Insurer claims public will pay more if Jackson is implemented

The public will bear the brunt of increased civil litigation costs if Lord Justice Jackson’s report is implemented in full, a leading insurer claimed this week.

Speaking at the Law Society Civil Justice Section annual conference, Dominic Clayden, director of technical claims at Aviva, said the insurer has computer-modelled Jackson’s final report and found that civil litigation costs under the proposed system would increase, rather than fall as intended. He said the extra costs would have to be passed on to all policyholders in the form of higher premiums.

Clayden was particularly critical of Jackson’s recommendation to increase general damages for successful claimants in personal injury cases by 10%, and said that the extra money ‘will simply transfer through the claimant and into lawyers’ pockets’.

Jackson said: ‘It is interesting that the claimant lawyers are saying to me that the 10% uplift is too mean, but the insurers are saying that the increase of 10% is too generous. It’s just possible that the balance of the report is right.’

Clayden said: ‘We are comfortable about the costs recommendations, but are nervous in respect of the damages. We see costs going down and damages going up, but the extra money simply transfers through the claimant and into the lawyers’ pockets. Awards must be proportionate.

‘Insurers will be supportive [of the proposals] but we will continue to point out the impact they would have on society in terms of the premiums that people pay.’

Clayden said Aviva accepts Jacksons’s proposals to: scrap the recoverability of success fees and after-the-event (ATE) insurance from unsuccessful defendants; abolish referral fees for personal injury; and implement one-way costs shifting whereby a claimant does not have to pay a defendant’s costs if the claimant loses. However, he said the insurer does not accept Jackson’s proposals to increase general damages to reflect the removal of success fees and ATE insurance; enhance damages in claims under £10,000; or have fixed costs linked to damages.

Clayden said that insurers are well prepared to offer an increased amount of before-the-event insurance, which was recommended by Jackson as preferable to ATE insurance.

Jackson said that recent parliamentary debates suggest there is ‘a reasonable degree of support for the final report on both sides of the political divide’.