Claims funding company threatens US-style compensation culture

The entry of a new litigation funding company into the UK market has raised fears of a further move towards a US-style compensation culture.

Australian funder IMF (Australia) is to enter the UK after-the-event market towards the end of the first half of 2005.

It will fund high value commercial and group litigation claims but not personal injury claims.

Insurers described the move to target group claims as "worrying".

AXA claims director David Williams said: "They will be trying to whip up interest in claims that may not otherwise be brought.

"I don't like the idea of someone trying to find claimants as they do in the US. The huge marketing costs will have to be paid for in the business model."

IMF managing director John Walker said the company was currently in the process of setting up a UK office and looking at prospective cases.

The minimum claim to qualify for IMF funding in Australia is A$2m (£830,000). Walker said: "We haven't yet set a minimum for the UK, but it will likely be a commensurate minimum."

Walker said the company would initially be looking to fund four or five group litigation claims, and two or three large commercial claims a year.

"It will be small initially," said Walker. "We don't see anyone else in the UK market doing what we do, so we will set up an office and see what happens."

IMF, which is listed on the Australian stock exchange, raised $7.7m (£3.2m) to fund the expansion at the end of 2004.