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I have been known on occasion to get agitated while watching the TV.  I have definitely shouted at referees’ decisions at football matches.  Question Time (both the Dimbley and Parliamentary versions) often has me vocalising my views to the screen.  But, until this morning, I have never found myself, sitting alone in my car on my way to work, expressing aloud (but to myself) my feelings about the content of an interview.  

That changed this morning as I exclaimed “oh come on! You have got to be joking?  Are you really going to let him away with that!?!”  

What happened? Alistair Ross from the Association of British Insurers was asked on to the Good Morning Scotland show to talk about statistics that the insurance industry had recently produced.  Ostensibly, the statistics were about “insurance freedom day” for young motorists.  

Wow, I thought, as Hayley Miller introduced the piece.  Liberating, empowering and interesting. I really did wonder what exactly it was all going to be about.  About the first ten seconds of the interview was spent explaining that the cost to young motorists insuring their cars represents about 10% of their income (as opposed to 2% for all other drivers); and that today is the day when typically young drivers will have earned enough money to cover the cost of their annual car insurance.  

Mark Twain Quote And on one level that is certainly very interesting indeed.  It asks questions of the gig economy, the living wage, young people’s working terms and conditions; and the absolutely pressing need for the governments of both Westminster and Holyrood to do everything in that they can to redress the balance that has swung the power so aggressively in favour of exploitative employers who have left our young people exposed and vulnerable at their workplaces.  

I waited therefore with bated breath to hear more from the ABI spokesperson.  Would the ABI finally strike a blow for civil libertarianism and, frankly, simply that which is right and with which the vast majority of the country agree?


In fact, the entire exercise was a statistical Trojan horse to give the ABI a platform to pedal their usual ill-informed but very dangerous lies about victims of personal injury in an effort to call upon the Scottish Government to change the laws of Scotland to discriminate against victims of accident, injury and disease in order to save the insurance industry - an industry that counts its profits in billions and with a turnover that a medium country would be proud to have as its GDP - money.  

And that’s when I found myself shouting at the radio.  I was appalled by such a barefaced attempt to hijack a serious news program for unashamed lobbying purposes particularly when the demands being made of the Scottish Parliament were so outrageous and the evidential basis for making them so far removed from those demands.  

They made two demands. Firstly a call against the “civil liability” Bill making its way through the Scottish Parliament that they said will lead to even more claims and further inflate motor insurance premiums for us all in Scotland.  Secondly, without any further explanation at all for the Scottish Government to change “the discount rate”.  

Let’s look at both of those demands.  

Firstly, there is no civil liability bill making its way through the Scottish Parliament. There is the Civil Litigation (Expenses and Group Proceedings) Bill that aims to make some modest but very important changes to the civil litigation process.  Chief amongst those proposals is the introduction of Qualifid One Way Cost Shifting or QOCS as it is also called.  

QOCS has existed in England and Wales for almost 5 years.  It was introduced in recognition of the fact that insurers have far too much financial power in the litigation process and they can use that financial clout to defeat difficult but meritorious claims.  QOCS serves to rebalance things and to give victims of accidents a fair shot at getting the compensation to which they are entitled in law.  It does no more and it does no less.  

Introducing QOCS in Scotland will similarly redress the balance in financial power away from insurers.  The impact that the bill may have upon the level of claims was forensically analysed recently by the Justice Committee of the Scottish Parliament who concluded that there may be some increase in claims but the numbers will certainly not mushroom.  

There will certainly be no impact on insurance premiums for Scottish drivers.  That is pure and utter spin.  The cost of personal injury claims were significantly higher proportionately in England and Wales for over a decade.  During that time insurance claims were not cheaper in Scotland and so the notion that this bill will somehow see premiums increase in Scotland is nonsense.  If I was being polite, I would suggest that the insurance industry are clutching at straws.  I however think it is more than that. They are contemptuously treating the Scottish people and the Scottish Parliament like fools.   

The discount rate is an extremely complicated issue.  The ABI spokesman did not attempt to explain the issue in any way.  He simply kept repeating the term.  I wonder, if he understands the issue himself.  I say that not to be cruel but because the demand to “lower the discount rate” has become somewhat of a mantra of the insurance industry over the last 6 months.  They have said that this must happen to reduce “fat cat lawyers’ fees”. There is in fact about as much of a link between the discount rate and fat cat lawyers’ fees as there is between what Boris Johnston thinks and what comes out of his mouth.  The two are completely unconnected.  

I find it quite amusing that when I gave evidence before the Justice Committee in relation to the Civil Litigation Bill I specifically raised the issue of the discount rate and the argument that the insurers had been making in relation to it.  I did so to shine a light for the Committee on the general, and I have to say both insidious and malevolent, true aims of the insurance industry in relation to all civil litigation reform.  The committee didn’t think my comments at that stage on that point were particularly relevant.  They are very relevant now, I think.

The discount rate is currently set by a non-governmental body.  It is only of relevant in the most catastrophic and life changing cases where victims of the most serious of injuries received hundreds of thousands of pounds to reflect their future loss of earnings and care needs.  They receive a one off payment of compensation and that one off payment must be enough to compensate their loss of earnings and to provide them with necessary care for the rest of their lives.  Interest rates and likely returns on investments are therefore essential in determining how much that one off lump sum should be.  That is what the discount rate is about.  It is about working out the correct one off lump sum.  With the past decade of low interest rates there is undoubtedly an argument that there needs to be some adjustment but (and it is a huge but written in bold and underlined) the discount rate is irrelevant in relation to lawyers’ fees and any changes to the discount rate means that our most vulnerable and most seriously injured victims of accident, injury and disease will receive less compensation.  In such circumstances that the only winners will be our highly profitable insurers.

Since the Tories came into power the insurance industry, led by the ABI, have engaged in the most successful campaign of lobbying ever seen at the Palace of Westminster. They have achieved sweeping changes to the laws of England and Wales that have had a profoundly negative impact on victims of accidents and injuries in those countries while delivering enormous financial windfalls to their shareholders. The Scottish Parliament have never followed suit and have never shown themselves open to such self-interested lobbing.

This morning on Good Morning Scotland the mask of the ABI in Scotland slipped.  They showed their try face and their true intentions.  They want to achieve in Scotland the same damaging legal reforms that they have secured in England for no purpose whatsoever than to further line the pockets of their shareholders.  I hope and trust that the Scottish Parliament will not be fooled.  

Blog by Patrick McGuire, Partner

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