Trade body urges cut in ‘exorbitant’ costs

Legal fees for settling low-value motor bodily injury claims are costing UK consumers £2.4m a day, the ABI says.

The association says this number, equivalent to £1,666 a minute, highlights why the UK’s “exorbitant” legal fees bill must be cut.

The £2.4m fees, which consumers are paying through their motor premiums, are being incurred in settling motor personal injury claims of up to £10,000 in value, the ABI said.

The ABI also cited several examples of legal costs exceeding compensation payments. These include an insurer whose claimant legal costs were 142% of the sums received by injured victims, and a recently-reported work-related injury claim for £12,750 that attracted legal costs of £74,000.

“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 ABI’s head of motor and liability insurance will say today at a conference titled ‘The Future of Casualty Claims’.

Dalton will add: “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.”

Dalton’s comments follow last week’s summit between prime minister David Cameron and insurance chief executives, aimed at eradicating compensation culture and ultimately lowering motor premiums.