Threshold for Small Claims Set to Increase in Plans to Cut Whiplash Claims

Earlier this week, Chris Grayling, the coalition Justice Secretary, opened a four-month consultation aimed at bringing down the number of whiplash claims brought in England and Wales.

In recent years, the road traffic accident (RTA) claims system has been bogged down with fraudulent or exaggerated injury claims which have cost road users money. According to insurance industry experts, bogus whiplash compensation claims cost insurance companies £2bn every year and this is reflected in the soaring premiums paid by motorists.

By increasing the limit for small claims from £1000 to £5000, the Ministry of Justice (MoJ) hopes to reduce the number of unwelcome claims and also reduce the role of injury solicitors to more serious claims.

Mr Grayling admitted that in doing so, some would-be claimants will find it difficult to achieve justice becoming unable to contest unreasonable insurance offers or claim the deserved compensation payouts. However, he insisted that the proposals will cut down on the “abuse” of the system. You can almost hear the cheers from our insurance companies at hearing that claimants, in small claims up to £5k will be without legal advice of their own – in contrast to the insurance companies, who will turn up with specialist compensation claim solicitors – hardly a level playing field.

As it stands, claimants whiplash cases are either diagnosed by their family doctor or an expert recommended by their solicitor. These medical experts receive a £195 fee and according to the MoJ this gives too many people special interests in pursuing whiplash claims.

As systems of accreditations or private contractors to assess whiplash claims will therefore be discussed doing the consultation as the MoJ seeks to ensure that only genuine cases receive damages.

The consultation will also consider increasing the limit for all small RTA personal injury claims to £5000 which would include whiplash claims, rather than increasing the limit for whiplash claims alone to £5000.

Interestingly, two previous consultations in 2007 and 2009 found that increasing the small claims limit was not necessary. However, the MoJ believes that claims can be dealt with more straightforwardly using the small claims track, meaning that cases requiring personal injury solicitors will only be those paying out over £5000.

When the consultation closes in March, its proposals look likely to be followed by changes to the RTA electronic portal making it more difficult to pursue small claims using the portal, but easier to pursue claims up to £25,000