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More time on Road Traffic Act

At a glance

  • The MOJ has extended the deadline for businesses to be compliant with new PI claims rules
  • The new legislation is expected to have a significant impact on businesses and claimants
  • Zurich is extending its MOJ helpline to support brokers during the transition period

A recent update from the Ministry of Justice (MOJ) has afforded the insurance industry extra time to prepare for the changes set out in the Road Traffic Act (RTA)

Brokers will have more time to prepare and implement any internal changes required by the RTA, after the Ministry of Justice extended the dates by which the insurance industry must be compliant with the new rules.

The legislative changes will see the fees charged by solicitors and claims management companies cut by 50% for personal injury and accident claims.

This will hopefully produce overall claims savings, which insurers will then be able to factor into the future pricing of premiums.

John Latter, Casualty Claims Director at Zurich

The new rules were initially set to come into force from the end of April. This deadline still stands for Fixed Recoverable Costs of up to £10,000, but the extension of these rules to include RTA injury claims up to £25,000, and the inclusion of EL and PL claims, will be pushed back to the end of July 2013.

What the changes mean for brokers

John Latter, Casualty Claims Director at Zurich, said that brokers have “an important role to play, by informing policyholders about how the changes could affect their risk profile, and ensuring a swift flow of information between claimants and insurers.”

“The main pressure is on the insurer,” he said, “but timely provision of accident information means that the policyholder should benefit from a lower level of Fixed Recoverable Costs. This will hopefully produce overall claims savings, which insurers will then be able to factor into the future pricing of premiums.”

Impact on public and businesses

The legislation is expected to reduce the number of ‘ambulance-chasing solicitors’ and the pressure that this has put on the insurance industry.

However, there are concerns that the extremity of the government’s plans will have a negative impact on claimants. People who have suffered an injury will no longer receive the same levels of compensation, or might not claim at all, as some solicitors stop offering their services on a ‘no win, no fee’ basis, and raise their rates to recoup their losses.

The impact on businesses that carry out this work is expected to be significant. Richard Hirst, of Laker Legal Solicitors, said: “Most businesses of course simply cannot afford to have their fee income cut at a stroke by such a dramatic percentage and yet still continue to trade profitably or at all.”

Zurich will be extending its MOJ helpline until the end of August, offering brokers information and support during the transition period. You can send any questions about the changes to mojhelpline@uk.zurich.com or get in touch with your usual Zurich contact.

The MOJ reforms will cause significant changes to the way that claims are handled. Zurich has been preparing for these reforms for over a year – share its expertise with a free webinar, to find out what the changes will mean for you. To participate, register for the webinar here.

Image © Getty

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