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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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