Justice secretary Liz Truss has shelved plans for a major overhaul of the personal injury sector, the Gazette has learned.
In an email seen by the Gazette, James Dalton, director of general insurance policy at the Association of British Insurers ABI), states today that the secretary of state has decided not to proceed with reforms 'at the moment'.
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It is understood that justice minister Sir Oliver Heald has pulled out of speaking next week’s ABI conference at short notice as the Ministry of Justice backs away from reforms proposed last year by George Osborne.
But the MoJ has insisted it is still committed to reducing the number and cost of whiplash claims, and is still preparing potential legislation.
A Ministry of Justice spokesperson said: ‘The number and cost of whiplash claims remains too high, increasing premiums for ordinary motorists.
‘We remain committed to tackling this issue, and will set out our plans in due course.’
The ABI today launches a fresh media campaign to persuade other Cabinet members – notably the prime minister and chancellor – that changes to whiplash compensation are urgently needed.
In the email, Dalton stresses that the decision not to proceed was taken by the MoJ ‘in isolation’ but that the appetite to push ahead remains ‘very strong’ within the Treasury and among a number of influential MPs.
In a press release due to be sent today, the ABI will say that the MoJ decision will see ‘ambulance-chasers laughing all the way to the bank’.
The lobbying body will argue that every day of delay costs honest motorists across the UK almost £3m as this country maintains ‘one of the most abused systems in Europe’.
The MoJ has yet to publicly comment on insurers’ concerns, but it is noticeable that none of the new ministerial team appointed in July has even mentioned personal injury reform as a priority.
The proposals were floated last November by then-chancellor George Osborne in his autumn statement, and it is understood the MoJ was taken by surprise at the extent of Osborne’s plans, which included scrapping compensation for soft tissue injuries and raising the small claims limit to £5,000.
The Association of Personal Injury Lawyers has welcomed news the MoJ is backing away from Osborne’s proposals, but warned there is ‘no room for complacency’.
APIL president Neil Sugarman said: ‘We will continue to argue that any reforms to the personal injury process must be based on independent evidence, rather than insurance industry rhetoric.’
Donna Scully, partner at claimant firm Carpenters and former chair of the Motor Accident Solicitors Society said now is the time for the whole sector to set aside its differences and work constructively together.
She added: ‘We need to work on implementing the fraud task force recommendations, make MedCo work more effectively, improve the regulation of CMCs and talk about other areas where things can be improved to support genuine customers.’
Andrew Twambley, spokesperson for campaign group Access to Justice, said: ‘The MoJ decision not to proceed with reforms to personal injury is a victory for common sense.
‘There was no evidence that the reforms would work, and it was not clear whether customers would benefit in the form of lower premiums. Moreover, if passed into law, the reforms would have eroded the rights of millions of people access to gain redress for their injuries.’
Sue Brown, Chair of MASS said: ‘We are of course pleased that MoJ are not pressing ahead immediately with its proposed package of damaging reforms that would have had a significant detrimental effect on the rights of the injured victims of motor accidents.
‘However we must not allow this news to interfere with the work that is already under way to address some significant problems in our sector.
‘Solicitors and insurers need to work together with government to address the scourge of fraud, prosecuting identified fraudsters and cracking down on cold calling.’
Insurers gloomy as Truss ditches whiplash reform
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