The Big Question November 2020: What harm will the continued delays to the claims reforms do to the insurance industry?

Samantha Ramen, partner and director of market affairs, Keoghs

“The full implementation of the reforms set out in the Civil Liability Act 2018 will mean big changes to the way many minor injury claims are to be handled and valued. Insurers will need plenty of time to get their operations ready for the implementation date of April 2021, but the date is fast approaching.

It’s worth remembering that these reforms have been deferred three times already - it will have been five and a half years since the original announcement from George Osbourne as former chancellor in his Autumn Statement 2015.

The little information that is currently available to the public from the Ministry of Justice (MoJ) makes it increasingly difficult for insurers to prepare.

We need sight of the secondary legislation.

Even then, there will be unanswered aspects of the reforms, particularly the valuation of minor injuries which will need judicial input.

There is already an increased workload weighing heavily on insurers’ shoulders due to operational matters in respect of the necessary adaptation to challenges brought on by the pandemic, and a second lockdown will only serve to exacerbate this.”

Matt Jarvis, managing director of personal injury legal services, Slater and Gordon

We’ve all become accustomed to the reforms being delayed. It’s not ideal, but we know the direction of travel, if not the exact timeline and the further important details such as the rules.

With or without the reforms, the future was always going to be a technology-led, customer-focused model and that’s what we’ve been working on for many months now. Once we get a definitive date, we should be in a strong position to implement the new system.

This rapid development and adoption of new technology ahead of reforms has also enabled us to respond to the challenges of Covid-19 and lockdowns.

The improved efficiencies and intuitive processes have given us room to innovate and respond to the impact lockdowns are having on the industry.

It’s also important to note that lockdowns have actually sped up consumer adoption and adaptation to digital services.

Andrew Morrish, claims director, Aviva

The whiplash reforms are a really important piece of consumer legislation.

Not only will this help reduce pressure on premiums – and Aviva has pledged to pass on 100% of the savings to our customers – but we know that the reforms will address a number of other issues that have vexed consumers.

For example, when fully enacted, we expect the Civil Liability Act to effectively hang up on ambulance chasing nuisance callers, as it will be harder for CMCs and others to profit from bringing whiplash claims.

Likewise, we’ll see fewer crash for cash incidents, which have targeted so many innocent motorists, meaning our roads will be safer.

Opportunistic fraud stemming from low speed incidents is also expected to be a thing of the past, as the reduced damages and lack of legal costs won’t justify the risk that insurers will detect these spurious and exaggerated claims.

It’s been a long road to landing these reforms, and no-one is under any illusion that continued delay will be acceptable to motorists.

So we’re expecting the Portal to launch in April 2021; more importantly, consumers are looking forward to the raft of benefits that the long-awaited reforms will bring.

Richard West, partner and head of the liability division, Kennedys

Clearly any delay results in a short-term loss to the insurance industry, although it has been temporarily balanced by the fall in the number of motor and other casualty claims during lockdown.

The new portal is an important step on the road to re-engineering the system, and we can see from how other jurisdictions have adopted digital justice that multiple benefits are in sight.

In Singapore, for example, lawyers are struggling to keep up with the speed with which the courts are processing cases.

In the meantime, the delay gives all of us the chance to ensure we are in the best shape possible and the systems work properly when the reforms are released.

It is important too to remember that other reforms are in the wings: progress on fixed fees in medical negligence and fixed recoverable costs in other cases worth up to £100,000 seems to have stalled as Brexit and Covid take priority.

It’s a pity that we are having to wait for further modernisation of the justice system. But the building blocks are moving into place and in time it will benefits users, insurers, lawyers and society alike.

Matthew Maxwell Scott, executive director, ACSO

Civil Justice is creaking. We believe there are tens of thousands of cases piled up in a backlog waiting to be heard in the courts.

If the much-delayed portal doesn’t do what it said on the tin, delivering a seamless, consumer-friendly journey to easy settlement of a claim without needing legal help, there will be massive customer detriment. It will also be another shellacking for the reputation of insurers, who promised the portal would, above all, make things better for their customers.

It has now been five years since the reforms were announced - and far longer since they were conceived - so the whole claims sector has been in limbo.

