The insurance industry’s campaign for cutting the cost of personal injury claims will not end with the banning of referral fees and the reduction of lawyers’ fixed fees in RTA Portal cases, a leading figure in the insurance industry has indicated.
James Dalton, head of motor and liability at the Association of British Insurers, yesterday called for a ‘genuine and open public discussion’ about the level of damages received by claimants and said society needed to start this debate.
‘High compensation awards mean higher car insurance premiums,’ he told the Claims Magazine conference in Manchester.
‘If insurers pay less in compensation, insurance premiums will reduce further. And the industry will have more capital available to invest in well-run companies or infrastructure to support the economic growth which [the] budget reminds us is so desperately needed.’
Dalton (pictured) admitted that insurers had been ‘part of the problem’ in the increasing cost of civil litigation, saying that members’ acceptance of referral fees had added to unnecessary costs in the claims system.
Referral fees will be banned next month weeks before fixed recoverable costs for work through the portal are cut from £1,200 to £500.
Dalton said the insurance industry had work to do to restore consumers’ trust after leading insurers profited from selling clients’ details to law firms and claims management companies.
‘We have paid a heavy reputational price for some of our own practices,’ he said. ‘Insurance is an industry where trust and integrity are critical to consumer confidence.
‘So it has been a major self-inflicted blow for insurers to participate in a personal injury claims market involving a merry-go-round of referral fees and other unnecessary costs.’
Dalton also reproached claimant solicitors who have complained at government reforms and argued the personal injury sector will survive after April.
‘Stop pretending that the English legal system is about to collapse because the gravy train of excessive fees has finally hit the buffers. PI lawyers will still have work to do after April.’