Gary Barker is Claims Director of ERS, a specialist motor insurer that covers every type of vehicle and distributes solely through brokers.
1. Do you think the reforms will have the desired effect on reducing the cost of claims?
Yes, the tariff-based system means that whiplash claims will be worth considerably less post-reform. What is not clear is how the Bill will impact the number of claims that are made. The Government assumes that half of all whiplash claims made where the prognosis is for a duration of 6 months or less will simply disappear, that feels very optimistic to me.
2. What are the potential unintended consequences?
A lot of money is made from Personal Injury claims and the hunger for that cash will not disappear because the law has changed. Expect a sharp increase in non-whiplash personal injuries that fall out of the portal and the tariff e.g. tinnitus claims, psychological injuries etc. Inflated third party repair, total loss and hire costs. The Litigant in Person portal appears to be on track but we know already from the PPI scandal that many consumers are unwilling to bring claims themselves and instead seek help from Claims Companies; I think it probable that the same will happen in motor and it is difficult to know what the consequences of that will be. The potential for fraud may increase.
3. How will this impact the consumer?
The anticipated benefit for the consumer of a reduced premium could easily be countered by inflation elsewhere in the market.
4. What impact will it have on Legal Expenses insurance products and how these are distributed?
There is no doubt that LEI will become more expensive and will likely need to become more like LEI of the ‘old days’. Policyholders with injuries will expect proper legal representation and that their LEI cover funds it.
5. From your perspective in their current form, are the reforms a good thing or not?
The reforms are more far-reaching than I ever imagined we would see in our market and the Government should be commended. However, the advantage we gain could soon be lessened in the hyper-competitive UK motor market and the potential for some of the unintended consequences I have described is real.