The ABI's plan to reform the compensation system could be scuppered before it gets off the ground because of opposition from lawyers and the trade union movement.

Fraser Whitehead, chairman of the Law Society's civil litigation committee, slammed the ABI's proposals for omitting lawyers from the claims process. "The Citizens Advice Bureau and claimants want a lawyer involved from the beginning of a claim," he said.

"This is one of the biggest flaws in the ABI's proposed system. Claims lawyers must be included in the process."

The ABI proposes claimants complete an "easy-to-use" form with the industry setting up a free telephone helpline to assist claimants, taking the expense of lawyers out of the equation (see box).

Each year the insurance industry spends £2bn on claimants' legal and other costs, according to the ABI.

The Association of Personal Injury Lawyers (Apil) also condemned any attempt to remove lawyers from the system. It said it left injured people in the hands of insurers whose first duty

ABI proposals for personal injury claims under £25,000

The ABI's proposed compensation process involves:

  • An easy-to-use claim form to enable people to submit their claim without the need for legal advice

  • A faster timetable to give insurers only three months to accept or reject a claim

  • A new public scale of damages to set out compensation payments for specified injuries

  • Tax incentives for employers to provide rehabilitation care, through a new tax credit

  • Extending the role of the Health and Safety Executive and the NHS to include promotion of rehabilitation

  • A new code of best practice to improve responses to accidents and ill health in the workplace.

    • BSS 2024/25

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