Future Focus 2030: The future of personal injury claims

After a number of false starts, the long delayed whiplash reforms were introduced in April 2022 after it was side-lined previously due to the Conservative government having to deal first with the Brexit vote and then the fallout of the Covid-19 epidemic.

Minster law CEO Shirley Woolham reflects: “Both the insurance and claimant legal sector wrangled over the implementation of whiplash reforms for more than five years and there were many occasions when implementation seemed increasingly unlikely. When reforms were finally implemented in 2022, the more forward-thinking and customer-orientated insurers and law firms had already, under their own steam, adopted a more collaborative approach to claims settlement, which assisted in reducing the overall cost of claims and were delivering swifter outcomes for customers.

“The early 2020s saw a new wave of consolidation. Law firms became more progressive, customer-centric and less litigious/adversarial. Motor personal injury became the domain of a smaller number of players and it became clear to both insurers and law firms that collaboration just made sense.”

This point about consolidation is picked up by Matthew Maxwell-Scott, executive director, the Association of Consumer Support Organisations, who adds: “The whiplash reforms were a catalyst for moving much of the UK’s civil justice system into the digital world. Analogue claims firms were quickly swept away by a wave of mergers and acquisitions, closures and recession post Covid-19. The market eventually coalesced around six major services providers that offered a portfolio of claims products to corporate partners.

“The inevitable IT teething issues aside, the new [whiplash] portal worked better than expected, although the expected savings to policyholders failed to materialise, with the insurers announcing these had been eaten up by higher ‘other’ costs in the infamous ‘You win some, you lose some’ press conference of 2025, which led to criticism of the Association of British Insurers and its members.”

Whiplash reform

LV claims director Martin Milliner counters this by noting the Financial Conduct Authority has kept track on insurers post-implementation, as promised, and has so far indicated it is content that all of the benefit has been passed back to customers by way of lower premiums, before adding: “Eight years on, the Civil Liability Act (whiplash) reforms have very much taken the froth off of the problem in the UK, with the US re-installed as the whiplash capital of the world. The immediate benefit from lower damages for pain and suffering in the 2022 tariff has been eroded over time due to subsequent increases in the tariff. The main win has been the reduction in claimant and defendant solicitor costs and through lower litigation/Stage two rates.  

“While that remains the case, the consequences of ‘layering’, higher tariff awards and diagnosis/prognosis creep has meant that the small claims limit is once more under pressure, so fresh calls to tackle this re-emerging problem are beginning to grow.”

Another impact of Covid-19 was that it sped up the use of remote trials/dispute resolution for PI claims, including the use of mediated joint settlement meetings before going to court. One knock on effect of this, as Maxwell-Scott notes, is that the ‘big six’ claims providers have far fewer lawyers on their books than was once the case, replaced by software developers and digital marketers.

One firm that capitalised on this shift was legaltech start-up Nuva Law. The firm’s adviser Tony Emms comments: “The whiplash reforms aimed to reduce costs and make access to justice far more accessible. Disputed cases falling out of the process were initially a serious problem until the adoption of smart technologies and online dispute resolution platform solutions, like Nuva Law, became a real game changer by facilitating early settlement of such cases. Subsequent broader use of these technologies has led to a much-reduced burden on the court system, improved operational and claims cost for insurers and quicker claimant outcomes.” 

Woolham describes the pandemic as “a watershed”, as it accelerated the use of digital in PI claims, although at the time, she believes some insurers only relented out of necessity rather than preference. “It took several years to achieve an industrywide digital consensus. Many found it hard to give up their analogue models. Insurers argued that the technology would lead to more fraudulent claims by lowering the bar of evidential proof and ‘oiling’ the claims process in favour of the customer and took far longer to come to the table. It was only with the passing of time that these concerns were allayed, and insurers collectively embraced this change and accepted it as an enduring business model.”

“It was the beginning of the end for the traditional defendant versus claimant model, which had always served as a key contributor to increasing claims costs. What followed, as we now know, was a new paradigm based on a genuine and shared focus on claims settlement. The new era of collaboration and ethics in the claims sector meant that the desire to litigate was removed altogether from the vast majority of cases, leading to the ‘done in one day’ PI claim we know so well today.”

Andrew Wilkinson, director of technical claims, Aviva continues: “We’ve been using remote alternative dispute resolution since before 2020 – Covid-19 just accelerated what we were already doing. In the early days, there were some teething issues with remote medical examinations and remote physio. Insurers were correct on insisting on face-to-face medical visits in areas where there were large amounts of suspected fraudulent cases, such as low-speed impact claims. These were worked through over time, though. Larger claims using mediators on settlements had been trialled pre-Covid and were already proving successful. This approach has continued and is now the norm, rather than the exception. It has resulted in a faster, more consensual process – speeding up payments for those with serious injuries while reducing legal costs.”

