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Jack Straw's Motor Insurance
Regulation Bill proposals
15 Sep 2011
by Pat Hoyle
Labour MP and former
Justice Secretary, Jack Straw, has this week provided more detail on
his proposed Motor Insurance Regulation Bill which he introduced in a
ten minute rule debate on 13 September in the House of Commons.
The
ten minute rule motion was passed, allowing him to introduce his Bill
to Parliament on January 20, 2012.
The
five key provisions of his Bill are as follows:
- to render it a
criminal offence to solicit, offer, or pay referral fees in relation to
any bodily injury claim resulting from a road traffic accident (RTA)
- to require
objective evidence for whiplash claims, thereby making it harder for
have-a-go fraudsters to make a successful whiplash claim
- to half the
fixed legal fee (currently £1,200) for claims pursued through the
electronic RTA claims portal system which currently processes claims
worth less than £10,000 although the Government is proposing to
raise this ceiling by up to £40,000
- to prevent
insurers isolating risk on the basis of small areas of high
risk, based on postcodes, making it unlawful to use any geographic area
smaller than a region for risk calculation
- to bring
forward provisions in the Data Protection Act that prevent the 'selling
on' of accident victim details.
In his presentation
to Parliament, Mr Straw spoke of a "claims industry" in which the
personal information of people injured in traffic accidents "is traded
like a commodity" between claims management firms, personal injury
lawyers, credit car hire companies and vehicle recovery companies.
He
was especially vitriolic with regard to the presumed high prevalence of
whiplash fakers, referring to whiplash in these cases as "a profitable
invention of the human imagination, undiagnosable except by third-rate
doctors in the pay of claims management companies or the personal
injury lawyers".
He
also spoke of "exorbitant profits" in personal injury cases (handled by
the MoJ claims portal) that made it possible for injury lawyers to pay
hefty referral fees and up-front payments to those that were willing to
pursue injury claims with them.
The
lawyers would, of course, argue that they only pursue cases that they
consider meritorious although cynics would suggest that this is better
put as those they could win which, according to the insurance industry,
is the vast majority of alleged whiplash cases whether genuine or not.
Injury
lawyers have already been publically critical of Mr Straw's proposals
with Deborah Evans, Chief Executive of the Association of Personal
Injury Lawyers (APIL) commenting: "Jack Straw is deluded if he
thinks a lawyer could possibly give advice to an injured person for the
price of £100. In all cases the solicitor needs to talk to the
client to understand the symptoms, and the impact of the injury on the
client's life, as well as obtaining a medical report. These were the
factors taken into account when fixed costs for road traffic accidents
were agreed with the insurance industry only last year."
That
an experienced politician is raising the very issues that need to be
addressed to reduce the cost of car insurance
is to be welcomed; the more so if a Bill could result from his
practical proposals. That this initiative has not come from the
Government itself should not represent a major impediment to the
progress of Mr Straw's Bill through the House given that the issues he
raises are not politically partisan.
We
shall see.
Related articles:
The
impact of Jack Straw's Motor Insurance Regulation Bill
Jack Straw:
Car Insurance 'parasites' cost motorists £2bn
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