On 30th April 2010 the long awaited reforms out forward by the Ministry of Justice (MoJ) to streamline the compensation system for low cost personal injury claims resulting from road traffic accidents will become a reality.

Industry implications

The MoJ initiative is a milestone for the insurance industry and follows years of lobbying by the Association of British Insurers (ABI) for a simpler, quicker and more cost-effective system. The new regulations mean that a standard framework is applied across the industry, designed to reduce delays and limit legal costs to the consumer, which are ultimately reflected in the cost of motor insurance.

This move has been broadly welcomed by the insurance industry and the legal profession, as the absence of a uniform process to this point has led to some claims taking years to be resolved and, ultimately, costing more after the additional time-associated costs have been applied. The ABI estimates that approximately 400,000 people could benefit from the new processes.

The reforms will apply to personal injury motor claims with a value of between £1,000 and £10,000 – around 80% of all motor personal injury claims – and has been designed to accelerate the process by:

• minimising the amount of correspondence between the various parties
• reducing the scope for time-consuming litigation and
• avoiding duplication of work

The new process will bring visibility for claimants, solicitors and insurers of how a claim is progressing and everyone will be required to work to a strict timetable and cost structure. For MIB, this will assist in achieving one of its aims; to compensate victims fairly and promptly.

Developing the framework

During the development stages of the project, MIB have been involved in an IT Project Steering Group which was formed to help develop an online portal – the gateway to the system which allows secure exchange of information back and forward between compensator and claimant as the claim progresses through the process.

This Group also included representatives from the insurance industry and claimant solicitors. It was important that all the parties involved had an opportunity to put forward suggestions and work together to make sure all stages of the process would work smoothly, efficiently and fairly.

In preparation for the system going live, MIB, along with several insurance companies and claimant representatives, has been conducting user acceptance tests. This involves running a number of test scenarios through the system to check for any anomalies or errors before going live. Testing is now nearing completion and MIB are at an advanced stage in their preparation to implement the system in April.

Although the MoJ reforms will only apply to personal injury claims of up to £10,000, MIB has introduced a similar processing framework to apply to higher value claims as well as claims falling within the Untraced Drivers Agreement. The application of this framework has the same aim of speeding up the process across the board and is now fully rolled out to all handlers who have received training.

Everyone across the personal injury and insurance sectors are committed to fulfilling a role in making the MoJ reforms a success. MIB is committed to the scheme’s successful implementation and determined to do everything possible to deliver fair and prompt compensation to those affected by uninsured drivers.