Economists Say Personal Injury Reforms Risk 35,000 jobs
Accordingly to economists 80 per cent of people directly employed in the personal injury business face losing their jobs if Ministry of Justice reforms become law.
The number of people directly employed in the personal injury market includes lawyers, claims management companies, insurers and medical reporting agencies. The consultation period for the proposed justice reforms ended in January 2017. PHC Law reported on this several times at the end of 2016. We published an article at the end of last year entitled: Compensation Reform: The Big Insurance Lie. Read it, you’ll find lots of interesting facts about the proposed plans to reform personal injury claims – some of the details are shocking.
In addition to the jobs directly affected, economists estimate the personal injury sector adds more than £2bn value to the UK economy through the spending of firms and employees. This will significantly drop at the Treasury’s and indirectly taxpayers expense. In a time when the NHS is facing a crisis and social care funding is in tatters this sort of news brings to the fore the government’s absurd position.
The government basically intends on limiting claims for all personal injuries to £5,000. They become ‘small claims’. In otherwords if you make a whiplash claim which normally pays out approximately £500-£4000, you won’t get a penny. This despite whiplash being a completely legitimate claim affecting thousands annually.
The Insurance companies lobbied the government over there being ‘too many fraudulent whiplash claims’. There is no evidence for this. The insurance companies also say they will pass on any savings made to the consumer – estimated at £40 per motorist – through cheaper premiums. However, there are just words. There is currently no law in the land to compel insurance companies to pass on savings to customers.
Campaign group Access to Justice (A2J), says the economic findings are evidence that the government’s argument does not hold up to scrutiny.
The north-west area of Lancashire, Manchester, and Liverpool, where 9,000 jobs are at risk, would be the area most likely to suffer.
It is universally accepted that it is necessary to reduce fraudulent claims. It is also expedient to stop cold calling, and corrupt claims management companies (sometimes referred to as ‘Ambulance Chasers’). Yet surely sacrificing thousands of jobs is not exactly a very moral way of dealing with the issue? When all is said, and done insurance companies will benefit from massive extra profits if the new changes come in.
The same argument is used to justify social welfare cuts – for example benefit fraud only accounts for 1% of the total welfare bill but tax avoidance is 8%. Yet the unemployed and people on low pay get cuts in benefits while global corporations still fail to pay their taxes.
The government is expected to respond to the consultation in April.
* Source – Capital Economics