STATISTICS: personal injury compensation needs urgent reform, says ABI director-general


The total cost of bodily injury claims paid by UK motor insurers has risen by 9.5% each year in the last decade, significantly outstripping inflation, a report published this week by the International Underwriting Association (IUA) and the Association of British Insurers (ABI) has claimed.



The fourth UK bodily injury awards study also says the number of claims made has jumped 3% each year between 1996 and 2006, despite government statistics showing the number of people killed or injured on British roads fell by 19% over the same period.



Dave Matcham, chief executive of the IUA, said: 'The increasing cost of motor bodily injury claims is not a recent phenomenon. This is a trend that... shows little sign of abating. Ultimately, however, such increases are unsustainable.'



The study blamed rising costs on more 'big-money claims', reimbursing the NHS, increased life expectancy in calculating compensation, and bigger awards to fund care regimes. The report authors also pointed out that insurers pay lawyers 43p for every £1 of compensation that goes to claimants.



Stephen Haddrill, director-general of the ABI, urged the government to implement reforms streamlining the claims system. 'Key to achieving this is reducing legal costs, which now account for 10% of every motor premium,' he said.



Amanda Stevens, vice-president of the Association of Personal Injury Lawyers, contested how some statistics were presented and said insurers 'continue to look at old figures'. She said that during 2003/06, the average cost per claim to insurers on fully comprehensive policies had only risen by 3.26% - less than the 3.97% national earning index figure for the same period.



'This report should be studied carefully by those pushing for reform because some of the objectives are already being met. We are quicker at solving claims and they are being settled more cheaply. It would be a great mistake to think we must reform the whole system without fully analysing the significant progress already made since the recent reforms were introduced.'



Law Society President Andrew Holroyd said: 'These figures demonstrate that an increasing proportion of those injured in road traffic accidents are obtaining the compensation to which they are entitled. That is good news. We agree that the process for claiming compensation should be streamlined. The Law Society's proposals in our document Fast and Fair, many of which are included in the government's consultation on the issue, point the way forward.'



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Anita Rice