As anyone who’s ever been knocked off their bike can attest, it’s not just a deeply unpleasant experience – it can be an expensive one, too. Troubling news then that UK chancellor George Osborne has proposed significant changes to the personal injury claims process, widely expected to make it harder for cyclists to win compensation after an accident.
Easily lost amid all the excited talk that Osborne has done a U-turn on cutting tax credits and plans to borrow £8bn less than forecast, this year’s autumn budget also included some significant proposals that will apparently cut costs for motor insurance providers – but are already worrying the legal industry.
Compensation culture clash
“The Government believes that going green should not cost the earth and we’re cutting other bills too,” Osborne told the House of Commons. “We’re going to bring forward reforms to the compensation culture around minor motor accident injuries.
“This will remove over £1bn from the cost of providing motor insurance. We expect the industry to pass on this saving, so motorists see an average saving of £40-50 per year off their insurance bills.”
What does this mean in practice? Well in the UK right now, if you’re involved in a “minor” motor accident – whether as a driver, cyclist or pedestrian – you can engage a solicitor to recover damages on a ‘no win, no fee’ basis. For cyclists, this can include general damages for soft tissue injuries, repairs for your bike and replacements for your wrecked clothing.
If Osborne’s proposals are approved in the New Year, these claims will instead have to be made through the small claims court, which would have its limit for personal injury claims increased from £1,000 to £5,000. The problem for cyclists is that they wouldn’t be able to engage solicitors on a ‘no-win, no-fee’ basis in this situation, and would instead be arguing their own case – relying on their own recollection of events. If court proceedings are issued then only court fees are recovered by legal counsel.
The proposed benefit of these changes is that it will reduce spurious whiplash claims by drivers involved in minor traffic accidents, which currently cost insurers more than £1bn a year. Yet insurance broker ETA Cycle Insurance believes it’s not guaranteed these savings will be passed on to drivers via cheaper insurance premiums.
“Whiplash claims have fallen by more than a third in the last four years and yet still the insurance industry has not reduced premiums,” says ETA. “More importantly, no safeguards are yet in place to safeguard the right to compensation and legal representation when cyclists and pedestrians are hit by cars.”
Legal profession concerned
It’s not just cyclists who are concerned by these changes, either – lawyers have reacted angrily to the idea that the small claims court should have its remit increased from £1,000 damages to £5,000.
“This is a fivefold increase in the number of claims currently within the small claims procedure, benefiting those who have negligently harmed people, and will result in more people trying to work their way through a complex court system without any legal advice,” Jonathan Smithers, president of the Law Society, told the Financial Times.
What’s more, major law firm Slater & Jones, which processes many personal injury claims, saw its share price halve the day after the budget was announced. Describing the UK government’s announcement as “unexpected”, the company quickly moved to reassure stockholders that its scale and diversity of business “positions it well to deal with the potential impact of any future legislative change”.
Future steps
So what happens next? Well, the the proposals will be subject to consultation in the New Year, and any approved changes will not be in place until 2017, so at least for the moment it’s business as usual. We’ll be watching the consultation process carefully, and report back.
What do you think? Let us know in the comments below.