PI Brief Update

General Damages Come Under Attack - Julie Carlisle, Boyes Turner

15/07/13. In the first ever issue of Modern Claims Magazine in May 2013 James Dalton, Assistant Director of the ABI, suggested that it is time for a public policy debate about whether low speed shunts in supermarket car parks should attract “the current levels” of compensation awarded to the non-fault driver. “This” he opined “is a debate society needs to have as the cost of damages and fraudulent claims are passed on to those honest customers paying car insurance premiums”.

This attempt to muddy the difference between dishonest and modest value was recently repeated in the Law Gazette by Tom Woolgrove, managing director of personal lines at Direct Line. This time however he went one further stating that the only way to sustain what he claimed were obvious reductions in car insurance premiums was through a new approach to general damages for low value claims. This time he told us that “there is a genuine public policy debate about the rights of the claimant to damages versus the cost to everybody paying for premiums”.

It would appear that slashing recoverable legal fees was not enough. Nor indeed was taking out fraudulent or exaggerated claims. We are now being told that we are not going to see those promised premium reductions unless we accept the need to go even further – that is unless we agree to pay our compulsory car insurance premiums but don’t necessarily expect to be able to claim on them.

When the current government agreed to the recent sweeping reforms to civil litigation one of the key stipulations they made to the insurance industry was that it had to result in significant savings for customers. Mr Woolgrove’s reference to “obvious” reductions a mere three months and ten days after 1 April isn’t backed by any evidence that changes implemented then could possibly have had time to impact positively on the cost of policies. So, we haven’t seen the promised reductions yet, and already we are being set up to expect further reform in the name of consumer savings.

Having won the war on costs the insurance industry appears to have general damages in their sights, and not just their reduction, but possibly their elimination. We were told that fraudsters were to blame, but it seems anyone – even the “honest motorist” so beloved of the insurance industry – is fair game. This headline from Insurance Times on 15 July: “Claims Data show motorists more honest than ever”. AXA spokeswoman Amanda Edwards is quoted as saying “It is reassuring to see that, despite facing rising costs, UK motorists are keeping their integrity”. How this squares with Mr Dalton’s call for rear end shunts in supermarket car parks to be excluded from civil compensation isn’t clear. If the honest motorist suffers genuine injury when an equally honest but distracted motorist hits them from behind, should they really be expected to take this on the chin for the good of all the other honest motorists duly paying their compulsory premiums?

AVIVA’s written response to the current parliamentary enquiry into whiplash claims perhaps gives the answer: “Our view is that the MOJ could, via primary legislation...make certain types of minor injury...either not call in general damages at all, or attract a nominal sum set by tariff”.

Why stop at whiplash?

Julie Carlisle
Boyes Turner

Image cc flickr.com/photos/webrolighting/4095891862/