UK Civil Liability Bill debate moves to House of Commons

Many UK risk managers and their insurers are closely following the process of reform of the UK's whiplash laws. Fresh from further amendments in the House of Lords, the Civil Liability Bill will now face the House of Commons. The Civil Liability Bill was passed for referral to the House of Commons by the Lords on 28 June, following the conclusion of the third reading stage. Since its introduction earlier this year, the Civil Liability Bill has been subject to some amendments and clarification both in respect of the whiplash reforms and the discount rate, which are set out below. The government defeated amendments proposing a reduction in the value of whiplash claims dealt with under the new tariff system and alterations lowering the proposed increase in the small claims track limit. Nonetheless, the move to the House of Commons is likely to intensify the debate on the bill and associated personal injury reforms. The Labour peer Lord Beecham made clear during the third reading that the proposed increase in the small claims track limit for personal injury will continue to face significant opposition. It is expected that lobbying by both claimant representatives and the insurance industry will markedly increase. With this in mind, the government's response to the critical report issued by the Justice Committee earlier this year is keenly awaited. Timescale The Civil Liability Bill proceeded through the first reading in the Commons last week, and parliamentary scrutiny will take place during the second reading, although the date for this has yet to be determined. Unfortunately, the bill will not have its second reading before the summer recess on 24 July, meaning further developments look set to be halted until September at the earliest. However, with party conference season following hot on the heels of Parliament's return on 5 September, the bill may be further delayed until October. The best-case scenario for the bill's enactment is that it could possibly see Royal Assent by the end of the year, with the newly-approved discount rate being in place within the first half of 2019. However, with the continued uncertainty surrounding Brexit, this timeframe is being regarded with increasing scepticism by the market. Whiplash measures: The full whiplash definition, originally produced within draft secondary regulations, is included with the bill and has now been extended to include injuries to the shoulder In line with the adoption of a periodic review system per the discount rate, a further clause provides the Lord Chancellor with appropriate powers to redefine the scope of what is a 'whiplash injury', provided appropriate consultation with defined experts is undertaken The proposed tariff system remains in place but the government conceded that the Lord Chancellor will be required to consult the Lord Chief Justice when setting the tariff amounts Further conditions for subsequent reviews of these tariffs were also included within the draft bill The introduction of the bill earlier this year prompted the restatement of promises of lower insurance premiums for consumers on the back of reduced whiplash claims. Lord Keen recently pledged to hold insurers to their pledges to pass on savings made as a result of the reforms. It is unclear how the government intends to legislate for this and ensure compliance with competition law. Discount rate: The commencement date for those provisions relating to the discount rate will be brought forward to the day that the act receives royal assent An amendment requiring the first review to be carried out without the expert panel under the guidance of the government actuary was agreed to expedite the setting of a new rate Subsequent reviews of the discount rate undertaken with the expert panel will now be carried out within a maximum of five rather than three years. The review period of five years may reduce or contain 'gaming' tactics from those seeking to use a pending review to their advantage in the context of a settlement negotiation The changes to the discount rate review period from three to five years in England and Wales might prompt a change in proposals for similar reviews in Scotland, after the Damages (Investment Returns and Periodical Payments) (Scotland) Bill set out proposals for a new formula in setting the discount rate in Scotland It was reported recently that analysis for Aon showed that insurers are pricing in for a 1% discount rate, with the majority of large-loss motor claims believed to be settling at rates of more than 1% despite the current rate being -0.75%. This indicates that the current market position is one of pragmatism The same analysis showed that the take-up rate of periodical payment orders (PPOs) had fallen by up to 50% in 2017, with evidence they were becoming confined to the very young and the elderly, where a structured approach to settlement was more justifiable. Against this backdrop, the government has stated that increased guidance on PPOs should be provided, to encourage their use. Contributed by Mark Hemsted and Peter Walmsley, partners at Clyde & Co

UK Civil Liability Bill debate moves to House of Commons

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Related Articles