Insurers trying to make fools of Government over whiplash savings, argues CILEx

03 May 2019

Insurers trying to make fools of Government over whiplash savings, argues CILEx                                                                     

Insurers are trying to make fools of the Government by claiming savings from the personal injury reforms enacted by the Civil Liability Act are already being passed on to consumers before they have even been implemented, the Chartered Institute of Legal Executives (CILEx) has said.

CILEx has voiced concerns that this narrative may be used to justify a failure to pass future savings on, “making a mockery of the promises the Government made during the Act’s passage through Parliament”.

CILEx is also arguing for stronger measures to force insurers to publish detailed data on the impact of reforms on their finances so that the true savings after implementation can be understood and seen to be reflected in insurance premiums.

In its response to HM Treasury’s consultation on how insurers will report on the impact of the reforms on their businesses, CILEx argued that the reported drop in premiums since the Act’s passing only showed that the reforms were unnecessary in the first place, and called for “a direct causal link to be drawn between the Act’s implemented reforms and reductions in premiums, independent of other factors”.

CILEx is against the proposals to allow firms to self-determine whether they fall within the scope of the reporting requirements, instead recommending that all insurers be automatically considered unless they are able to provide the Financial Conduct Authority (FCA) with clear evidence that they do not meet the thresholds set.  

If the government does go ahead with self-reporting, the FCA must be clear on what punitive measures will be applied to those who declare wrongly. 

In its submission, CILEx proposed that insurers disclose complete data sets for premiums and settlements, not just averages alone, so that the impact of the reforms could be properly understood.  

It also suggests mandating that insurers provide data on their legal costs and whether reductions fall in line with the loss of legal support for injured persons. One of the central points of contention around the passage of the Civil Liability Act was that unrepresented claimants would now need to go up against lawyer-represented insurers. Regulations requiring insurers to disclose their spending on legal costs in defending claims, both for external lawyers and in-house legal costs, would allow for an assessment of whether the reforms have resulted in an inequality of arms between defendants and claimants in personal injury cases.

CILEx President Phillip Sherwood says: “Insurance leaders are claiming savings have been made before reforms have been enacted, raising the question of whether the reforms were even needed in the first place. We have real concerns that insurers will use this narrative to avoid lowering premiums further once the reforms come into force. 

“The purpose of the proposed financial reports is to understand the impact the new reforms are having and whether the promised reductions in insurance premiums are actually being passed on to the public. That means that we need to make sure that insurers are reporting detailed data, not just averages, and are not able to side-step scrutiny by failing to opt in. Both insurers, and the public, deserve to know what penalty would be in store for those who failed to declare.”

 

ENDS

For further information, please contact:

Kerry Jack, Black Letter Communications on 07525 756 599 or email:

kerry.jack@blacklettercommunications.co.uk

Louise Eckersley, Black Letter Communications on 0203 567 1208 or email:

louise.eckersley@blacklettercommunications.co.uk

Notes to Editors:

The Chartered Institute of Legal Executives (CILEx) is one of the three main professional bodies covering the legal profession in England and Wales. The 20,000-strong membership is made up of Chartered Legal Executives, paralegals and other legal professionals.

CILEx members are regulated through an independent body, CILEx Regulation. It is the only regulator covering paralegals.

CILEx provides training, with qualifications open to those holding GCSEs, A levels or a degree. Over 100,000 students have chosen CILEx over the last 25 years, with the majority studying whilst in full or part-time employment.

CILEx provides a non-graduate route to qualification as a lawyer, although graduates are also welcomed and the Graduate Fast-track Diploma offers a more affordable and viable alternative to the LPC.

Those who complete the full CILEx qualification are known as Chartered Legal Executives. They can become partners in law firms, coroners, judges or advocates in open court.

The membership is diverse – 75% of members are women and 14% are from a BAME background.