The government wants insurers to end the practice of making pre-med offers to settle claims, justice secretary Chris Grayling said today.
The Ministry of Justice (MoJ) will also be talking to the Solicitors Regulation Authority about its recent decision not to ban solicitors from offering cash inducements to potential claimants.
The end of pre-med offers has been a central plank of claimant lawyers’ counter-proposals to cut whiplash fraud and comes on top of today’s decision to defer any rise in the small claims limit.
Mr Grayling identified pre-med offers as one of the practices “which can contribute to the inflated number of whiplash claims”.
He added: “We also want insurers to share more of their data on suspected fraudulent or exaggerated claims with claimant lawyers, and we want claimant lawyers to carry out more effective checks on their potential clients before taking on claims.”
Releasing the detail of its response to the whiplash consultation, to which there were 292 submissions, the MoJ said it was “attracted to introducing a rule to ensure that a medical examination and report is completed before a claim can proceed”.
The exact proposal is being developed, but the MoJ said this should provide more certainty to the costs of medical reports and provide both parties with the information they require to make an accurate assessment of the treatment and/or compensation required to settle the claim.
“This should also mean an end to the practice of pre-medical offers to settle, which can lead to unmeritorious or exaggerated claims being made by some claimants, including fraudulent claims by uninjured claimants, and reduce the risk of under-settlement for the genuinely injured.”
Other aspects of ongoing work include developing accurate baseline data on the number of neck and back whiplash and other soft tissue injuries, which will help identify and classify fraudulent or exaggerated whiplash claims.
Recognising that the data on fraudulent claims is not robust, the MoJ said: “This will enable us to validate the estimates made by those in the personal injury sector and ensure the public are aware of the true scale and nature of the problem.”
On inducements, the consultation response noted that the MoJ banned claims management companies from offering cash inducements to consumers to make claims on 1 April 2013, and that both the Association of Personal Injury Lawyers and Motor Accident Solicitors Society have called for this ban to be extended to cover solicitors.
“The government will consider this issue with the Solicitors Regulation Authority,” it said.
A further measure will be to look at ways to “increase transparency to the consumer in relation to the financial and other links between insurers and other companies which may have an interest in a claim”.
The response document also outlined more detail about the decision on the small claims limit, and emphasised that it sees “good arguments” for extending the small claims limit generally for personal injury claims.
But on balance it was persuaded that it would not be appropriate to increase the limit for RTA-related personal injury at this stage.
It said: “The government accepts that currently extending the small claims limit may have an adverse effect on genuine victims of RTA injuries. In particular, the government will seek to ensure that adequate safeguards are developed to protect genuine claimants from any detrimental effects relating to access to justice or to the under-settling of claims from any future rise in the limit.
“The government is also keen to ensure that raising the small claims limit does not lead to any unscrupulous CMCs taking advantage of any resulting increase in self-representing litigants and entering the market to offer advice services which might not be in claimants’ best interests.”