Press coverage this morning states that a previous source of concern over group earnings may have gone away. This related to changes, proposed by George Osborne in his Autumn statement last year, to reform the UK’s compensation culture around minor motor accident injuries, specifically the operation of whiplash claims.
These proposed reforms, which sought to ended the right to cash compensation for minor whiplash injuries have apparently been shelved. If they had been implemented they were expected to cut average motor insurance premiums by up to £50 pa.
We had previously argued that the risks to Fairpoint had been overplayed. Specifically, our 19 September update; Noted that the implementation timetable was well behind the critical path for a scheduled April 2017 start ; Reaffirmed our view that Fairpoint’s legal processing centre gave it a competitive advantage which, post reform, should put it in a position to manage the legal work generated under any new structure at low cost.
According to press reports this morning these reforms have been set aside by the government, indeed the insurance industry has concluded that they will never happen.
The Ministry of Justice confirmed that the whiplash changes are not a priority but claims reforms are “not off the agenda”. According to the insurance industry the consultation is being blocked by Whitehall due to opposition from ministers and the legal profession, and the need to prioritise government time ahead of Brexit negotiations.
This reform may be revisited at some stage.