The need for speed

Speed plays a major part in most motor accidents. It is ironic, then, that lack of speed has characterised the settlement of many personal injury claims arising from such accidents.

A desire to streamline the legal process prompted the Ministry of Justice to reform the system. Changes come into effect on 30 April.

It is hard to argue against the objective, namely: a simpler process for road traffic accident (RTA) claims that delivers fair compensation as soon as possible at a more proportionate cost.

Of course, previous well-intentioned changes have had unfortunate consequences. We must hope that, on this occasion, we will have more reasons to be cheerful.

Let us address the details. The reforms, which affect only England and Wales, apply to third-party RTA injury claims with a value of £1,000 to £10,000. The new process has three stages, each of which carries fixed fees payable to the claimant’s solicitor.

Stage one requires the insurer to respond to notification of a claim within 15 days, denying or admitting liability (possibly with an allegation of contributory negligence). If the insurer does not respond in time, the claim falls out of the process.

Stage two begins if liability is admitted. The claimant’s solicitor obtains medical evidence and sends the insurer an interim payment request or offer of settlement. The insurer has 15 days to consider. If the offer is rejected, the parties have 20 days to negotiate. If the offer is accepted, insurers have 10 days to pay.

Stage three is invoked if settlement cannot be agreed, and application is made for the claim to be assessed by the court.

The incentive is for insurers to speed up their processes. This will be a challenge, and claims handlers will need the skills and training to help them make the right decisions at the right time.

How will lawyers adapt? Some may bristle at the new fixed fees; they may seek ways to remove cases from the new process. Of course, those paying hefty referral fees to secure cases may not find the stage-one fixed fee attractive. On the other hand, could this be a first step towards removing inflated referral fees altogether?

We also need to ask if there is the potential for abuse. To secure a £400 stage-one payment it only needs to be shown that a client is injured. There is no recourse to recover this money if the claim is not pursued. There are other concerns. Under the reforms, a defendant insurer has no influence over how medical evidence is obtained. If the case stays in the scheme, the insurer does not see any medical notes and cannot ask questions. Equally, the deliberate selection of experts whose prognosis is likely to be lengthy is also a worry. Whiplash cases worth £1,500 might easily become injuries with symptoms spanning two years and worth £5,000.

But the reforms will speed up a process that was far too slow, and claimants that take realistic offers in stage two will get their claims settled quicker.

However, it seems unlikely that many (if any) cases that reach stage three will be dealt with by a ‘paper’ hearing. Oral hearings are set to become the order of the day, and this could double the cost of the process and clog court timetables.

The consultation that led to these reforms inevitably resulted in considerable compromise, and understandably some insurers have expressed dismay. However, even if the system has drawbacks, we should embrace it. It is better than the one it replaces. Let’s take ownership, make it work and turn it to our advantage. IT