Ministry of Justice Reforms 2013

1

April 2013

Ministry of Justice Reforms 2013…

What is changing?

The £10,000 limit has been increased to

Year on year insurance premiums have been rising on

£25,000 for Motor, Employers Liability &

some policies, due to high legal fees, the practice of

Public Liability personal injury claims

‘referral fees’ or most of all the ‘compensation

The prescribed timeframes have been cut

culture’ we have found ourselves in.

There will be fixed solicitor fees One way cost shifting (all parties pay their

The Ministry of Justice Reforms are the most

own legal costs)

significant overhaul to the personal injuries legal

A ban on ‘success fees’

framework, in England and Wales, in over a decade

After The Event (ATE) expenses are no longer

and seek to change this.

recoverable The practice of paying ‘Referral Fees’ for

In order to understand the change we have

providing potential claimants details to

to first understand the current process. In

solicitors and Claims Management Companies

2010 the government introduced a system where legal professionals had to report all Road Traffic Accident personal injury claims, between £1,000 – and an upper limit of £10,000, via an online portal. The main purpose of this was to speed up claim timeframes and avoid large legal costs.

will be banned There will be a 10% increase on the general damage awards

Why is it changing?

The current regime, with recoverable success fees and after the event insurance premiums, allows claims to be pursued with no real financial risk to claimants and

with the threat of excessive costs to the defendant.

The intention is that the reforms will make legal costs more proportionate to the award and that the cost of an action will be borne by all parties to it.

What does this mean to me?

These reforms will have both operational and

financial impacts on you and your business.

They will save money by;

When is this happening?

Fixed/reduced legal costs, and

The implementation of these reforms will be

Decreased premium spend due to the overall

staggered as follows:

decreased claim spend

2nd April 2013

Operationally you will see the most dramatic change,

Introduction of qualified one way costing

which is why we are here to help. Currently you have

Referral fees will be banned

21 days to respond to a letter notifying a personal

ATE expenses will no longer be recoverable

injury claim...it is understood that this is now required

Success Fees will be banned

within 1 day.

10% increase on general damage awards

End of April 2013 Introduction of reduced fixed recoverable costs in the portal will apply to motor personal injury claims up to £10,000.

1ST August 2013 The new protocols extending the portal scheme to £25,000 and to Employers and Public Liability claims Introduction of all other fixed and reduced solicitor fees, both in and outside the portal

Currently insurers have 3 months to respond on liability claims…..this now has been decreased to 30

business days for (Employers Liability) and 40 business days for (Public Liability).

So what do we need to do?

We need to work efficiently together to avoid delays, so that we quickly and accurately notify insurers of new claims but more specifically you need to; Notify actual or potential claims to us immediately Ensure information is complete and accurate Provide all supporting documentation within shorter timescales