Industry could save 'thousands'

The insurance industry could save hundreds of thousands of pounds if it adopts the recommendations of a report by the Civil Justice Council, which calls for the UK to adopt the US system of paying lawyers.

The council wants “after the event” (ATE) insurance claims to be paid out of a claimant’s damages rather than from insurers if a claimant is successful.

The ABI criticised the current system. “The whole system basically encourages cases to be brought to court whereas they could be settled more quickly,” said a spokesman.

“We are not saying insurers should get out of their responsibilities but it could be settled more quickly,” he said.

“Legal costs add significantly to the overall costs and it would mean people will get the right and fair compensation more quickly.

It’s no secret we have an issue with legal costs, which we feel are disproportionate to the work involved.

“The vast majority of claims are non-contentious and we don’t think there is a need for the number of court actions.”

The only downside to the US-style structure is that it could lead to law specialists only adopting high-value cases, the spokesman added.