Grayling Delays Change to the Small Claims Limit

Following the Transport Select Committee report into whiplash injuries completed in July 2013 the Government has now chosen to delay making a decision regarding any increase to the small claims limit for personal injury.  Anyone with a claim valued less than the small claims limit is expected to represent themselves in any legal proceedings and they cannot recover their legal costs from their opponent if they succeed with their claim.

We welcome the Government’s decision as we consider that any increase to the small claims limit, currently set at £1,000, will be detrimental to access to justice for most accident victims.

The Association of Personal Injury Lawyers (APIL) had warned that the plans were based on numerous misconceptions and false assumptions which would lead to a denial of access to justice for genuine injured people, as well as a variety of other unintended consequences.

An increase to the small claims limit for personal injury claims as high as £5,000 has been mooted. The Secretary of State for Justice, Chris Grayling, has commented “We believe that there are good arguments for increasing this threshold to £5,000 for all road traffic accidents…”.

Personal injuries with a value of £5,000 or less can be very severe, and the Judicial Guidelines indicate that a claim for loss of a part of the little finger or a claim for 2 years of back pain may be valued at less than £5,000.

In its report the Transport Select Committee stated:

The Government’s claim that the UK is the “whiplash capital of the world” cannot be conclusively proved or disproved from the international evidence which is available. It is surprising that the Government has brought forward measures to reduce the number of fraudulent or exaggerated whiplash claims without giving even an estimate of the comparative scale of the problem.

The Transport Select Committee went on to say:

…we would like to reiterate that whiplash injuries are inherently complex, difficult to diagnose and it has been estimated that 95% of all RTA’s will result in some form of whiplash injury. Furthermore, all medical research shows that whiplash is an inevitable injury in car crashes due to the inherent mechanics of the RTA i.e. the sudden deceleration of speed. These findings are corroborated by the report survey of the Whiplash Society.

Despite the comments of the Transport Select Committee, Mr Grayling quoted in his Written Ministerial Statement figures from the Association of British Insurers which indicated that 7% of all motor claims were fraudulent.

The Government has already massively reformed the personal injury sector in recent years in what they have stated is an attempt to reduce fraudulent claims. The delay in the introduction of the proposed increase in the small claim limit is largely in order that they are able to assess what impact those reforms have on the Insurance Industry.

Chris Grayling also said that it is estimated that the Insurance Industry would save approximately £1.5-2 billion as a result of the reforms that have been introduced. At the Prime Minister’s summit in February 2012 the Insurance Industry committed themselves to pass on those savings to their customers. We now wait to see whether the Insurance Industry will keep to their commitment.