So here we go again. The Ministry of
Insurance Companies Justice has issued another consultation document, this time regarding their proposal to raise the Small Claims Court limit for some PI claims.
Now if the Government hadn’t already rejected a rise less than a year ago, perhaps I wouldn’t be so sceptical about this but I am afraid to me, and countless others, this just goes to show how close the Insurance industry has managed to get to the decision makers at the MoJ.
A further indication that there has been some very successful lobbying going on are the three proposals themselves. The MoJ has given respondents 3 options:
1. No change to the small claims court limit
2. Raise it to £5,000 for all Road Traffic Accidents
3. Raise it to £5,000 only for whiplash claims suffered in a Road Traffic Accident.
So why options 2 and 3? Why limit the change to RTA claims? Are those injuries less serious or the victims less worthy than say someone injured at work? What has option 3 got to do with anything? Is a whiplash claim less serious than an injured leg? Is a whiplash claim somehow easier to deal with and so victims won’t need legal representation? What happens if there are multiple injuries including whiplash?
This is just unbelievable. It is quite clear that the Government has listened to the insurance industry and has ignored everyone else.
I will stick my neck out here and predict the results of the consultation. There will be loads of replies but the summary document produced by the MoJ will refer mainly to data provided by the defendant insurance industry. The MoJ’s summary will be produced somewhat quickly following the closure of the consultation period (I am guessing we will be seeing it within 2 weeks of the March deadline) and will conclude that the public will be well looked after using the small claims court (and Insurers can be trusted to pay out the right compensation). The MoJ will therefore decide to raise the limit to £5,000 for all Road Traffic Accident claims to take effect in October 2013.
I will now also predict the results of all of this:
1. The Small Claims Court will become swamped with claimants who will be ‘represented’ by claims management companies in return for a cut of the damages. There will be an outcry from The Law Society and APIL etc but they will be ignored. No one will be paying referral fees so no law will be broken. This is will be a brilliant way for Referrers to remain in business.
2. Car Insurance premiums will drop by an average of £20. The predicted £90 reduction which has been banded round by insurance companies will turn out to be incorrect. After all, the insurance industry will have a large hole in their finances following the ban in referral fees and so the lower claim payouts will help them to maintain (or who knows increase) profit levels. Additional costs will also be found with the waters muddied by, I don’t know, flooding claims or similar. The £20 reduction won’t take effect for 2 or 3 years anyway due to the ‘backlog’ of claims.
3. The Government will sympathise with the Insurance industry who will hold further talks at Downing Street over tea and cakes. The invitations to this shindig for representatives of claimants will be lost in the post.
That’s it. I am off to punch a wall.