In his 2015 autumn statement the Chancellor of the Exchequer, the Rt. Hon George Osborne MP, announced that to make it “harder for people to claim compensation for exaggerated or fraudulent whiplash claims, the government is ending the right to cash compensation”. The proposal will remove the right of individuals to claim ‘general damages’ for minor whiplash injuries, compensation for injury, pain and suffering. However, the victims of such injury will still have the right to claim compensation for financial losses such as the costs of medical treatment or loss of earnings.
The Chancellor says that this reform will save the motor insurance industry £1 billion, which will be passed onto consumers, who will see premiums reduced by £40 to £50 per policy. Legislation implementing this change is proposed to take effect in April 2017. A consultation paper from the Ministry of Justice (MoJ) was due in March. At the moment, the only details of the reform proposal are as set out by the Chancellor in his autumn statement.
The cost savings the Chancellor claims will be achieved are derived from a consultation document written by the Association of British Insurers (ABI). The ABI is the trade association of insurers and is neither independent nor impartial. The document relied upon is from September 2011: it is not only based on old data, but does not take into account reforms to the civil justice system in 2013 which were intended to reduce the costs of litigation and save insurers substantial amounts of money. That the Chancellor should refer to this document rather than, for example, the two-volume report into whiplash injuries prepared by the House of Commons’ Transport Committee, or the MoJ’s consultation papers on whiplash, may be indicative of his proposal being shaped within a narrow frame of reference.
The MoJ has indicated that its consultation will be accompanied by a detailed impact assessment. The overall costs to motorists are not the underlying rationale for the reform, but the incidence and cost of fraud. In 2013, the Transport Select Committee found it impossible “to give even a rough estimate of the scale of the problem”. The MoJ has consistently argued that high caseloads and “anecdotal evidence” indicate that fraudulent claims are increasing. In response to an online petition about this proposal in December 2015, the MoJ said:
The number of reported road traffic accidents has fallen from approximately 190,000 in 2006 to around 146,000 in 2014 (a reduction of over 20%). However, at the same time, the number of road traffic personal injury claims has risen from around 520,000 in 2006/07 to 760,000 in 2014/15(an increase of around 50%).
That analysis is both simplistic and flawed. The first figure is derived from the number of accidents reported to the police, and the second by the number of claims registered with the Compensation Recovery Unit. Not all road traffic accidents are reported, particularly minor ones. It has been estimated that almost twice the number of people attend hospital following an accident than are recorded as having been involved in an accident by the police. Evidence that the number of claims is increasing is also inconsistent, or at least not indicative of a pattern of inexorable growth in the number of claims. In 2013, the Transport Select Committee concluded that the number of whiplash claims was in fact going down.
The Transport Committee also heard evidence from a range of stakeholders, lawyers, and experts whose evidence on the number of fraudulent whiplash claims ranged from 0.1% to 60%. In his reply to the Transport Select Committee the then Lord Chancellor, Chris Grayling MP, referred to the ABI’s own study that suggested that 7% of motor claims in 2011 were fraudulent. In its impact assessment the MoJ must demonstrate a significant and verifiable link between the number of claims and the incidence of fraud, but its record on this issue to date does not inspire confidence.
Even if the evidence were to show a sound basis for estimating the number of fraudulent claims, at what point would the amount of fraud justify ending the right to bring claims for general damages for all persons suffering moderate whiplash injuries? Probably not 0.1? Or even 7%? But 25%? 60%?
The question becomes even more difficult when one considers the category of persons who are likely to suffer from modest whiplash injuries. Minor whiplash injury may result from the particular position in which an individual was sitting, or an individual’s particular physique: those with more vulnerable necks, perhaps due to a pre-existing condition, are more likely to suffer an injury. Older people are more likely to suffer injury than the young. The Transport Select Committee heard evidence that women are more likely to suffer whiplash injury than men. The abolition of general damages for minor whiplash injury claims will impact on those vulnerable people within our society who are more likely to suffer from such an injury.
There is no logical connection between there being a category of persons who are more likely to suffer minor whiplash injury and the incidence of fraud. It cannot rationally be argued that such people are more likely to commit fraud. Likewise, children suffer whiplash injury but are not renowned perpetrators of fraud.
This proposed reform discriminates against the poorest within our society in another way. While all modest whiplash victims will lose their right to compensation for their pain and suffering, some will be entitled to the costs of medical treatment or compensated for their loss of earnings. The retired and the unemployed will not have claims for loss of earnings. Most medical treatment is provided free by the NHS. Paying for the cost of private medical care is beyond the means of most people. In other words, the residual right the Chancellor offers is meaningless for the vast number of those who suffer from minor whiplash injuries.
The right and the costs of access to justice
A further argument made by the MoJ is that this reform is justified because the cost of litigating fraudulent claims justifies the abolition of the right to claim for minor whiplash injuries: “the overall costs of these claims far outweigh the value to genuine claimants of relatively small amounts of compensation”. It is not clear what evidence the MoJ has for asserting that this proposal has such popular support. Most motorists would welcome reduced premiums, but would they welcome it at the cost of giving up their own right to bring such a claim, and the rights of their children and elderly relatives? Presumably a member of the public would base his or her choice on evidence, but if there is a lack of evidence about the number of fraudulent claims there is even less reliable evidence about the resulting legal costs. Many members of the public may think that the appropriate basis upon which to deal with fraudulent claims is to have such allegations proven at court, for the perpetrators of fraud to be penalised appropriately and for those wrongly accused to be entitled to compensation, without depriving those who have genuinely suffered injury of their right to make a claim.
The proposed reform to minor whiplash injuries provides a copybook example of how the present government balances and prioritises the competing interests of members of society, in this case the rights and interests of the injured as against the pecuniary wellbeing of the general motorist. Perhaps more significantly, Mr Osborne’s proposed reform presents a novel case to restrict access to justice for reasons which are economic rather than principled. An individual’s right to bring his or her claim for injury to court is not only that individual’s right, but the hallmark of a civilised society; to seek to restrict that right for a questionable and uncosted benefit to motor policy holders is a political choice; but to abrogate that right to vulnerable members of the community without compelling evidence would be a disgrace.