Fixed-cost failings


I read with interest the consultation paper published by the Department for Constitutional Affairs (DCA) on reforming the personal injury claims process.



First of all, the DCA is to be congratulated for recommending that the small claims limit remain at £1,000. So far, so good.



As for the rest, the picture is not quite so rosy. Claimant solicitors dealing with the claims process day in and day out have some fairly unpleasant insights into how insurers operate. The bald truth is that insurers are experts at fending off claims. Their shareholders expect it. Delay and obfuscation are the insurers' favourite weapons. Like it or not, this is how they operate.



To find proof of this, look no further than the personal injury protocol. Insurers frequently ignore the time limits. When they do make settlement offers, the opening offer is usually about 40% of the true value. In my experience, proceedings have to be issued in roughly 50% of cases before the correct level of compensation is offered.



So is it not somewhat hypocritical that insurers are complaining about the level of legal costs? By their conduct, they have brought such costs upon themselves. Why do they generally refuse to pay fair compensation in the first place? The insurance lobby appear to have convinced our somewhat naive DCA of their 'plight'.



In view of the above, the fixed-costs regime recommended by the DCA is not the answer. Fixed costs will simply encourage insurers to drag their feet even more, confident in the knowledge that claimants solicitors will use up the allotted costs for the individual case.



I would prefer the DCA to make one small change upstream, which would have significant cost savings downstream. Why not change the rules concerning litigation insurance? Often the premiums cost more than £1,000. In many cases, such insurance is an unnecessary expense.



The single change I would make is to allow litigation insurance to be taken out only when the protocol period has expired. This would act as a major incentive for insurers to deal with claims more swiftly, or face financial penalties. Simple, but effective.



The claims process has experienced wholesale change before, particularly the abolition of legal aid and the introduction of conditional fee agreements. The result was chaos and extra expense. So I would invite the DCA to learn from past experience. We need change, but please introduce it incrementally.



Boris Kremer, Kremers, Gosport, Hampshire