Investment decisions delayed, countless hours of management time wasted planning for a future that never arrives and now Covid-19 putting the administration of justice under huge strain and turning past certainties on their head.

In truth, moving personal injury claims online was always going to be a tough ask. There are so many moving parts, and no injury is the same. The challenge for the government is now simple.

Meet the deadline, come what may, and risk a civil justice disaster, or push the implementation date out still further and watch as a fast-changing world renders the portal obsolete.

Kirsty McKno, chair, The Credit Hire Organisation

It is now five years since the Cameron government (remember him?) announced the reforms, but elections, Brexit, the pandemic and general mayhem have pushed the reforms back, and back…… to a point where we have to ask whether they are still relevant, because there have been such deep changes in the claims industry.

Even now it is unclear how credit hire will be handled in the new regime, because the CPRC still hasn’t agreed the rules for the small claim’s portal, due to be launched in April 2021.

Companies have delayed vital investment decisions, and the uncertainty is now compounded by Covid and of course, Brexit.

The MIB has been forthcoming with stakeholders on the portal build, but the lack of clarity from the CPRC means we are all in the dark; credit hire companies and others need time to prepare for such big changes, and we can’t prepare at the last minute.

Moreover, the decision to remove ADR looks to be a poor one in light of the impact of the pandemic on cases piling up in the civil courts.

The CHO remains keen to work with Ministry of Justice and other stakeholders to ensure that, post reform, customers can continue to access mobility as is their right. But, after five years, will that post reform world ever emerge?

Donna Scully, director, Carpenters Group

The claims reforms may still happen on the revised track in April next year. I share the frustrations of many in the sector about the continued uncertainty for businesses of not knowing. The MoJ remain bullish that this will be third time lucky and that any remaining obstacles can be overcome. Only time will tell.

It remains important though that we get the reforms right. That they operate effectively for both claimants and defendants. 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.

The growing problems around court capacity & Covid backlogs will only be made worse by a legion of unguided self-litigants. There are still huge unknowns about what happens with mixed injuries and other fundamental principles are yet to be resolved. The sector does need time to prepare. Then there is Covid and all its consequences.

Most insurers probably just want to get on with it but given everything else we’re all dealing with right now, if there was a further delay, I doubt whether too many tears would be shed. We have a lot on our plate at the moment.

Anna Fleming, chief operating officer, Motor Insurers’ Bureau 

We’re pleased to report that lockdown has not slowed our work on the Official Injury Claim service.

We have been building steadily for many months based on direction from the Ministry of Justice. Some requests for changes have come in recently but the build remains 85% ready.

We’re now looking forward to getting confirmation of the pre-action protocol and accompanying civil procedure rules to help complete our work.

The team is set up to work remotely, so we are confident a second lockdown would not affect our remit to deliver Official Injury Claim in April 2021, in line with our agreement with MoJ.

We’re not best placed to comment on the impact of a second lockdown on the reforms as a whole, as this goes beyond our remit as MoJ’s delivery partner.

Shirley Woolham, chief executive of Minster Law

It has been nearly two years since the Civil Liability Act received Royal Assent, and with the prospect of further delays to the new April 2021 deadline, the claims industry remains caught in potentially damaging no man’s land.

As we await clarity, the pace of change, brutally accelerated by Covid, risks the claims reform programme being rendered obsolete by unfolding events.

Not only have the number of injury claims fallen dramatically, but the increasing use of technology (and wholesale public adoption of that technology) means that injury claims can be resolved more rapidly than ever before, and in a way that delivers the seamless online experience that customers demand.

Minster Law has decided not to wait. We have built a digital claims platform that our customers and those of our partners are already using and liking. Our ambition is to be able to deal with a claim from start to finish in the digital world, delivering civil justice in a fresh, customer-friendly manner at a super low cost.

We will plug our digital operation into the new insurer claims portal when/if it ever arrives, but customers will expect that portal to be as slick as, say, changing their energy supplier or doing online banking.

If it doesn’t fit the bill, the insurance industry’s reputation for looking after customers interests will be further tarnished – a worsening position that the industry can ill-afford to find itself in.