Whiplash Reforms: Let’s make sure we get it right!

10 minute read 

Our Director, Donna Scully, shares her response to the latest updates regarding the whiplash reforms, including what may result from the removal of ADR from the system, as well as an in-depth look into whether the reforms will successfully achieve their initial objectives.

What was your initial response to the announcement detailing a further delay until May 2021 of the implementation of the whiplash reforms?
The delays have been deeply frustrating for many in the sector. At a generally unsettling time, the delays, however understandable, have created further uncertainty for businesses not knowing what the details of the new claims process will be soon. So, whilst I am pleased that we have a degree of certainty that the reforms will finally happen in May 2021, and we can begin to roll-out our plans accordingly, I do also have some reservations about the timing.

It has always been my view that, whenever the reforms finally happen, we must do everything possible to ensure that we get them right. Previous structural changes to the process have illustrated time and time again that it is important that they are carefully constructed and operate effectively, both for claimants and defendants, from the outset. It is always far harder to correct errors, gaps and loopholes after the event. A half-baked new claims process will only be storing up problems for the future.

The simple truth is that most organisations will struggle to get everything up and running, and fully tested, ahead of May. This will be a fundamentally new way of processing claims and will take time to get it right. Implementation in May when, as of writing, we have yet to see the new rules does not provide sufficient time, which is why, on the basis that the new rules will be signed off and published shortly, I would have much preferred to see implementation later in the Summer or the Autumn, allowing significantly more time for preparation but with the certain knowledge that they are proceeding.


How would you suggest the government utilise this short delay?
We know that there will be some significant elements missing from the design architecture of the new process, but leaving them aside for the moment, the next few months ahead of implementation must be used wisely. First, the whole sector urgently needs to see the details in the new Pre-Action Protocol and Rules and the finalised Tariff of Damages. The Ministry of Justice has promised the insurance sector that it will have a three months’ notice period between publication and implementation, but this may well be shorter and inadequate. The industry is simply not ready for the reforms and cannot prepare for the application of rules that have not yet been published. This promised 12 weeks’ notice period of the changes will make it very tight for most organisations to design processes, build and test systems, and train staff, particularly in an on-going pandemic with most staff working from home.

It very much feels like the MoJ is rushing these reforms through at a very difficult time for everybody.  My view is it is far more important that they are done right not quickly. They should have been delayed for longer to allow the industry to prepare and the court service to recover from the growing backlog it has because of Covid before we rush to implementation.

The Motor Insurers’ Bureau has worked hard to keep the professionals informed, but we also need to see sight of the public information campaign informing consumers about the major changes to how they seek compensation following a road traffic accident. Litigants, whether represented or not, deserve to be fairly and equally treated in the new system. They need sufficient safeguards to protect them from the claims farmers that are circling ready to pounce. We are now in the regrettable, and avoidable position, where consumers who have bought motor insurance over the last 9 months have been deprived of the opportunity to make an informed choice about whether they wish to run their own claims or buy insurance to cover legal representation. I deeply regret that we will be facing a legion of bewildered and potentially angry customers after May when they realise that their options for pursuing justice have considerably narrowed or become more expensive.


The role that ADR would play in the new claims portal was initially highlighted as key to the process for those claims where liability was denied, however, ADR was soon dropped from the new system. How might this decision to remove ADR from the claims portal and replace it with a new court process affect access to justice?
The absence of any Alternative Dispute Resolution procedure from the new process is one of its major deficiencies. From everything we have seen, the new Official Injury Claims (OIC) portal may work reasonably well for straightforward claims that are uncontested but clearly the problems will come when liability is disputed. Some claimants using professional representatives will proceed based upon the advice they receive, but many self-represented litigants may simply give up at that point, confused and anxious about a complicated legal system and the costs involved. This may be welcomed by many, but it is hardly a fair or just approach to civil justice. This would certainly be a backward step for access to justice, which is something I have always passionately believed in as the right thing to do.


If ADR was still included in the process, how might this help to reduce the increasing backlog in claims we are seeing?
The decision to drop ADR from the new process so early was very disappointing. No-one believes that it would have been easy. Would ADR have been used to resolve liability and quantum disputes? Would an ADR process have been available for professional users or only self-represented claimants? Some in the sector are still grappling with these thorny issues.

Without any ADR included as part of the new portal, potentially thousands of LiPs in disputed cases are likely to be forced into the small claims court to seek justice.  Court capacity was already a major concern but the Covid pandemic has significantly exacerbated the already strained situation with further dramatic increases in delays with civil claims being pushed back in the queue even further. On top of that, ADR is also helpful to compensators saving them time and the cost of litigation.  Insurer reserves will be tied up whilst cases back up in the already too busy court process.

The issue of court capacity is of major concern to all those involved in the justice system. With the government closing nearly 300 courts between 2010 and 2019 and a serious backlog of cases existing in early 2020, the situation has only got worse just as the reforms are going to be implemented. Whilst several measures introduced by the government, including remote hearings and new temporary Nightingale courts, may stem further dramatic increases in delays, the system will continue to struggle with the existing backlog without significant further investment. An influx of thousands of disputed RTA cases forced into the court system will only add to the delays and strain on the system we are already experiencing.


