Ministers confirm compensation reforms

The Ministry of Justice has confirmed plans to introduce a simplified, fast track system for compensation claims arising from motor accidents.

The reforms, announced earlier this year, are set to be introduced in April 2010.

Justice minister Michael Wills confirmed this in a letter published today, and said all parties had reached broad agreement on the outline of the plans. The reforms were welcomed by the industry when published this summer, but there was widespread disappointment that they were currently limited to motor claims.

The new system will apply to personal injury claims valued between £1,000 to £10,000 in l damages – around 80% of all motor personal injury claims. As well as speeding up claims, the new process will reduce unnecessary legal costs through setting a fixed legal cost for each stage of the process. It will involve the use of standardised electronic claim forms to enable key decisions to be made more quickly and reduce duplication. Challenging new timelines have been built into the process to ensure much quicker compensation payments.

The ABI’s Director of General Insurance and Health, Nick Starling said: “The ABI has long argued for a simpler, more streamlined compensation system that works in the interests of consumers, so we completely support today’s announcement. This new process will cut down on delays, and reduce the high legal costs that are paid for through motor insurance premiums.

“It is now vital that employees injured at work have the same opportunity as those injured on our roads to benefit from this new process, so we call on the Government to extend it to cover employers’ liability insurance claims.”