The ongoing Justice Select Committee inquiry into the government’s whiplash reforms has a number of aims, but among them is to look into their original, central justification. This was to reduce claims numbers and thereby save consumers money.
On the first part, the data are clear enough: although there is no particular evidence to suggest accident numbers have come down, those claiming damages after being injured on our roads through no fault of their own has fallen significantly.
The next quarterly set of data from the government’s Compensation Recovery Unit is due towards the end of April, and we do not anticipate changes in the recent, downward trends. Motor injury claims have fallen by 44 per cent since 2018, with the 84,247 submitted during the latest quarter (October - December 2022), the lowest figure on record.
The question is how hard it will be for the Financial Conduct Authority (FCA) to calculate the savings, as mandated by the legislation.
The government’s pledge was that “up to £35” would be saved per motor insurance premium. A not unhelpful sum to most people, albeit one dwarfed by recent rises in average insurance costs, with Consumer Intelligence reporting average increases of 21.1 per cent over the last year, more than double the rate of headline inflation.
Although the FCA has a year after the initial three-year operating period of the Official Injury Claim (OIC) to report, it looks as though it is aiming to get numbers out on or around the second anniversary of the OIC launch, which is 31 May 2023.
The reporting period for this will be March 2020 to March 2023, in other words covering more than 12 months of the previous regime. How helpful or instructive this may be remains to be seen, given the impact of lockdowns.
It is understood that insurers will be surveyed from September to October this year, with analysis to follow. What the FCA is asking for, how it will be independently audited and what other factors will be considered are useful questions MPs should consider asking the FCA.
If the position from compensators turns out to be that the savings were made but were swallowed up by other costs, the committee could reasonably ask what the point really was of such an upheaval in civil justice in England and Wales. It should also consider the destabilising impact on the legal services market and unintended consequences for access to justice.
History indicates we should expect suggestions that the answer is to impinge still further on injured people’s rights, by reducing again the damages available or the categories of people entitled to claim. This should be rejected out of hand. The original and still overriding purpose of motor insurance is to provide support and redress in the event of personal injury. For it to become more expensive but less effective was never, surely, the government’s hope. Even as things stand, many injured consumers are reported to be surprised by quite how low their levels of compensation are, despite being for pain, suffering and loss of amenity for up to two years.
We can expect too that the supposed savings will somehow be shown to come out at around - or probably just above - the magic £35 figure. The cost of so many genuinely injured people finding it hard to make a claim is much more important, but more difficult, to assess.