If you are injured in an accident then the right to seek legal representation to support a claim for compensation is under threat. The age-old entitlement that compensation is fair to all, regardless of your wealth or position in society, is being challenged by proposed government changes.
Most would find the right to redress an uncontroversial point of view – but the current government thinks differently. The very same Tory ministers who are making workers pay to bring a case to the Employment Tribunal, and who are seeking to neuter trade unions through the Trade Union Bill, are now hell-bent on denying ordinary people the right to legal representation for certain types of road traffic accident injuries. It is possible we may see the end of the basic convention by which the person at fault pays what a case is really worth. This could mean injured people having to take on insurance companies alone in their own time or seeing compensation for lost wages or broken limbs being spent being eaten into by lawyers.
In November’s Autumn Statement, George Osborne said would raise the small claims limit from £1,000 to £5,000 for road traffic cases. For any such injury the injured person would not be able to recover legal costs if the compensation awarded is less than £5,000.
While some people may be fortunate enough to have the time, knowledge and confidence to fight an insurance company (who will have an army of lawyers and wily negotiators working for them), for many others the idea of representing yourself whilst recovering from injuries is a nightmarish prospect. Injured people will increasingly accept settlements deemed “appropriate” by insurers’ and others will simply decide not to go ahead with seeking compensation. For further evidence, just looks at the 70 per cent drop in employment tribunal claims since the introduction of fees.
The government, along with its friends in the insurance industry, claims there is a “fraud and claims culture in the motor industry” and the Association of British Insurers says it detected 67,000 instances of ‘fraud’ in 2013 alone. But there has never been any independent verification of the insurers’ figures and, by the ABI’s own admission, they include cases which “might have had an innocent explanation” or where claims handlers simply held a suspicion of fraud and an applicant accepted a substantially reduced offer, withdrew a claim without “credible explanation” or allowed communication with the insurer to lapse.
Later, when pressed by a cross-party group of MPs, the ABI admitted that there had only been 84 convictions between January 2012 and September 2014 by the police unit set up to tackle the problem. If fraud is such a widespread problem, why is the number of convictions so low?
Without solid evidence to back up the idea that fraud is at the level of an “epidemic”, as one insurer claimed, the figures being peddled are self-serving rhetoric to reduce the money paid out while increasing their profits and dividends to shareholders.
Motor insurance is compulsory and the £15 billion a year market is looking pretty healthy by anyone’s standards. Direct Line and Admiral paid out £1.65 billion in dividends to their shareholders in the last three years (that’s equivalent to £221 per policyholder). The chief executive of Direct Line received an 82 per cent increase in his rewards package last year – which probably reflects the fact that his company’s shares soared 32 per cent between the Conservatives’ election win and December 2015 (out-performing the rest of the UK stock market by 7 per cent over the same period).
The chancellor claims that the proposed rise in the small claims limit will save the insurance industry £1 billion but it is unclear how this has been calculated. Even if it does happen, it is unclear how the saving would be passed on to motorists. In fact, Ministers have admitted they do not intend to intervene in the market to require savings to be passed on. And, while some car insurers have “guaranteed” they will pass all savings on to the policyholder, many have refused to do so. Why should we believe it will happen when premiums rose in the 12 months to the end of September 2015 by 9.2 per cent at the same time as claims payouts were 29 per cent down on 2010?
While the government continues its attack on working people, union members should remember they and their family are protected from the worst effects of Tory policy through a union legal scheme.
Thompsons is working with trade unions and opposition parties to fight these changes before they are sneaked through as law. Help us fight them too.
Ann Rooney writes from Thompson Solicitors