Michael Faulkner is 'embedded' with the ABI during its roundtable on compensation reform

The word coalition conjures images of Iraq, oil and wayward US bombs. But in a hot dining room in the depths of the Houses of Parliament last week, the ABI was looking to form its own coalition - a coalition on compensation reform.

The ABI was hoping to garner support for its proposals to reform the compensation process but, to some extent, it was preaching to the converted, given the large number of insurance industry big-hitters in the room.

Yet as ABI director general Stephen Haddrill addressed the delegates to explain the merits of the proposals - fewer costly claimant lawyers and swifter resolution periods - it was clear it wasn't going to be all plain sailing.

In addition to some rather sceptical MPs ("I treat it with a degree of scepticism when the insurance industry says it wants to pay claimants more money," was the comment from Hendon MP Andrew Dismore), was a TUC man and new Association of Personal Injury Lawyers (Apil) president Richard Langton.

That's not to say the ABI didn't have some powerful friends from outside the insurance industry. The Citizens Advice Bureau's director of policy, Teresa Perchard said: "The current system is perplexing, confusing and unsatisfactory. There is no compensation culture but a compensation deficit. The ABI's proposals would make a simple and understandable system."

And Oliver Heald MP, the shadow constitutional affairs secretary, also backed the ABI. "We need a system that produces results quickly," he said. "Claimants aren't getting good advice or getting back to work quickly."

But then it was time for the sceptics. Mark Hunter, Liberal Democrat MP for Cheadle sounded a cautionary note. "There is a danger that in making the system more efficient the principles of access to justice may be compromised."

Andrew Dismore also expressed some "serious" concerns over some of the ABI's ideas. "Insurers can't have early notification of claims and still expect a full account of the accident," he said. He also warned that some people had difficulty filling in forms, which insurance companies would use against them.

Apil president Richard Langton did not launch into the expected full-frontal assault on the ABI's proposals (time was running out), instead he concentrated on regulation concerning the reporting of workplace accidents.

He argued that insurers should enforce the Reporting of Injuries Diseases and Dangerous Occurrences Regulations (Riddor) requirements "more strictly". Employers' liability wordings require notification of accidents, he said, and if this was enforced it would enable rehabilitation to begin more quickly.

David Williams, AXA claims director, later pointed out that this would not work, as insurers were not allowed to avoid paying out on employers' liability claims because of late notification of incidents.

Hugh Robertson of the TUC, who remarkably described the insurance industry as "not the villains" (that was the employers), called on the industry to take action immediately rather than wait for the government to legislate. He also warned against increasing the small claims limit as proposed by insurers because it would deprive claimants of legal representation while the insurance industry could keep using its lawyers to defend claims.

So did the ABI's coalition grow? David Williams was optimistic, noting there was "so much common ground" to build on.

And an ABI spokesman said: "We want to explore the areas of difference. We have put a proposal on the table but it is not the only way forward."

As the Department of Constitutional Affairs examines reform options, how many of the ABI's proposals become reality will depend on how the common ground is nurtured in the coming months.

The ABI's proposals

  • Easy-to-use claim forms to enable people to submit claims without legal advice
  • Give insurers only three months to accept or reject a claim
  • A public damages scale to set out compensation payments for specific injuries
  • Tax incentives for employers to provide rehabilitation care
  • Extend the HSE and NHS's role to include promoting rehabilitation
  • New best practice code to improve workplace responses to accidents and ill health