The ABI has attacked the government 's intention to force the courts to review periodic payments in advance.

It said reviewability could put pressure on insurers' solvency and ability to set premiums.

The ABI was commenting on the passage of an amendment to the Bill in the House of Lords last Thursday.

The amendment concerned retrospective periodic payments being flagged by the courts in advance.

This would restrict the Lord Chancellor from being able to review "all cases irrespective of the original terms and conditions of the court order or agreement ".

An ABI spokesman said: "We welcome the amendment. That is a step in the right direction. But we need to argue our case every step of the way.

"The industry is happy with periodic payments, but reviewability is a major concern. It will mean insurers can never really close their books or set premium rates."

During the debate, Baroness Scotland of Asthal said: "If implemented without strict controls reviewability could cause more litigation and endless uncertainty, putting claimants under constant scrutiny and possible financial instability for compensators."

The government was defeated in the House of Lords when peers backed an opposition move to water down proposals for recovering court costs from litigants.

Voting was 90 to 87,a majority of three, during the detailed committee stage of the Bill last Thursday.

The Bill introduces a major shake up in the running expenses and procedures of the courts system.
But Lord Hunt of Wirral and other members of the Conservatives argued that it was wrong for the Treasury and the Lord Chancellor to try to recover increasingly heavy costs of court cases -
including judicial salaries - from litigants.

Beachcroft Wansbroughs partner Andrew Parker said: "Lord Hunt pursued the amendment to the Bill which would have led to self funding courts.

"These will seek to pay all running costs from the revenue of court fees.

"If that had not been defeated, insurance companies would have been hit by spiralling court fees."