If only the Government had passed the 'Law of Unintended Consequences’ they would actually have something to shout about.

Perhaps I am being cynical, but much of what Government does seems to go wrong, or produce negative unintended consequences.

And that maybe the case with the 2013 Personal Injury Reforms introduced with the aim of streamlining the claims system and reducing legal costs so they are proportionate to the claim (in other words stopping the claims management industry milking the system).

Laudable aims, but already some unintended consequences are emerging and it seems to be yet more legislation to fix the unintended consequences of what has gone before and before and before…

The personal injury and claims management industries are a mess, but you cannot just blame the legislators, as has been said here on numerous occasions in the past, insurer’s inability to deal with personal injury claimants fairly and speedily over the years has been a major factor.

It hasn’t all been about insurers, changes have been made over the years to give access for all to wider legal remedies. Solicitors were allowed to advertise back in1984 in the hope that competition would reduce fees, but who could have foreseen solicitors giving away free iPads to sign up accident victims (which has just been banned)?

But without insurer unfairness, would all the changes have been necessary? Would we have seen the introduction of ‘no win no fee’ arrangements, referral fees or the emergence of a claims industry, which arguably has not only fuelled the compensation culture, but also developed the abuse of after accident car hire and repair costs (currently the subject of a Competition Commission investigation).

The 2013 Act was partly to reform ‘no win no fee’ arrangements first introduced in 1995 and modified in 2000 and included the banning of referral fees, making success fees irrecoverable from the losing party, as well as tightening the timeframes with which insurers must comply if claims are to stay within the ‘claim portal’ (the process for streamlining claims where set legal fees apply).

The insurer’s perspective is that it is probably still too soon to give a verdict on the overall net effect; damages are up, but offset by some reduction in costs if they improve their claims handling to benefit from the portal. However, the worry is they have seen a tendency for smaller claims management firms to disappear and be replaced by larger ‘claimants supermarkets’ who are very savvy with the claims process, pushing small claims further through the ‘portal’ to maximise fees and a surprising number of whiplash claimants are now developing psychiatric problems.
Those on the legal and claims management side will have a different view, but should we be surprised by any of this? Claims are big business with vested interests on all sides and some of those involved seemingly intent on playing the system, perhaps reflecting wider changes in attitudes and society over the years.

Who knows what will come next, it is a complex problem; probably more changes, unintended consequences and then more changes and I doubt in my lifetime I will ever hear a minister introducing a new bill with ‘it may work but…’