Autumn Statement17 Dec 2015 08:46
The insurers clearly have the ear of the Government - raising the small claims limited from April 2017 will save motor insurers more than a billion a year - see article below from Kerry Underwood - solicitor. This should double DLGs motor profit in 2018 - will there be a reduction in premiums? Don't bet on it! This is massive news - which the market does not yet understand focusing on premium rather than claims/claim inflation. My bold estimate is a billion pound profit for 2018 - which would mean 600m in divi - approx. 45p per share divi = 10.8% yield on current share price - in reality a 6% yield by 2018 would mean a share price of about £7.20. Good for share holders - not so good for those who are injured!
The Autumn Statement to the House of Commons this afternoon contained an announcement that the small claims limit for all personal injury claims will be raised from £1,000 to £5,000. No date has been set but presumably it will be April 2016. It should be noted that this was a financial statement by the Chancellor of the Exchequer for the coming financial year, so expect implementation sooner rather than later.
Courts will be prohibited from awarding general damages for pain, suffering and loss of amenity in minor soft tissue injuries, but “Claimants will still be entitled to claim for “special damages” including treatment for any injury if required and any loss of earnings.” So, an injured person will have to prove their claim and get medical evidence accordingly, but will then get no general damages for those proven injuries.
In reality that means that the small claims limit for whiplash will be £10,000 as it is only general damages which has the lower threshold, currently £1,000 but to be raised to £5,000. Absent general damages the small claims limit is and will remain £10,000.
The proposals are at page 125 at section 3.103 and read, in full:
Insurance
3.103 Motor insurance – The government will bring forward measures to reduce the excessive costs arising from unnecessary whiplash claims, and expects savings of £40 to £50 per motor insurance policy to be passed onto customers, including by:
removing the right to general damages for minor soft tissue injuries;
removing legal costs by transferring personal injury claims of up to £5,000 to the small claims court.
Claimants will still be entitled to claim for “special damages” including treatment for any injury if required and any loss of earnings.”
The raising of the small claims limit does not require primary legislation. My view is that the removal of the courts’ power to compensate for a tort does require an Act of Parliament.
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