Civil Liability Bill [Lords] — House of Commons, 2018-09-04
Topic: Mixed Topics
Gareth Thomas (Labour, Centre-left): If the speech by the hon. Member for Croydon South (Chris Philp) was a bid to get on to the Bill Committee, it was an excellent one, but I fear that I cannot agree with any of the substantive points that he made. As I see it, the Bill will simply increase the profits of insurance companies while reducing the compensation available for those injured in road traffic accidents. Hidden behind the Bill is an attack on all injured people through an increase in the small claims limit. I fear that, as my hon. Friend the Member for Jarrow (Mr Hepburn) implied, it is a classic Conservative Bill that uses the pretence that a serious problem exists even though there is little independent evidence that it does. In practice, it will achieve a reduction in the rights of ordinary working people In this case, the alleged serious problem is with whiplash claims, yet the evidence that a substantive problem actually exists is, to be generous, questionable. It is true that there has been a storm of stories suggesting that we have a whiplash injury crisis, but the number of whiplash claims registered with the Government’s own compensation recovery unit has fallen consistently in the past six years. Indeed, it has fallen by 41% since 2010-11. Even when whiplash statistics are combined with the number of injuries registered by insurers with the compensation recovery unit as neck and back injuries, there has been a significant fall of 11% since 2011-12. The claim of an epidemic of fraudulent claims is a popular canard that has been repeated many times by Conservative Members today, yet the Government’s own report from Lord Young after 13 years of a Labour Government concluded that a compensation culture was a perception, not a reality. As my hon. Friend the Member for Cardiff Central (Jo Stevens) noted, the Association of British Insurers’ own data in 2016 showed that a tiny fraction— just 0.17%—of all motor claims were proven to be fraudulent Like every car owner and insurance buyer, I would welcome genuine measures to prevent fraud. Greater punishments for convicted personal injury fraudsters and, as my hon. Friend the Member for Lewisham West and Penge (Ellie Reeves) said, an outright ban on cold calling from dubious claims management companies would do more to prevent fraud than the measures in this Bill. Indeed, the Bill and the package of which it is a part appear to start from the position that every claimant is a fraudster or a charlatan trying to make a quick buck from a car accident. It will mean a substantial reduction in compensation for all claimants, including those with genuine injuries who make up the vast majority of claimants. As for the claim that these measures are going to lead to a substantial reduction in the cost of motor insurance, I think we are entitled to be sceptical. Reforms in 2013 have provided insurance companies with a windfall of £8 billion over the past five years, yet we have all seen premiums rise and rise again. According to the Association of British Insurers’ own figures, average premiums have increased by almost 17% each year between 2013 and 2017. I appreciate that Ministers have been written a letter by some insurers promising that if the Bill passes they will cut their premiums. The Secretary of State has claimed that there will be an amendment that will hold insurers’ feet to the fire. Well, that amendment could and should have been published ahead of this debate. I struggle to think of a single measure that Ministers could add to the Bill that would guarantee that premiums were cut. Perhaps that is why such an amendment has not been published today. Perhaps the only measure that might work would be a legal cap on motor insurance premiums. There would of course have to be a bit of consultation first, and I appreciate that those of us who sat through debates about an energy price cap may be sceptical given that that has not stopped energy bills rising either. At the moment, however, this Bill looks like it will amount to a £1 billion boon to some very big companies The Bill proposes a new tariff-based system which, conveniently for insurance companies, reduces the average compensation paid out to injured victims of road traffic accidents. In 2015, the average compensation for a whiplash claim with an injury duration of around six months was £1,850. Under this Bill, compensation for the same injury will be reduced to £450—a reduction of almost 80%. To remedy that supposed overcompensation for the genuinely injured, the Government want to make it even harder to bring a claim by forcing increased use of the small claims track, where a claimant’s legal costs are not recoverable. That would see injuries such as facial scarring, fractured ribs and whiplash classed as small claims. As the trade unions and the Law Society have all set out, it amounts to a huge inequality of arms in the courts system for those who have experienced road traffic accidents. Individuals deprived of legal advice will have no choice but to act for themselves, while the insurance companies defending claims will still have huge resources to pay for lawyers to take on the unrepresented Until now, it has been left to independent judges to decide on levels of compensation. This Bill stifles that very independence and replaces the flexibility of our judges to appraise each individual case of injury on the roads independently and on merit with a tariff that reduces value for all of us who pay motor insurance premiums. If the tariff system as proposed in the Bill is introduced, it may well open the door to the introduction of similar tariff-based systems in any area that provides a lucrative saving to the insurance industry. Notably, Lord Woolf noted the dangers of the tariff model being applied to holiday claims, industrial deafness claims and so on. The Bill benefits the insurance industry and will not lead to lower motor insurance premiums. I hope that it will be substantially amended or defeated.