The government risks damaging access to justice through its plan to raise the small claims limit in personal injury from £1,000 to £5,000, MPs have warned.
They also called on insurers to “immediately put their house in order and end practices which encourage fraud and exaggeration” – particularly settling claims without medical evidence.
Issuing the findings of its inquiry into whiplash, the transport select committee said that if insurers did not do this, “the government should take steps to protect motorists”.
The government also needs to explain how it will monitor that insurers honour their commitment to reduce premiums as a result of lower claims costs.
The committee highlighted the lack of authoritative data on the scale of fraudulent or exaggerated claims and criticised the government’s failure to give “even an estimate of the comparative scale of the problem” before bringing forward its reforms.
It also expressed disappointment that the legal profession had not been invited to last year’s whiplash summit hosted by the Prime Minister.
Its report dismissed the suggestion that whiplash does not exist but “accepted that some of the increase in the number of claims will have been due, in the main, to fraud or exaggeration, even if it is not possible to give even a rough estimate of the problem”.
While seeing “good arguments” for and against raising the small claims limit, the MPs concluded that on balance they did not support the proposal.
“We believe that access to justice is likely to be impaired, particularly for people who do not feel confident to represent themselves in what will seem to some to be a complex and intimidating process. Insurers will use legal professionals to contest claims, which will add to this problem.
“It would be financially difficult for many solicitors to assist litigants fighting personal injury claims using the small claims procedure, given the limited fees available. However, we are concerned that some claims management firms might find a way to enter the process, fuelling another boom in their activities.”
The committee was also concerned that using the small claims track would prove counterproductive in discouraging fraud and exaggeration as a claim where that was alleged would be transferred to the fast-track.
Further, the MPs said the government needs to understand better the impact of the RTA portal on claims and costs before increasing the limit.
The committee was far more supportive of the other limb of the government’s reform proposals: setting up independent medical panels. It said this should go further by reducing the three-year limitation period – given that most whiplash symptoms usually emerge within a few days of the accident and do not last for more than a year – and requiring more information in support of a claim.
This could be proof that the claimant saw a medical practitioner shortly after the accident or evidence of the impact of the injury on everyday life. “There should be a presumption against accepting claims where such information is not provided,” the committee said.
Medical experts should be provided with information about the accident and the claimant’s medical records, it added. “Reports prepared without this information are likely to be of very limited value.”
Other recommendations included considering whether the right to compensation should be limited where it can be shown that a claim is “grossly exaggerated” and for the government to encourage greater data sharing between insurers and lawyers.