My Lords, I declare the interests set out in the register, including in particular my partnership within the global legal firm, DAC Beachcroft, as well as my other entries. The amendments in my name are designed to promote responsible behaviour by motor insurers in order to focus on getting people better rather than by paying them cash which is not then used for treatment.
In putting these amendments together, and in this speech in particular, I have borrowed substantially from a very good report published last July by the insurers, Aviva, called Road to Reform, which I commend to the House. As your Lordships know, for many years I have urged that we should adopt a rehabilitation system of this kind for minor injury claims. It chimes very well with the Government’s agenda of people taking responsibility for themselves, so we should embrace the concept of providing treatment for those who need it rather than compensation and legal costs for what has now become hundreds of thousands of claimants every year, many of whom do not need treatment at all. That is what lay behind the amendment that I successfully moved during the passage of the Compensation Act 2006, which is now Section 2 of that Act:
“An apology, an offer of treatment or other redress, shall not of itself amount to an admission of negligence or breach of statutory duty”.
In these amendments I seek to go one stage further by substituting treatment for payment in low-value cases. We are not talking about serious injuries here, but about temporary distress or discomfort which leaves no lasting effect. According to Aviva’s research, 98% of drivers want further costs taken out of the system to keep motor insurance premiums affordable. We should therefore encourage people with genuine minor injuries simply to make a claim to repair their body rather than for cash. After all, we get the car repaired—why not the genuine minor injury as well? By doing that, we will effectively look after those who need treatment and at the same time will tackle those who seek to abuse the system.
UK motorists do not have the weakest necks in Europe; we have a whiplash culture because as a society we have not taken the same stance as other European countries to avoid these claims in the first place. In other countries you have to prove a level or percentage of disability before you can even make a claim. Aviva’s data shows, for instance, that 94% of all personal injury claims for a UK motor accident are for minor whiplash injuries, while in France it is estimated that whiplash accounts for just 3% of personal injury claims.
I hope that I have taken the House with me so far. How, then, do we turn this into meaningful legislation? These amendments propose a threshold of 15% loss of function or less. Doctors will make better sense of that than I can, but I understand that a similar measure has been used in New South Wales since 2002. In case it is felt that we have little to learn from our Australian friends either on the sporting field or off it, the DWP also uses a threshold of 14% for payment of industrial injuries disablement benefit, which is paid only for lasting conditions. In truth, I am not necessarily wedded to the 15% figure as long as there is a clear dividing line between minor road traffic injuries not deserving of compensation if treatment can be and is made available at insurers’ expense, and more significant injuries where compensation can be properly targeted. Aviva estimates that if the simple measure in this amendment was adopted, with insurers still covering the cost of treatment for those who genuinely need it, that could save £32 on everybody’s premiums.
I have spoken before about the other cause for concern behind this approach. As the Association of British Insurers and the British Insurance Brokers’ Association, which I have the honour to chair, put it, we have become the “whiplash capital of Europe”. Fraudsters know it and they are exploiting the ease of our current compensation system. There has been a growing rise in the frequency of whiplash claims and a significant increase in the number of so-called “crash for cash” scams faced by insurers. Particularly troubling is the increase in the number of induced accidents where fraudsters deliberately target innocent motorists to cause an accident. According to Aviva, these increased by 51% last year, and that has to be a cause of major concern.
I am not sure that I have yet persuaded the noble Lord opposite but I am told by my noble friend Lord Henley that to persuade him I just have to quote from Dickens. I am not sure whether that is right—
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