A word of caution

Milliner urges a word of caution though in that virtual JSMs are still proving to be hit and miss with many still taking place in person. He adds remote or hybrid trials, while widely encouraged, have also proved to be inconsistent in outcome, with insurers’ defendant teams finding it necessary to have representation in some courts in order to increase the chances of fairer outcomes being determined.

At the start of the decade there was considerable hope that automated claims notification would eradicate the intervention of claims management companies in motor claims, optimism that has mostly been born out as Milliner explains: “The rise in penetration of electronic notification of loss over the past decade has created at scene resolution. Insurers now get an immediate upload of data and video footage from vehicles together with a 30-second voice recording from customers and witnesses at the scene from all of the vehicles involved. That information is instantly fraud/indemnity checked and analysed through arificiaI intelligence models that determine liability, repair ability and drivability, meaning that digital chatbot advice can be given to customers at the scene, with supply chains automatically instructed. The upgraded subrogation portals also mean that mobility, recovery payments and dispute resolution are achieved at the scene for 95% of all accidents.”

Working from home

The increase in vehicle automation might have meant a decrease in the number of PI claims related to motor, but CMCs have replaced some of the lost volume in other areas – such as claims farming for employers’ liability home-worker claims.

Wilkinson notes: “The Covid era quickly dispelled the myth that the majority of us can’t work from home. This, then, changed the purpose of an ‘office’ in the sense that we used to know it. By the time a vaccine was ready for the general population, we had already successfully adapted to homeworking, and indeed more than 50% of us still do today. So offices have become more than work spaces, but also collaborative spaces where teams could get together, helping them to feel connected and valued, even though they work remotely.

“Risk management has a role to play in this. Aviva Risk Management Solutions run regular risk management seminars for teams in offices, providing employees working from home with an opportunity to get together, but also ensure that we address questions and concerns they have about their health and safety when working from home. We can demonstrate best practice and the process leaves employees feeling valued and included, and reduces the risk of accident and injury at home.

“Not surprisingly, the post-Covid recession saw an increase in injury claims, mostly coming from the same claims farmers that we knew from the bad old whiplash days. But this prompted regulators to take a harder line on claims farmers, making sure the injured party was at the centre of the process, as opposed to a commodity whose data was bought and sold on the farming market.”

Other areas CMCs refocused on included accidents involving mobility-as-a-service vehicles such as e-scooters, as well as cyclists, who now have to have compulsory insurance.

“With the large reduction in motor vehicle ownership and the step change in the reduced use of public transport in favour of walking, running, cycling and e-scooters since Covid-19, we have seen a big rise in the proportion of claims involving cyclists and scooter riders,” Milliner responds. “The compulsory liability insurance introduced for cyclists and e-mobility, as well as the long awaited compulsory wearing of helmets, has been welcomed by insurers and consumers alike.

“CMCs partnering with major distributors of these products have really got hold of this market and in partnership with Association of Personal Injury Lawyers and leading law firms have driven large scale advertising campaigns not seen since the period between 2010 and 2020. The numbers of pedestrians, cyclists and scooter riders seriously injured by these modes of transport are now outnumbering those caused by car use. The ABI, together with charities such as Brake, are now jointly campaigning for graduated licencing of the use of cycles and e-mobility solutions.”

Finally, the market is due another review of the Ogden discount rate in early 2030. After some exploration the government rejected the possibility of a dual-rate five years ago, which would mean having a lower rate in the short term and a higher rate in the long term to safeguard vulnerable claimants, although the Lord Chancellor said this remained open to further discussion at the next review.

“We welcomed the 2025 revised ODR for England and Wales at 0% but as investment markets have rebounded over the past decade, the time is right to acknowledge that 0% is delivering in excess of 100% compensation to claimants,” comments Milliner. “The economists and investment analysts agree that a dual rate that mirrors the Canadian model is the right way to go and we hope that the Lord Chancellor agrees.”

A radical solution

Wilkinson agrees: “0% may have been the correct rate in 2025, but our long-held belief is that a dual rate is the fairest way to compensate seriously injured people. Enabling someone who has suffered a catastrophic injury obtain a more reasonable rate of return, given the impact of their injury on their lifespan, seems a fairer and more equitable approach than a ‘one size fits all’. We believe this will be the year that the government finally accepts a dual rate is the fairest approach.”

However, Emms offers a more radical solution: “As we have seen over the last decade the concept of using predictive analytics to calculate future losses has gained popularity as a more refined and accurate means of calculating future losses. Introducing such an approach would render the discount rate an outdated concept but it would be a huge and brave step forward for the courts to adopt this controversial approach. Considerable further discussion on this is needed between all parties which will no doubt be adversarial.”