No benchmarks in Callery

PREMIUM DECISION: Court finds that insurance premium of 350 was reasonable in test case

Final judgment in Callery v Gray has been cautiously welcomed as a boon to claimant lawyers - and a warning shot to claims management companies (CMCs) - but the Court of Appeal shied away from setting a general benchmark for personal injury premiums.The court said it was only ruling, and not setting guidelines, in the Callery case, but found that a premium of 350 was reasonable in that case, a minor road traffic accident.In considering the report of costs master John O'Hare, it disagreed that there should be a presumption that premiums are reasonable unless the contrary is shown.Instead the court said it examined evidence of the relationship between the premium and the risk, and the cost of alternative cover.But there was a barbed warning for CMCs in the court's comparison of Mr Callery's policy with a blanket-style policy from the Accident Group costing 997.50 including tax.

The judgment said: 'On the face of it, adoption of such an option [the 997 premium policy] would be hard to justify.'The finding was welcomed by Accident Line, the Law Society-sponsored referral service.

A statement said Accident Line's premiums - which begin at 300 - should be secure from challenge, and 'it is a very positive outcome for Accident Line, member firms and clients'.The Association of Personal Injury Lawyers gave the judgment a guarded welcome.

APIL treasurer David Marshall, a partner with London firm Anthony Gold, said: 'The decision that the premium of 350 for Mr Callery's road traffic claim was a helpful guideline, but it is disappointing, although perhaps not unexpected, that the court was unable to provide more specific guidance about premium levels.'Anthony Dennison, a partner at Manchester firm Rowe Cohen, who acted for the after-the-event group - a consortium of claims managers, insurers and referral agencies - welcomed the news: 'The 150,000 personal injury cases that have been awaiting the decision of this particular case can now be progressed.'l Our report 'Premium judgment' (see [2001] Gazette, 26 July, 9), referring to the earlier judgment in Callery, stated that the court suggested - obiter dictum - that 100% success fees might be used in more risky cases.

In fact there was no specification as to risk.In addition we stated that an uplift should decrease where cases settle before proceedings.

We should have said where cases settle before the end of the protocol period.Jeremy Fleming