From Osborne to Hammond – 12 months of nothing
With the first Autumn Statement from the new Chancellor, Philip Hammond fast approaching, the insurance and personal injury sectors will be listening intently. Following George Osborne’s final Autumn Statement, in which he floored many with his proposal to ban damages for routine soft tissue damages as a result of motor accidents. Osborne then proceeded to put the final nail into the personal injury coffin with the increase of the small claims limit to £5,000.
The oft referenced, never proven, compensation culture was finally beaten as party streamers and balloons fell from the sky onto a jovial Osborne as MPs chanted his name… Okay, none of this happened outside of the ex-Chancellor’s mind, but if there was ever a moment for an 80s movie montage, that was it.
Perhaps one industry that did receive a movie montage was insurance. They had once again whispered sweet nothings into the Chancellor’s ear; stroking his leg seductively until they receive those diamond earrings. This was LASPO all over again.
What happened next?
So what has happened in the 12 months since this rather unexpected announcement? The simple answer is not a lot and frankly the uncertainty that it leaves around this sector is far worse than any kind of reform itself.
Anyone trying to plan a business will know that without a reasonable idea of the future, you might as well be fumbling around in the dark. Being at a crossroads is the worst of all worlds when you don’t know whether the best option is left or right or indeed straight ahead.
Let’s take a look at the small claims limit
For years this idea has been bandied around with everyone having their say. Insurance companies loved the idea, with the majority of claims likely to stumble at the first hurdle. Maybe this will save the £2bn that whiplash costs the insurance industry each year, although wasn’t LASPO supposed to have already done that?
Osborne’s banning of soft tissue injury claims is possibly the hardest pill to swallow because it came so out of the blue. Anyone who has been unfortunate enough to suffer with a soft tissue injury will tell you that it isn’t a walk in the park. Just because it doesn’t show up on an X-ray, doesn’t mean that the pain is any less real.
In the last 18 months, the insurance fraud task force has done a great deal of work to incorporate changes that could benefit both the insurance and personal injury sectors yet many of those appear to have been overlooked in favour of increasing the small claims limit. Where is the consultation? Where is the compromise?
Perhaps the biggest spanner in the works for the reforms is Brexit. Widely believed by many to be a non-starter, Brexit shocked the nation and toppled leaders in its wake. There was hope among the personal injury sector that the proposals would be lost in the long grass, although many insurers and James Dalton of the ABI will be doing their best to keep the life support machine maintained and functioning. Just think of James Dalton as the over eager lifeguard at a beach full of good looking 20 somethings jumping to their aid every time one of them stops splashing.
The problem that has plagued the industry in the past is the speed at which changes are implemented without a proper consultation or ‘bedding in’ period. Just a quick look at the recent MedCo reforms highlights the ineptitude we can expect from Government backed proposals.
With the unveiling of a new Chancellor, the Government is in an ideal position to rectify the sins of the past. Instead of running headfirst into a fog, Hammond could sit down with representatives from the various sectors and look at this from a fresh perspective.
Instead of alienating an entire industry based on ill founded facts from Americanised sound bites, why not listen to both sides of the argument and come up with a fair proposal, one that doesn’t favour one side over the other and instead focuses on the general public who seem to have been forgotten altogether.
Before we get the usual rhetoric of the insurance companies doing this for the people, they should perhaps look at their recent plan to increase insurance premiums and ask who that helps. Surely LASPO and MedCo were meant to put savings back into the pockets of the man on the street; instead those who were meant to benefit the most have saved the least and soon will have no recompense should they be the unfortunate victim of an accident that wasn’t their fault.
We’ve tried shouting over each other and going with the loudest voice and that didn’t work, maybe we should try listening to each other and compromising. Or, we could just continue to take away people’s civil liberties until they break, whichever is easier.