Personal injury solicitors rebuff ABI claims over ‘excessive’ costs
Personal injury lawyers have hit back at claims that they ‘take motorists for a ride’ by charging high legal fees for settling road traffic accident (RTA) claims.
The Association of British Insurers (ABI) said last week that legal fees add £40 a year to the average motor insurance premium, or 87p for every £1 that insurers pay in compensation.
The Motor Accident Solicitors Society (MASS) and Association of Personal Injury Lawyers (APIL) both pointed out that insurers agreed on fixed costs for the current low-value RTA claims process.
MASS chair John Spencer called on the ABI to share its evidence and calculations.
An APIL spokesman said: ‘This is old news, and it really beggars belief that the ABI has focused on the same tired old argument, when its members have been actively involved in the development of a new claims process. All stakeholders worked on this together, so this statement now is particularly disappointing.
‘The new scheme has been designed to make this specific type of claim more efficient. It will apply to all straightforward road traffic cases up to a value of £10,000, which will actually account for 75% of all personal injury cases, according to the government.
‘It will be interesting to see how insurance premiums will be affected in a year’s time.’
In a statement released last week, the ABI claimed that motorists ‘are being taken for a ride by high legal costs’. It said that 10% of every motor insurance premium, or £2.7m a day, is passed to lawyers as fees.
The ABI said that an average claim of £2,430 costs an extra £2,100 in legal fees. It said it analysed more than 50,000 low-value road accident personal injury claims to arrive at these figures.
Nick Starling, ABI director of general insurance and health, said: ‘A compensation system that can deliver £2,000 of compensation at a cost of as much as £5,000 is dysfunctional. Excessive legal costs are a symptom of a civil litigation system that is broken and in urgent need of fixing.
‘Too often genuine claimants get the compensation they deserve despite the system, not because of it. The activities of some claims management companies in racking up high legal costs adds to the cost pressures that end up being paid for by motorists through higher premiums.’
He added: ‘We agree with Lord Young that the recommendations of Lord Justice Jackson’s review of civil litigation costs should be implemented in full as soon as possible. We need a simpler, faster, more cost-effective compensation system that gives claimants a much better deal. Reducing excessive legal costs is essential to achieving this.’