The Ministry of Justice is reforming the compensatory system for low cost personal injury claims arising from motor accidents. The new procedures came in to effect on 30th April and will apply to injury claims with a potential value of £1000 to £10000. The scheme introduces fixed stages and costs with set deadlines for both claimants’ and defendants’ solicitors, according to how many stages a case has to go through before it is settled. It will apply to road traffic accident personal injury claims valued between £1,000 and £10,000, which in the past have accounted for 80% of all injury claims.

The aim is a process which delivers fair compensation to the claimant as soon as possible at proportionate cost. The process will be made even quicker through a new industry led online portal which will allow solicitors to share information quickly, efficiently and securely.

The details of the new process have been developed by the Ministry of Justice in consultation with stakeholders from both sides of the industry while the fixed costs were agreed by bodies representing claimants and defendants’ solicitors following a mediation process overseen by the Civil Justice Council

The new process is split into three stages:

• Stage 1 – the claimant solicitor completes the claim notification form (CNF) and sends it to the insurer who may admit/deny liability.

• Stage 2 – if liability is admitted, the claimant obtains a medical report and the process continues with offers and negotiation of a settlement to a strict timetable.

• Stage 3 – where the parties cannot agree a settlement an application is made to court for a quantum hearing.

Each of those stages has fixed costs and deadlines depending on the circumstances.

How will this affect your business?

a) It is important that you report all accidents promptly as your insurers have 15 days to decide whether to admit liability or to contest the claim. This will prove difficult without a prompt report from you.

b) It is possible that the insurer will accept liability if you do not report an accident in the prescribed timeframe and it looks to be your driver’s fault on the basis of the third party’s report.

c) It is not uncommon to receive a spurious injury claim from a third party following an accident. The system is designed to control the costs of minor injury claims so these must be reported as a priority.

d) It is possible that your insurers will contact you/your driver direct to discuss aspects of the claim. Please do not hesitate to contact us if you need guidance and support in this situation.

e) Ultimately the new system should help reduce the substantial legal costs incurred in handling these claims. This will in turn help control increases in your own motor insurance premiums.

A summary of the three stage process is detailed as follows:

Stage 1 - Providing early notification of claims to defendants and insurers

• The claims notification form will be sent electronically to the defendant's insurer and the claimant solicitor or the claimant will sign the statement of truth on the CNF.

• The defendant's insurer will send a receipt to acknowledge receiving the CNF.

• All the fields on the CNF must be completed with the exception of the referral source field.

• When the CNF has been correctly completed, the defendant's insurer will have 15 business days in which to respond - electronically - with the exception of the Motor Insurers' Bureau, which will have 30 days to respond.

• Fixed recoverable costs of £400 will be paid at the end of Stage 1 where liability is admitted (whether or not contributory negligence is alleged). A 12.5% success fee will be applied to Stage 1 fixed recoverable costs where a conditional fee agreement is in place. However, the success fee element for Stage 1 will only be payable at the end of Stage 2 where the case settles.

Stage 2 - Medical evidence, offers to settle and negotiation

• Once the defendant's insurer has made an admission of liability, the claimant solicitor will obtain a medical report.

• Where it is clear from the outset that an additional medical report is necessary from a medical expert in a different discipline, a second report may be obtained from a medical expert in that discipline.

• The acquirement of medical records will only be allowed as a disbursement where the medical expert has identified a need for them.

• There will be no fixed timetable for obtaining the medical report.

• Within 15 business days of the report being confirmed as factually accurate, the claimant solicitor will complete the Stage 2 settlement pack form. This will be sent electronically to the insurer, together with the medical report and any receipts/evidence of special damages claimed.

• The insurer has 15 business days from receipt of the settlement pack to consider and either accept the claimant's offer or make a counter offer.

• Where the defendant's insurer makes a counter offer, there will be a further 20 business days for consideration and negotiation between the parties.

• Where agreement on quantum has not been reached at the end of the 20-day consideration and negotiation period, the claimant will prepare the Stage 3 version of the settlement pack form.

• Where the parties have not reached agreement to settle the case by the end of the negotiation period, the next step will be a Stage 3 hearing to determine quantum.

• Fixed recoverable costs of £800 will apply to all claims taken forward under this process from the beginning to the end of Stage 2. This will attract a 12.5% success fee uplift where the case settles in those cases where a conditional fee agreement is in place.

Stage 3 - Where quantum cannot be agreed

• Where quantum cannot be agreed by the end of Stage 2, an application will be made to the court to determine quantum.

• There will be separate fixed recoverable costs for claimant solicitors for Stage 3 of the process for paper (£250) and oral hearings (£500). There will also be a fixed success fee of 100% for those cases where a conditional fee agreement is in place. This will only apply where the claim concludes at trial and the claimant has won.

• Where an offer is made and settlement is reached between the issue of the claim and before the trial commences, fixed recoverable costs of £250 will apply and there will be a fixed success fee of 12.5% for those cases where a conditional fee agreement is in place. The agreed damages and fixed costs should be paid within 10 days of a settlement being reached.

For more information call 0844 573 9490, e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .