The hidden truth: How insurance companies profit from personal injury reforms

When you’ve been involved in an accident that wasn’t your fault, navigating a complex insurance landscape is the last thing on your mind. However, recent personal injury reforms and insurance claims processes might not work in your favour. Despite the promises of reforms, injured people are not seeing the benefits. In reality, the insurance companies benefit, leaving victims with fewer options and, in many cases, less compensation.

The rise of personal injury reforms

In 2021, the UK government introduced changes to process personal injury claims, particularly for road traffic accidents (RTAs). The reforms, often dubbed the “whiplash reforms,” aimed to tackle the high number and cost of whiplash claims, costing the insurance industry over £2 billion per year. The goal was to reduce the overall cost of claims and pass on the savings to motorists through lower insurance premiums.

But what’s the real impact of these reforms on you, the claimant? Unfortunately, it’s not as promising as it sounds. While the reforms were designed to crack down on fraudulent claims, they’ve also made it more difficult for legitimate claimants to seek fair compensation. Instead, the insurance companies are saving money—money that, in theory, should be passed back to policyholders in the form of lower premiums.

How the reforms impact you

Before the personal injury reforms, if you were involved in a road traffic accident that wasn’t your fault, you had the right to seek compensation for your injuries and financial losses. This included hiring a personal injury solicitor to guide you through the claims process.

The rules before 31st May 2021 entitled a claimant to instruct a solicitor where the damages for personal injury exceeded £1,000. Although fixed costs applied, your solicitor would submit the claim on your behalf, collate the medical and other evidence and liaise with insurance companies and their appointed solicitors, calculate claims for damages, complete paperwork, check legal documents, and prepare documentation for court as well as negotiating a settlement with the defendant.

Now, if a soft tissue injury claim is worth less than £5,000, claimants must apply for compensation through an online portal without the representation of a solicitor. A limited fixed tariff for compensation for soft tissue injuries now applies.

This means you’ll be expected to navigate the claims process independently—without a solicitor- for injuries like whiplash—if your claim is valued at under £5,000. While this might sound straightforward, it can be overwhelming and confusing, especially when dealing with an accident’s aftermath.

The financial impact on you, the claimant

Let’s say you’ve been involved in a road traffic accident and suffered a minor injury like whiplash. Under the new system, your compensation payout for such an injury could be significantly lower than before. The compensation amounts have been fixed, meaning that no matter the severity of your injury, you could receive far less than you deserve.

And while the government argues that this is all in the name of reducing insurance premiums, the numbers don’t always add up. Insurance companies are saving millions thanks to the reduced number of claims and smaller payouts, but there’s little evidence that these savings are being passed on to consumers. The truth is that many drivers have seen little to no reduction in their insurance costs.

According to the latest government figures, car insurance premiums have risen 82% since May 2021.

The role of insurance companies

Insurance companies have long argued that personal injury claims were driving up the cost of premiums. While there’s no denying that fraudulent claims were an issue, legitimate claimants have now been caught in the crossfire. Insurers enjoy bigger profits by making it more difficult to seek compensation, while claimants are left to deal with lower payouts and fewer legal protections.

Insurance companies now pay far less in personal injury claims while still collecting the same, if not higher, premiums.

Statistics from APIL show that in 2023, reported road injuries increased by 14% compared to 2020, the year before the introduction of the ‘reforms’. During the same period, however, the number of claims for these injuries fell by 29%. More people are being injured, yet there are far fewer claims.

Why you should still seek legal help

Even though the personal injury reforms have made it harder for personal injury solicitors to assist with more minor claims, seeking expert legal advice is still crucial if you’ve been involved in an accident. Navigating the online claims portal can be tricky, and without legal expertise, you could end up accepting a settlement below what you deserve.

A personal injury solicitor can assess your case, help you understand the compensation you’re entitled to, and, most importantly, fight on your behalf. Legal representation can make all the difference, ensuring you receive fair treatment, even in a system that makes it more difficult.

The reforms are designed to discourage claimants from seeking legal advice by introducing a system that encourages self-representation. But this approach can leave you vulnerable. Without expert guidance, you may not understand the total value of your claim, especially regarding non-economic damages like pain and suffering.

For example, if you’re awarded £1,000 for a whiplash injury, but the value of your suffering, loss of earnings, and inconvenience is closer to £3,000, that’s a huge financial gap.

Seeking legal advice could be the key to getting what you deserve. At NV Legal Ltd, we specialise in helping accident victims navigate the legal system. With years of experience, we understand the complexities and know how to fight back.

If you’ve been in an accident, visit www.nvlegal.co.uk today or call us for expert advice.

NV Legal Ltd

At NV Legal, we’re here to guide you through every step of your personal injury claim, ensuring you receive the support and compensation you deserve. If you have more questions or need personalised assistance, please get in touch with us.

Call – 03330 112 732

Email – info@nvlegal.co.uk

Website – nvlegal.co.uk

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