Unaffordable, unsustainable, unacceptable – legal fees in settling motor personal injury claims now cost UK consumers GBP 1,666 every minute according to the Association Of British Insurers.
The ABI highlighted yesterday why the UK’s exorbitant legal fees bill must be cut. The ABI said that UK consumers are now paying GBP 2.4 million a day through their motor insurance premiums – the equivalent of GBP 1,666 every minute – in legal fees incurred in settling low value motor personal injury claims of up to GBP 10,000.
On top of this, legal costs often exceed compensation payments, ABI gave the following facts:
- One insurer’s average claimant legal costs in 2010 represented 142% of the sums received by injured victims.
- A recently reported compensation claim for a work-related injury for GBP 12,750 settled out of court attracted legal costs of GBP 74,000. After hearing about the case, Lord Neuberger, the Master of the Rolls, said of the case that there is something “out of kilter” in the civil justice system.
- A legal bill of GBP 37,250 was run up in settling a claim for GBP 15,000 in respect of injuries sustained by a woman who fell into the moat at a castle (source: National Trust).
- Between 2004-2011 there has been a 5% rise in NHS legal costs, but a 130% increase in claimant legal costs. In the financial year 2010/2011 the NHS paid out GBP 257 million in lawyers’ fees following claims.
Speaking about ‘The Future of Casualty Claims’ at a conference yesterday, James Dalton, the ABI’s Head of Motor and Liability Insurance said: “Since its introduction in 2010 the fast track process for settling lower value personal injury claims has led to significantly quicker compensation pay outs. But the fixed costs in the process remain too high - The UK’s compensation system is riddled with disproportionate and excessive legal costs, often exceeding compensation awards. This means higher insurance costs for motorists and businesses and a heavy cost burden on local authorities and the NHS”.
“The Government must press ahead with the much-needed reform of our dysfunctional compensation system, which, together with the ban on the selling on of personal details of potential claimants, will enable solicitors’ fixed fees to be reduced to more realistic levels. Lower legal costs will help bring down the cost of motor insurance for all drivers.”
