PI reforms: the early verdict

Little more than a week after the introduction of the personal injury reforms, I Love Claims invited key industry influencers to discuss their initial impressions.

Taking part in the 90-minute online special hosted by ILC founder and chairman, Chris Ashworth were: Donna Scully, director, Carpenters Group; Caroline Johnson, director of technical claims, LV=; Peter Gomes, CEO of The CHO; Samantha Ramen, director of Keoghs LLP; and Matthew Maxwell Scott, executive director, ACSO.

They discussed the anticipated benefits of the reforms, the challenges presented by the recently launched online portal, as well as any unintended consequences that may arise in the future.


The reforms were first proposed in 2015 as part of the Civil Liability Act with the intention of reducing motor insurance premiums by weeding out fraudulent and exaggerated claims.

After years of consultation, it was finally agreed in 2018 that the reforms would do three key things: set a fixed tariff for whiplash injuries; increase the limit of small claims from £1,000 to £5,000; and create an online portal called Official Injury Claim (OIC) to enable claimants to process claims themselves, thereby cutting personal injury lawyers out of the process.

A second part of the reforms was meant to be introduced at the same time, addressing issues such as credit hire and rehabilitation. However, it is believed this is still months away and many feel the success of part one is compromised by the lack of progress of part two.

Despite this, hopes are still high that these new measures will go some way to clearing the muddy waters of personal injury claims.


When proposed, this package of reforms was anticipated to reduce average annual motor premiums by between £40 and £50. They are now expected to deliver savings of £35, and insurers will be expected to prove to the Financial Conduct Authority (FCA) exactly how the savings brought about by the reforms have been passed down to their customers.

Caroline said, ‘We’re very supportive of the reforms. Over the years we have seen ever-increasing whiplash claims of ever-increasing values. The original intentions of the reforms have been watered down and it will take time to understand exactly what they will deliver in terms of benefits, but there is a passion to pass them on to consumers.’

She continued, ‘The FCA will monitor this closely. There is quite a structured process to demonstrate the benefits in reduced claims costs and also that they’ve been passed on.

‘But the market is so competitive and if insurers don’t pass on the benefits they won’t get the business. We’re fully committed to doing it, and I don’t think any insurer can afford not to.’


However, Matthew is concerned. He believes much of the competition in the market is illusory with multiple brands under the same umbrella, and he suggests this has helped to create a ‘herding’ approach to pricing.

He is also unsure about the nature of the reforms in the first place.

He said, ‘Motor insurance is compulsory and it’s there to help you in the event of an injury. Anti-fraud measures were part of the original incentives, but claims have been falling for five or 10 years so there are serious flaws in the thinking behind these reforms. I’m just not comfortable with claimants getting accused of being part of the compensation culture. There is exaggeration and fraud, but we mustn’t assume it’s more than it is.’

Peter Gomes, CEO of The CHO, is also sceptical that reducing the cost of claims will have a direct impact on premiums. He pointed to research that found motor premiums rose 25% between 2014 and 2019, while claims costs actually fell 20% between 2013 and 2018.

He said, ‘One of the things that needs to happen if we’re going to deliver £35 savings is to understand what creates the average cost of claims.’


However, if there are to be benefits, a key factor will be the ease by which claimants can navigate the online portal and proceed without legal representation. While there are inevitably going to be teething problems with a project on this scale, there are worrying signs.

Donna said, ‘This has been a long time in the making and having a start date in the middle of the pandemic, when people are working from home, is obviously not ideal. There are bugs so we’d have liked to have seen more testing.’

But while these can be ironed out over time, perhaps of greater concern is the complexity of making a claim. The portal comes with a 60-page ‘how-to’ guide for consumers, which Donna doubts many will take the time to read through.

She said, ‘They only want to read what’s relevant to them, but how do they know what’s relevant to them? I’m a lawyer and even I found it chunky and complicated. Time will tell and maybe people will use it themselves, but I’m sceptical.’

Samantha agrees, but is hopeful that any initial problems can be overcome with collaboration and the greater use of technology to automate more of the process.

She said, ‘We’ve engaged heavily with this reform from the outset. It is a big operation and there will always be learnings and teething problems, but if we work together we can make a success of it.’

Unintended consequences

The desired outcomes are clearly stated, but could these reforms impact the industry in ways unplanned for? At this early stage it is difficult to predict, although the fact that part two of the reforms package has not been introduced has left loopholes which might be exploited. These include inflated costs around credit hire, rehabilitation and mixed injuries, as unscrupulous claimants seek to make up the shortfall in pay-outs brought about by the fixed whiplash tariffs.

It was reported that in the build up to the introduction of the reforms, psychological claims received by one insurer from a third party rose from 15% to 85% of claims, while Samantha said that since the start of June there has been a significant rise in ‘exceptional circumstances’ claims, which brings a 20% uplift on maximum pay-outs.

Donna said, ‘Before these reforms whiplash would have been the major injury. Now it’s a minor injury so we need to see if people start claiming in other areas. There are so many loopholes out there and we need to see if people use them. That’s why collaboration is so important. We need to share data to make these reforms work without rolling out the red carpet for bad behaviour. This is our industry and we need to make it work.’


Everyone is agreed that until the second part comes into force the job is only half complete. But there are no signs yet that it is imminent.

Matthew said the Ministry of Justice had informed him it would return to part two when ‘the team has capacity’, while Samantha suggested there would not be any movement until the end of this year or early next year.

Until then, the focus needs to be on gathering data on the impacts of part one, and sharing that data for the betterment of both insurers and their policyholders.

Caroline said, ‘As an industry we’re going to be in an uncertain period now though, so we need to truly collaborate to understand the data and if there is balloon-squeezing we need to quickly spot it if we’re going to deliver the savings these reforms are meant to deliver.’

Peter agreed.

He said, ‘There needs to be a period of bedding in before we can see the benefits of the OIC, and whether the benefits materialise. I do worry that the £35 will come back to haunt insurers.’


Certainly, there are still challenges, not least around consumer awareness, legal expense insurance and new exploitative entrants to market, but change always brings challenge and a cooperation towards a shared objective could well result in change for the better.

Matthew said, ‘Covid-19 has shown we can put a rocket-booster under new technology and we need to do that to reduce the cost of claims. It’s in everybody’s interest.’


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