Ministry of Justice: The new process for low value personal injury claims in road traffic accidents

Personal injury claims arising out of a road traffic accident are now being reported and handled under a new process. Since 30th April 2010 such claims are being submitted to motor insurers on-line via a secured website operated by the Ministry of Justice.

This only applies to claims where the value of the injury (or resultant claims for earnings loss or medical treatment) is likely to be between £1000.00 and £10,000.00.

The process

The claimant's solicitor completes the on-line claim form which is forwarded electronically to the defendant's insurer. A hard copy version of the form is sent through the post to the defendant.

On receipt of the claim form the defendant's insurer then has 15 business days (three weeks) in which to respond.

If the insurer does not admit liability or fails to respond within the 15 days, or admits liability but suggests that there is contributory negligence (for something other than failure to wear a seatbelt), the claim will no longer be dealt through the process.

At this stage the insurer can accept liability but can challenge the amount claimed.

Stage 1 is completed:

• Where liability is admitted, fixed recoverable costs of £400 are payable within 10 business days of the end of the 15-day period.
• A 12.5% success fee will also apply, but this does not become payable until the end of the Stage 2 when the claim is settled.
• Failure to pay fixed costs will mean the case comes out of the process.

If liability is admitted by the defendant's insurer, the claimant's solicitor will obtain a medical report. The appointed GP prepares this report in a standard format. The solicitor then proposes on-line a settlement figure to the insurer and uploads the medical report along with any documentation confirming any out-of-pocket expenses.

The insurer has 15 business days from receipt to accept or reject the offer. If the offer is rejected, the insurer must make a counter-offer using the same form. There is a further 20-day period for consideration and negotiation and if both parties are in agreement then Stage 2 is completed.

If agreement cannot be reached, the matter proceeds to Stage 3. The insurer, at this point may question or deny causation. If so, the claim will no longer be dealt through the process and the fixed recoverable costs will no longer apply. This is also the case where the time limits are not adhered to. However, both parties can agree to extensions of time, but the extra costs will no longer be recoverable.

If no agreement has been reached, the defendant's insurer must pay the full amount of its offer by way of interim payment.

Stage 2 is completed:

• Fixed recoverable costs of £800 will also be payable at this point.
• If the case settles, a 12.5% success will also apply.
• Payment must be made within 10 business days.

Stage 3 is the quantum hearing, where the Ministry of Justice's aim is to adopt the simplest procedure possible, The hearing will be on paper unless the judge decides otherwise or either party requests an oral hearing.

The application is usually made by the claimant's solicitor, but the defendant's insurer can apply after a certain period. Each party must put forward a final offer in a sealed envelope for the judge to consider after he/she has reached his/her decision. A claimant who is awarded damages less than or equal to the defendant's final offer will have to pay the defendant's fixed costs of the hearing.

The claimant's solicitor can recover:

• Fixed fees of £250 for a paper hearing.
• Fixed fees of £500 for an oral hearing.
• A success fee of 100% will apply but only if the claimant wins at trial.
• For settlements reached between the issue of the claim and the start of the trial, the success fee will be 12.5% applied to recoverable costs of £250.

Stage 3 is the only time during the process that the defendant's solicitor is subject to fixed recoverable costs.

Where the initial medical report indicates that the claimant's condition is such that a fixed prognosis cannot be made or further treatment is needed, the parties should agree to stay the proceedings for the required amount of time until a further medical report can be made.

In such circumstances, an automatic interim payment of £1000 applies, which must be paid by the insurer within 10 business days of receiving the settlement pack with the initial medical report. If the claimant seeks a higher interim payment, the reasons for this must be set out in the pack.

If the amount cannot be agreed, the case will leave the process, but the claimant may be restricted to fixed recoverable costs if, later on, the court finds his claim for a higher interim payment was unreasonable.

As an Insurer we have already seen benefits such as:

• Fraud: the information completed on the online claim form highlights any inconsistencies/spurious information and multiple claimants.
• Improved pro-activity: quicker liability decisions and medical evidence being received earlier. Easy to make counter offers. We consider relationships have improved between us and claimant solicitors as they are more prepared to compromise.
• Down the line cost savings will be made, but there are still issues around re-allocation of claims between Insurers when on-line claim forms are sent to the wrong insurer and have to be rejected before they can be re-submitted.