursued, but there needed to be "more meat on the bone".

Professor Fenn said fast-track fixed costs were overlooked because of the MoJ's focus on the RTA portal, resulting in "two different reform schemes" derived from the same process.

He described the government's decision to extend the portal as "based on the perception that it was a success" without proper evidence.
Referring to his own research on the impact of the original portal, Professor Fenn said his call for a further review was "completely ignored" by the government, while his recommendations that fixed costs should be proportionate to damages and for an integrated approach to all fixed costs claims had not materialised.

He compared the massive cuts in RTA portal fees implemented in England and Wales on 1 May this year with the "highly proportionate" German system.

Instead of the flat rate fees of 500 for RTA claims worth up to 10,000, the German system offered a range of fees from 180 to 1125 with incremental increases depending on the size of the damages. For claims worth up to 25,000, fees ranged from 1125 to 1620.

Professor Fenn added that the latest changes had produced a "poorly designed recoverable cost scheme" with "bad behaviour penalised less often" and "good behaviour rewarded less often".

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