AMA calls on Ministry of Justice to rethink compensation system reform proposals
News Release – 10 July 2007
Tony Baker, Director General of the AMA, commented:
“Faster, fairer, easier and more cost effective processes are great aims in seeking to reform the personal injury claims market. But the Ministry of Justice proposals are defective in key areas and must be reworked.
The MoJ must pay careful regard to the representations it receives and present fresh proposals that preserve good access to justice and fair levels of compensation. ”
The MoJ published a consultation paper “Case track limits and the claims process for personal injury claims” on 20 April and sought views on major reforms to the system and process for delivering personal injury compensation.
AMA‘s representations welcome several of the MoJ aims but highlight four major areas of importance where a change of view is essential:
1. In setting fixed costs there must be an adequate allowance included for the cost of acquiring claims and/or marketing services. Virtually every business has a cost in acquiring customers. If no allowance is made for referral fees in setting costs as the MoJ suggests, genuine claimants will be adversely affected as many claims emerge from businesses set up or operating so as to capture claims.
There would be no incentive for businesses such as accident management companies to continue to provide a service so many potential claimants will not be compensated.
2. The tighter timescales to be followed in processing claims are welcome but there must be a realistic sanction on defendants/TP insurers to encourage compliance with the timescales. The MoJ seem to be soft on the activities of defendants/TP insurers. A failure to decide on liability within the set time limits must not prejudice claimants. They must be able to proceed with their claim under existing rules and without the constraint of fixed fees and no After the Event (ATE) insurance protection.
3. The consequences of preventing most claimants from having an ATE policy with a recoverable premium have not been adequately thought through. Even when liability is admitted, claimants and solicitors will face risks and without insurance protection.
ATE insurers will effectively be selected against by only being able to insure high risk cases and this would make ATE a very unattractive market to be in. Premiums will need to be dramatically increased and this may lead to challenges on recovery. At best the proposals will result in uncertainty and instability in the market with most probably a big reduction in market capacity. Claimants needing ATE protection could find it much more difficult to obtain.
4. There are a large number of initiatives already under way on personal injury claim management including the Compensation Act, tighter regulation of solicitors and fast track claims and fixed costs. These should be allowed to bed down before even more change is introduced. The rights and interests of claimants are much too important to rush through further changes that are not robust and fail to recognize the practicalities of the claim process.
-ENDS -
Notes for Editors
1. The Accident Management Association was established in March 2001 as a new trade association to unite the credit hire industry. AMA members provide services to motorists involved in accidents that are not their fault. These services include replacement vehicle hire, vehicle repair and legal expenses insurance. Today AMA has 30 full members and they are estimated to account for over 60% of the credit hire and credit repair market in the UK.
2. Copies of the full AMA response to the consultation paper are available from Tony Baker.
3. Further information:
Tony Baker (Director General, AMA)
Tel: 01920 465000. Mobile: 07890 711797
Email thetonybaker@gmail.com
Web: www.amassociation.co.uk
