Understanding the Civil Liability Act and what it means for our brokers

Declan Bl

It’s been a long time coming, but the Civil Liability Act – better known within our industry as the ‘whiplash reform’ bill – is finally kicking in from 31st May 2021.

Designed by the Government to crack down on fraudulent whiplash claims and thus reduce motor insurance premiums, it’s a reform with wide-ranging consequences for insurers, brokers and, of course, your clients and customers.

So we thought we’d refresh your memory and explore how the Act will change the way we need to work with brokers going forward.  

The Act in a nutshell

The Act introduces a new fixed tariff of compensation for whiplash claims with an uplift of 20% in ‘exceptional circumstances’. The Small Claims Track limit will increase to £5,000 for personal injury claims which means that claimant legal costs will not be recoverable for claims falling below this limit. Cases will be funnelled through a new online portal – Official Injury Claim – so that drivers can submit their claims without the need for third-party representation.

Insurers will no longer be able to make pre-medical offers to claimants for whiplash injuries, and they will have 30 days from the date the claim is submitted to accept or deny liability on behalf of their customers.

The need for speed

The 30-day rule means a significant change in how we need to handle claims. It’s a very short period for evidence-gathering and determining liability, and if we don’t respond in time, we’ll be admitting liability by default.

Our ability to handle claims effectively will be reliant upon receiving claims information from customers as quickly as possible. The earlier we receive notification, the quicker we can start sourcing witness evidence and assessing the claim details. At face value 30 days looks more generous than the current provision, but the sting in the tail is that any denial of liability will have to be supported by a witness statement and statement of truth signed by the driver.

Managing our way through an uncertain moment

No one knows what the Act will mean to the overall number of whiplash claims. While the new online portal is supposed to allow people to submit their claims without the need for representation, the portal itself is still under development, and we’re yet to see the guidance for claimants to help them navigate the claims journey. Attempting to value the cost of an injury and any associated trauma may not be straightforward unless the guidance is clear. And then there’s the subjective nature of the ‘exceptional circumstances’ uplift, for which there is unlikely to be any guidance at all.

Given these potential difficulties in submitting claims, we’re expecting to see a lot of outreach from both lawyers and claims management companies, who will be looking to take on clients on a ‘no win, no fee’ basis. If they’re successful, we may reasonably expect to see a higher frequency of claims for ancillary injuries and rehabilitation in an attempt to circumvent the Small Claims Track limit and recover legal costs. Such a move will inevitably mean that the claims end up costing more, rarely to the claimants’ benefit.

Working together to educate the market

The Motor Insurers’ Bureau, responsible for developing the online portal, states that ‘the goal of the service is to make the personal injury claim process simple, unbiased and secure for everyone.’ Yet the risk is that, in the wrong hands, claims are deliberately made as complex as possible, with both insurers and policyholders suffering the consequences.

We can solve this issue together by acting early to brief existing customers and by educating the wider market.

Nobody likes the hassle and inconvenience of making a claim, and we’ve built our reputation on giving customers the best possible claims experience and the best chance of a fair outcome for each claim. Some claimants may be left unsupported in the new regime, and we must try to reach as many of these as possible. ERS has an established intervention process which helps control indemnity spend by leveraging trusted and longstanding commercial partnerships. But our aim isn’t just about protecting indemnity spend. Claimants are our customers of tomorrow, so it’s important that we help their claims journey rather than alienating them through it.

Claims volumes have temporarily declined due to reduced road usage during the pandemic. But as the Civil Liability Act’s introduction coincides with society’s reopening, we’re expecting the Official Injury Claim portal to see considerable activity later in the summer. By working together now to inform our customers of the changes, we’ll be able to give more claimants a trusted, high-quality experience and navigate any unexpected consequences that emerge once the Act is in force. Reporting claims quickly will provide ERS with the best opportunity to settle genuine claims early and contest those without merit.

To report a claim, please call us within 24 hours of the accident on 0330 123 5992.

It’s important that we keep this conversation going, so we’re hosting our own online whiplash reform debate for our UK motor brokers on Friday 30th April - reserve your place today.
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