Ministry of Justice Reforms 2013…

Year on year insurance premiums have been rising on

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

‘referral fees’ or most of all the ‘compensation

culture’ we have found ourselves in.

The Ministry of Justice Reforms are the most

significant overhaul to the personal injuries legal

framework, in England and Wales, in over a decade

and seek to change this.

In order to understand the change we have

to first understand the current process. In

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.

What is changing?

The £10,000 limit has been increased to

£25,000 for Motor, Employers Liability &

Public Liability personal injury claims

The prescribed timeframes have been cut

There will be fixed solicitor fees

One way cost shifting (all parties pay their

own legal costs)

A ban on ‘success fees’

After The Event (ATE) expenses are no longer

recoverable

The practice of paying ‘Referral Fees’ for

providing potential claimants details to

solicitors and Claims Management Companies

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

1

April 2013

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.

When is this happening?

The implementation of these reforms will be

staggered as follows:

2nd April 2013

Introduction of qualified one way costing

Referral fees will be banned

ATE expenses will no longer be recoverable

Success Fees will be banned

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

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;

Fixed/reduced legal costs, and

Decreased premium spend due to the overall

decreased claim spend

Operationally you will see the most dramatic change,

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

21 days to respond to a letter notifying a personal

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

within 1 day.

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