The Association of British Insurers and International Underwriting Association has in its recent report stated that for every £1 recovered in compensation, 43p is paid in legal costs (see [2007] Gazette, 11 October, 5). This means that every time damages are agreed/awarded in the sum of £2,000, £860 costs are paid (the latter figure includes all disbursements and VAT).


Once the disbursements (medical report fee, hospital records fee, GP records fee, police report fee and after-the-event insurance premium fee) and VAT are deducted, this provides profit costs of less than £400 (20% of damages in this example). I suspect that this is not the picture the two associations intended to paint because it does nothing to support the age-old proposition that claimant solicitors are running up legal costs to ridiculous levels.



The insurance industry appears intent on attempting to highlight a problem which does not exist. Its figures do not provide any evidence of a problem. In fact, they appear to show that claimant solicitors are pursuing cases extremely cost-effectively despite all of the hurdles insurers throw at them throughout the course of a claim.



Guy Platt-Higgins, Law Costing Ltd, Birkenhead