One of the aims of the reforms was to reduce fraudulent and exaggerated claims, however do you think we are likely to see an increase in fraudulent activity and behaviour following their implementation? If so, is the industry prepared?
This is undoubtedly the area where I am most concerned. Having spent years working with other interested individuals and organisations and with the sector having made significant progress in combatting fraud, I fear that the reforms will be a worrying and unnecessary step backwards with an increase in fraudulent behaviour. Fighting constantly evolving fraudsters will always be an ongoing battle, but I think it is already clear that the new process will lead to an increase in fraud.

There will always be those who seek to exploit the system more directly by feigning injury or staging crashes, particularly during times of financial hardship, but fraud will increasingly become digitalised in the future. Whilst embracing new technology is essential for the sector, the increased automation of the claims process carries a high risk of new ways of fraud. A supposedly frictionless claims process will lack the checks and common-sense of real people in the process. With many more claims being pursued without legal representation, many checks currently carried out by solicitors are unlikely to be fully replicated, leaving the system open to potential abuse.  Suspected and detected fraud have always been very different but with a frictionless claim process, there is more likelihood that genuine claimants will be scared off from pursuing claims.

Having kept claims farmers on the periphery of the formal claims process for decades, the new claims process is now openly inviting them to participate and compete for claims. With a distinct pricing and regulatory advantage in the new market, some CMCs will actively exploit the structural flaws in the system – medical reporting and rehabilitation, the absence of credit hire, repair and total loss – and they are already gearing up for the future bonanza. Cold calling has already gone up 60% during the pandemic and some of the old problems, such as phoenix companies, have not gone away.  Under-funded and over-stretched to police CMCs or the unregulated sector, the Financial Conduct Authority still only regulates CMCs who trade in bodily injury, allowing those to pursue repair or credit hire claims exclusively, beyond their regulatory reach. Unless this and other issues are urgently addressed, 2021 is going to be the green light for a whole new army of fraudsters.

In the face of the rapidly changing threats from fraudulent behaviour, we must all remain vigilant and quick to respond to new threats. In these uncertain times, the hydra of fraud is likely to develop many new heads in the months ahead. We will only be successful if the whole sector is informed and given the opportunity to tackle the problems, working collaboratively on a practical level in areas such as further ID checks and verifying legitimate claims, and better sharing of intelligence, information and data. We must present a unified front across the sector to change the cultural perceptions that fraud is a victimless crime.


What dangers could we run into if implementation is rushed and the portal is not yet fit-for-purpose?
In many ways we already know that the system will not be fit-for-purpose with key elements of the claims process not being incorporated into the new Portal, but we are where we are, and it is too late to change these structural flaws. We must collectively work hard to ensure the roll-out is the best that it can be in the circumstances. With less than 50% of claimants likely to have legal representation under BTE insurance in the future, we must do all we can to ensure that unrepresented claimants are not thrown to the wolves but guided and assisted. As much support and guidance as possible must be provided to consumers. The MIB’s call centre will not provide legal advice but it is hoped that the guidance is clear to understand for those unfamiliar with the claims process and that the promised provision of support from charities is in place.

The dilemma of what happens with mixed injuries must be resolved, almost certainly in the courts. Issues with the dual operation of the current Portal as existing claims are settled need to be addressed. The dangers and potential problems are many. They were foreseen by many and could have been avoided, but we must now all work to make the new process work as well as it can in delivering justice. No system will ever be perfect, but everything that can be done, must be done, to make the new system better.


While there is still much to determine before implementation, how confident are you that the reforms will achieve its objectives once the portal is in motion?
Fighting fraud was the driving force behind the regulatory and legislative changes in the sector, but unfortunately, this has become a secondary goal behind the pursuit of cost savings, at the expense of fairness for premium paying customers and independent legal representation.  Only time will tell whether it has really been worth threatening the advances made in fraud prevention. Pushing out lawyers in favour of CMCs may appear superficially attractive but history may show that replacing one set of problems with an even worse set was perhaps not the most sensible or desirable solution to the original problem.


With so many challenges and changes to overcome in 2021, how do you see the claims sector evolving in the next 12 months?
As with the rest of society, and the world, we must first overcome the dreadful pandemic which will continue to dominate all our lives for some time yet. For the claims sector, the implementation of the reforms is going to be a hugely difficult period, significantly adding to the pressures already faced by insurers and solicitors alike. Some operations in the sector will not survive these combined pressures, while others will navigate the challenges successfully having invested in the right technology and people and evolving rapidly to the new world. With new entrants to the claims sector, the rapid advancement of fintech and changing consumer behaviour, the claims market is likely to look very different within the next 12 months or so. We will have to wait and see!


Donna Scully
Director, Carpenters Group

Credit: Modern Insurance Magazine