Trade body submits response to Government consultation
The Association of British Insurers (ABI) has submitted its response to the Government consultation on the Jackson Review.
The ABI called for the Government to view Lord Justice Jackson’s recommendations as an interlocking package and as a “wholesale solution to the existing problems with our current civil litigation process.” It argues that this approach would help preserve access to justice for claimants at proportionate cost to defendants.
The ABI criticised the Government’s omission of referral fees in the consultation. The report said: “Disproportionate costs are at the heart of these reforms and referral fees are an integral part of the current problem. The ABI’s response to this consultation must be read against the wider context of the ABI’s position that it would like to see the implementation of Lord Justice Jackson’s reforms as a package and in full.”
According to the response, it is expensive to bring a compensation claim – and disproportionately expensive to bring a low-value one.
The ABI surveyed over 50,000 low value motor accident claims from September 2009 to March 2010, and found that for every pound paid in compensation, 87p was paid in legal costs. It found that UK consumers are paying £2.7m a day to the legal profession through their motor insurance premiums – or £41 per motor insurance policy.
This trend is reflected in employers’ and public liability claims, especially in claims under £5,000 where 93 pence is paid in legal costs for every £1 recovered, according to the report.
The Transport Select Committee are currently considering the escalating costs of motor insurance pricing - the current civil litigation system has contributed to this escalation.
ABI research also shows that for personal injury claims lodged in 2002, the insurance industry paid out £7bn in compensation. It holds that current trends indicate that for personal injury claims lodged in 2009, payouts will double to an estimated £14bn.
“The personal injury system is too slow, too expensive, and fails too many genuine claimants, encouraging many people to believe that there is a compensation culture that they can exploit,” the report said.
