The government announced a major climb-down this week in its long-awaited response to the claims process consultation.

The new process will only apply to road traffic cases worth up to £10,000 where liability is admitted. The consultation had proposed a £25,000 limit that also encompassed disease, employer’s liability and public liability claims.

The Ministry of Justice (MoJ) also ditched plans to make after-the-event insurance premiums only recoverable in cases worth more than £2,500 where the insurer denies liability, so as not to damage the market.

The new three-stage process involves early notification and quick liability decisions; a defined period to negotiate quantum where liability is admitted; and district judge hearings where quantum is not agreed – all on fixed fees. Where liability is contested, or contributory negligence alleged, the claim would leave the process.

The government ducked the question of whether the cost of referral fees should be included in the new fixed fees, saying issues such as solicitors’ overheads, marketing and acquisition of cases were for the advisory committee on civil costs to consider.

Several other proposals which had been opposed by claimant lawyers also bit the dust, although defendant insurers will still have to make a decision on liability within 15 days.

The MoJ confirmed its intention to leave the small claims limit untouched, but it is to raise the fast-track limit to £25,000.

Bridget Prentice, Minister for Civil Justice, pointed out that 75% of personal injury claims come from road accidents. ‘This new process encourages people to come to a quick settlement and to resolve any issues without a lengthy court process,’ she said.

Tony Goff, president of the Motor Accident Solicitors Society, fears that ‘the motor community is now isolated’, adding that he was worried the fees would be set so low as to drive out claims management companies and encourage third-party capture by insurers.

He also called for the advisory committee to have a motor specialist on board when advising on fee levels.

A statement from the Association of Personal Injury Lawyers said the current system of fixed fees had not prevented insurers from disputing costs and causing delay.

The Association of British Insurers and manufacturers’ organisation the EEF described the reforms as a ‘missed opportunity’ for not including employer’s liability claims. Henry Bermingham, president of the Forum of Insurance Lawyers agreed and questioned why a person who broke their arm at work should not have access to the same faster scheme as someone who broke their arm in a car accident.