Protecting the mighty insurance industry
The government's whiplash reforms are propaganda designed to kid the public, writes Qamar Anwar
'The government I lead will be driven not by the interests of a privileged few, but by yours'¦ When we pass new laws, we'll listen not to the mighty, but you.' The words of Theresa May upon succeeding David Cameron as prime minister in mid-July. Fast-forward four months and we see that the government May leads has done a full U-turn on that pledge. It didn't take long.
When the Ministry of Justice announced its PI reform plans in mid-November, many of us could not believe what we were hearing. The proposals came just four weeks after the government were reportedly 'unenthusiastic' about making changes. Many believed this indicated a change of heart about industry reforms.
For many law firms, the proposed reforms are forcing them to face-up to their futures. And while much has rightly been written about the impact on firms, I want to take this opportunity to look at those who will be hardest hit. The very people that May pledged to listen to: the claimants.
The reforms have at their heart the complete protection of the mighty insurance industry, while the claimant barely merits a mention. The consultation document is notable in its lack of detail about the impact that a car accident has on innocent victims. Instead, the consultation document is unashamed of who these reforms will help:
'The reform package announced in this consultation will save the industry around £1bn a year, which will be passed on to consumers through reduced motor insurance premiums. Millions of motorists could save an average of £40 on their annual car insurance from these proposals to tackle the unacceptable number of claims.'
The industry is the driving force behind this consultation, not the people who have been injured through no fault of their own. As someone who has suffered from whiplash, the idea of saving £40 on my car insurance is not that attractive if I can't work or get the specialist medical attention I need when I need it.
I have a better idea for passing on £40 to every motorist: When it comes to renewal time the industry could cease their annual premium hike charade designed to get time poor individuals to stump up more cash and instead just give the real price. This would be a fairer and more transparent way of passing on savings to motorists. The fact that the government hasn't explored this with the insurance industry just highlights the stranglehold the mighty have over the government.
The reality is that these reforms do not tackle the issues raised. If fraud is the real issue, then tackle it at source and make a real stand against it so that everyone benefits.
Unscrupulous people will always look for loopholes but scams like 'cash for crash' have to be tackled at source, not by penalising innocent victims. It beggars belief that the government does not appear willing to tackle organised fraud.
What is perhaps starkest about the consultation is the complete lack of meaningful evaluation about what happens to an individual when they have an accident and make a claim: the impact on them physically, mentally, and economically, as well as the associated ramifications for their wider family. Instead innocent victims, at the behest of the mighty insurance industry, are lumped into the pile of fraudulent claimants.
The fact is that whiplash is not a made-up injury, it can be utterly debilitating and even career-threatening. For those who struggle to believe that I urge them to pick up Olympic medallist Greg Rutherford's autobiography in which he details his fight with the injury:
''¦the whiplash '“ had been severe enough to force fluid into a compartment of my inner ear. That overloaded the amount of fluid that was meant to be in there, which in turn blocked the hair cells that received information. In simple terms, I had lost the ability to hear properly in that ear'¦
''So,' I asked, 'what's the likelihood of me getting my hearing back?'
''You've got a one-in-four chance of being permanently deaf in one ear,' came the reply.
''¦I discussed the possibility of me having to pull-out [of the Olympics], and how we would deal with that eventuality '“ how I was going to pay the mortgage, what contracts would be void and so on.'
As well as the health issues, even from minor whiplash, the economic fall-out can be just as debilitating. There is a real danger that people in situations who haven't been paid for a couple of weeks may well jump at £425 just to pay the bills and with no real knowledge of how their injury will manifest in six months' time, although of course it will be too late then.
Those that are able to fight face a modern-day David and Goliath battle going up against the insurers and their lawyers and will be forced to rely on McKenzie Friends. Hardly a level playing field.
The proposals fail to outline how innocent victims should handle their claim. Will it be through a consumer facing portal that then allocates a doctor? If so, who pays for the doctor should the claim not proceed? There are still too many unanswered questions about how the innocent victim will fare in this process.
At First4Lawyers, we would like to see transparent data about how many car accidents there are in the UK as a whole in comparison to how many claims are actually made, yet this data just isn't available. Surely this is the starting point before we reach a true picture of any so-called compensation culture?
Finally, with the introduction of the increased insurance premium tax (IPT) announced in the budget, any hope consumers had of actually seeing their insurance bills cut will disappear.
The government is knowingly using the whiplash reforms as propaganda to kid the public into thinking their insurance premiums will be lower in the full knowledge that this will never happen because the insurers will immediately pass the IPT directly onto consumers. Quite how the needs of the consumer that the government claims it wants to champion are met by this is wholly unclear.
Qamar Anwar is managing director of First4Lawyers