Civil Liability Bill cost for insurers and consumers
The recent proposal to push back the implementation date of the Civil Liability Bill from April 2019 to April 2020 could potentially cost the insurance industry considerably, according to GlobalData Financial Services.
The reforms aim to stifle the growth of the UK’s compensation culture, particularly within the motor insurance market. Not only will insurers have to be patient for the benefits to come to fruition, but policy holders will also have to wait to experience any reductions in premiums associated with the bill’s implementation.
The proposals within the Civil Liability Bill are mainly targeted towards reducing both the number and cost of claims relating to road traffic accidents. There have been previous attempts to implement legislation to reduce claims. The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) came into effect in 2013 and aimed to reduce the costs associated with claims in the motor market through the capping of referral fees.
Civil liability bill cost
In 2017/18 the number of personal injury motor claims recorded by the Compensation Recovery Unit fell considerably by 16.7% in comparison to 2016/17. This reduction in claims could prove to be pivotal in the implementation of the Civil Liability Bill. Those who oppose its implementation highlight that such a fall in claims means there is no need for its introduction. Given the proposed date has now been extended by another year, further reductions to motor personal injury claims may lend this argument further traction.
Should this occur there will be a stronger argument for elements of the Civil Liability Bill to be amended, with the compensation values set out in the tariff system potentially being raised, as this has proved to be one of the most contentious issues. The revision of the Ogden rate will remain a key element of the bill; however, policy holders will have to wait longer to experience the drop in premiums which is expected following the rate rise.
Ultimately the development of the personal injury motor claims landscape over the next year will undoubtedly be influential in any decisions surrounding alterations to and implementation of the Civil Liability Bill.
Another factor that may prove to be influential is Brexit, with the new proposed implementation date falling after the UK’s formal departure from the EU. The government may have to postpone its implementation further as more pressing legislation could be required.