This is the third of three articles recently written by Thompsons Solicitors for the Society of Labour Lawyers' publication Justice for All. If you would like to contribute an article analysing or commenting on a legal development from a left-wing point of view, please send submissions to email@example.com
Claims costs drop for the sixth year while customers continue to overpay
People get injured at work. Whether it is because employers fail to put in place and enforce proper systems or because health and safety is not given sufficient priority, every year thousands of working people sustain workplace injuries which are not their fault.
The Civil Liability Bill announced in the Queen’s Speech in June 2017, the government will strip the public of their right to free or affordable access to legal representation by raising the small claims limit to £2,000 for personal injuries, including those sustained at work, and up to £5,000 for road traffic accidents.
There is no inflationary or other logic proffered by the government for these fundamental changes. Hundreds of thousands of people injured every year will lose out on compensation they deserve. Claimants would be forced to either fight their employers on their own up against highly-resourced insurance-backed defendants, or pay legal fees out of their own pocket if they are successful.
Despite having limited time to deal with new policy while negotiating Brexit, the government still chose to re-introduce the plans when they (just) got back into power in June. They want to go ahead with limiting the rights of injured people despite it costing – according to the government’s own figures - the Treasury £135m and the NHS £13m each per year. It will also (again on the government’s figures) hand over an extra £200m in profit to insurers every year.
There is no evidence to justify these proposals. The government's own statistics show the number of work injury cases has dropped 30% over the last four years. At the same time, the Association of British Insurers (ABI) admit that motor insurance claims costs are down to £4.79bn (2016) from £8.30bn in 2010 - a reduction of 42%.
‘Fraud’ is the unsupported 'justification' being used to attack claims by people injured in road traffic accidents (yet not enough of a problem to be reported to their shareholders as they should do under financial reporting requirements). And Aviva reported in December that they paid out 99.85 of motor claims which fundamentally undermines they claims of a fraud ‘crisis’.
Even if there were fraud issues that the insurance industry could independently prove, there is no suggestion whatsoever of any problem with fraud in workplace accidents.
The only possible justification for an increase in the small claims limit might be inflation but even that doesn’t stack up. Jackson LJ in his 2009 Review of Civil Litigation Costs set out the position clearly. At paragraph 3.3 of chapter 18, he stated that:
If a satisfactory scheme of fixed costs is established for fast track personal injury cases (both contested and uncontested) and if the process reforms bed in satisfactorily, then all that will be required in due course will be an increase in the PI small claims limit to reflect inflation since 1999. A series of small rises in the limit would be confusing for practitioners and judges alike. I therefore propose that the present limit stays at £1,000 until such time as inflation warrants an increase to £1,500.
No reason has been given by the government to depart from this conclusion. The question therefore, to follow Lord Justice Jackson’s lead, is whether inflation warrants an increase to £1,500. The short answer is that it doesn’t.
Jackson LJ correctly set 1999 as the starting point for the calculation of the impact of inflation because that is when special damages were removed from the calculation of what cases fall within the small claims limit and it was re-set at £1,000 for general damages only.
Given that the government applies CPI to the pensions and benefits paid to injured workers pursuing EL claims, the logic must follow that if there is to be any increase the same measure should be applied to the small claims limit which would mean only an increase £1,440 would be justified.
Perhaps it is because the insurers don’t feel restricted to inflation-only increases in respect of their premiums that they think it is acceptable to ignore inflation when it applies to the small claims limit. In the last year, the cost of motor insurance has gone up from £500 to 3597 in the last year alone. Certainly their shareholders are getting more than inflation. In 2016 the remuneration packages for the CEOs of the four major insurance companies ranged from £3.38m to £11.25m.
The government is pushing to take away legal assistance from thousands of injured people. The audacity of this is staggering – the changes to the small claims limit that will only mean more profit for the insurers and leave people injured at work or on the roads out in the cold.
It is simply unacceptable.