Ministry of Justice Reform – Motor Personal Injury Claims
The Ministry of Justice (MoJ) has introduced a new claims handling procedure which commenced on 30th April 2010 and will affect the way in which claims for alleged third party injuries are handled on your motor insurance. The MoJ has decided that ‘low value’ motor personal injury claims generally take too long to settle and claimant solicitors costs are too high and disproportionate to the level of compensation (Damages). The new process will apply to third party personal injury claims arising from road accidents on or after 30th April 2010 occurring in England and Wales, if the estimated value of the claim is between £1,000 and £10,000 excluding vehicle damage and hire. It will not apply if either vehicle is registered outside the UK. One insurer estimates that the new process will affect 85% of motor personal injury claims, mainly whiplash incidents. Insurers are keen that as many claims as possible are kept within the new process as otherwise they revert to the existing ‘predictable costs regime’, which will be more expensive and of detriment to your policy’s claims experience and potential future premiums. Estimates of savings in solicitors’ costs for claims dealt with under the new system range from 8% to 38% depending on the stage at which settlement is reached and the level of Damages awarded. The new process is split into three stages:
Stage 1 The claimant solicitor completes a claim notification form via a Web Portal which is sent to the defendant insurer electronically, with a paper copy of the details sent by post direct to you as the defendant. Your insurer has 15 working days from receipt of the claim to respond on liability. The claimant solicitor receives a fixed fee of £400 if liability is accepted by the defendant insurer within 15 days. It is therefore important that you notify our office (or your insurer if direct notification of claims is the agreed process) immediately of all accidents involving your insured vehicles. If your insurer is advised of the accident before they receive a third party injury claim they can begin their investigations regarding liability in advance of the 15 day time limit. If liability is to be denied those investigations will need to include evidence gathered by your driver at the scene including details of the third party/parties involved and any witness details. It continues to be important that your vehicle details on the Motor Insurance Database are kept up to date as the MID will be used by the claimant solicitor to select the defendant insurer. If there is no response from the insurer, or a denial of liability, or an allegation of contributory negligence, the claim will leave the new process. If a claim leaves the new process it cannot re-enter under any circumstances.
Stage 2 If liability is admitted, the claimant solicitor obtains and submits a medical report along with supporting documents regarding any financial losses and confirms the claimant’s settlement offer. When received, the defendant insurer must accept or reject the offer within 15 days. If rejected the insurer must make a counter-offer and 20 further days are allowed for negotiation. If settlement is reached at stage 2 the claimant solicitor receives a fixed fee of £950. If settlement is not reached at stage 2 the claimant solicitor receives a fixed fee of £800 and the claim moves to stage 3.
Stage 3 If settlement has not been reached at stage 2 an application is made to court for a quantum hearing, to which the defendant insurer has 5 days to respond. The decision on quantum (the amount to be paid to the claimant) is made by a Judge considering paper evidence alone (if both sides agree) or an oral hearing, if requested by the claimant. If the Judge finds in favour of the amount claimed by the claimant their solicitor will receive a fixed fee of £500 if a paper hearing was held or £1000 if it was an oral hearing. These costs are considerably lower than those on claims settled outside of the new process. If the Judge finds in favour of the amount offered by the defendant insurer, the insurer is entitled to claim costs of £250 for a paper hearing or £500 for an oral hearing.
How do the changes affect you ? Please report all motor accidents involving your vehicles and another party as soon as they occur. This will enable your insurer to begin to establish the issue of liability with you and your driver prior to receiving a claim from a third party solicitor alleging injuries. Your insurer will consider themselves to be at a disadvantage if they hear about the incident from the other side first. Your driver will need to provide full details of the incident including details of the third party and any witnesses.
You will need to respond urgently to any queries raised to enable your insurer to make the correct decision regarding liability, quickly. Please ensure that your vehicle details are accurately recorded on the Motor Insurance Database, with all changes notified as soon as they occur. This may involve you advising our office of all changes, or you updating your records via your insurer’s website, depending on the system currently in place.
Please contact our office should you require any advice in this respect. The solicitors costs indicated at each stage above will be subject to VAT where appropriate. If the amounts still sound like a lot please bear in mind that they are only the solicitors costs. The full cost of a third party claim may also include vehicle repairs and alternative vehicle hire as well as injury compensation, loss of earnings etc. It is hoped by insurers that the new process will keep costs to a minimum, but not as much as avoiding the accident in the first place ! In the event of any query please contact our office on 01274 206500.