A leading defendant lawyer has publicly questioned whether the government can meet its ambition of reducing fraud through the new personal injury reforms.
Gary Petterson, partner and head of counter fraud services at national firm Plexus Law, welcomed the reforms implemented this week – but warned fraudsters will ‘change and evolve’.
On Monday the government increased the small claims limit to £5,000 for RTA claims, introduced a new online portal for making claims and banned the settlement of whiplash cases without medical evidence. Lord chancellor said the changes would ‘put an end to this greedy opportunism’ and result in £1.2bn savings for the insurance industry, which would be passed on to the consumer through cheaper premiums.
But there are many who believe that the reforms will not reduce the number of fraudulent claims but will simply change the focus for those behind them.
Petterson said: ‘We are likely to see an increase of injuries not dealt with by the new portal such as wrist injuries, tinnitus and significant psychological damage.
‘There is likely to be a drift to dishonest employers liability/public liability claims that are not subject to the reduced tariffs and still attract third party legal costs. Finally, there will likely be an increase in exaggerated bent metal and credit hire claims, which can attract significant damages and costs.’
He added that fraudulent claims usually spike in times of financial instability, the kind of which is predicted following the pandemic. This will mean it will be difficult to draw any conclusions about the impact of the Civil Liability Act and this week’s reforms.
‘Any savings made will probably be masked by a general increase [in claims], reducing the overall impact of its introduction,’ added Petterson.
The tariff of compensation applies only to whiplash injuries that last up to two years. It is still unclear what compensation is paid where someone has suffered both whiplash and non-whiplash injuries.
The changes themselves are only part one of the Civil Liability Act. Part two, dealing with costs such as credit hire and rehabilitation, has not been addressed by the government.