BIBA Welcomes Civil Liability Bill Proposals

BIBA (The British Insurance Brokers Association) today welcomes the bringing of the Civil Liability Bill before Parliament.

The Ministry of Justice (MOJ) today confirmed that long awaited legislation to help genuine injury claims be settled fairly will be brought before Parliament today.  Through its participation on the Insurance Fraud Taskforce (IFT), BIBA is fully cognisant of the impact of fraudulent whiplash claims on the provision of insurance and looks forward to measures to combat this, while ensuring those genuinely injured receive the fair compensation and care they need.

The measures proposed will ensure fairness to both motorists and claimants by:

·         setting fixed amounts of compensation for whiplash claims; and

·         banning the practice of seeking or offering to settle whiplash claims without medical evidence.

The Bill will also address the problems that arose by the way in which the Personal Injury Discount Rate (Ogden Tables) is set. The rate allows a discount to be given in the claim settlement to account for investment income in lump-sum payments to ensure that claimants are neither under, nor over compensated.

In March 2017 the change in rate from 2.5% to 0.75% – a rate which assumes claimants lose rather than gain income from investing a lump sum – did not reflect real investment decisions. This change caused reactive increases in premiums, evidenced in the BIBA/Acturis Premium Index, which showed a 10.7% increase in car insurance premiums during the final quarter of 2017 compared to the same period in 2016. Not only this but it importantly meant that for many businesses their liability limits of indemnity became potentially insufficient to cover higher claims awards, leaving them at risk of under-insurance.

In the consultation document on the rate, the MOJ has confirmed that the means of calculating insurance injury awards “should put claimants in the same financial position they would have been in had they not been injured – they should receive neither more nor less than full compensation.” and confirmed that the Civil Liability Bill, introduced today, will create “a fairer and better system while still providing full compensation”.

This will be achieved by:

·         setting the rate with reference to ‘low risk’ rather than ‘very low risk’ investments as at present, better reflecting evidence of the actual investment habits of claimants;

·         establishing a regular review of the rate, the first within 90 days of the legislation coming into force and at least every three years thereafter;

·         establishing an independent expert panel Chaired by the Government Actuary to advise the Lord Chancellor on the setting of the rate.

Steve White, BIBA Chief Executive said: “The bringing forward of this Bill covering both whiplash fraud and the way the discount rate is calculated is clear evidence of Government listening to the carefully considered concerns from the insurance industry and taking forward recommendations in our Manifesto.”

Graeme Trudgill, BIBA Executive Director said: “BIBA welcomes this legislation which aims to bring about fair, 100% compensation for personal injury claims and should help millions of policyholders by reducing the pressure on the cost of insurance. The legislation is also needed to assist with the unintended consequence of under-insurance, created when the discount rate changed so significantly a year ago.”