One way or another, the regulation of claims management companies is essential, says Dominic Clayden

Lord Falconer's commitment to six of the 10 recommendations of the Better Regulation Task Force is a welcome step in the much needed modernisation of our compensation system. It was particularly pleasing to see that the government has recognised the importance of rehabilitation.

It was also appropriate that the claims management companies should be singled out, requiring them to effectively self regulate or be regulated.

Norwich Union supports the Claims Standards Council's work to introduce a framework for self regulation and will be happy to enter dialogue once it has in place the standards that demonstrate its ability to meet the level of scrutiny that regulation demands. We do not see this as unreasonable given the legacy that companies like The Accident Group and Claims Direct have left the compensation system.

It was probably no surprise that government felt unable to commit to exploring the use of contingency fees. Norwich Union's view is that it would be premature to do so. We believe that the need for any lawyer involvement in the high volume, low value cases should be tested. The government's undertaking to research the benefits and costs of raising the small claims limit for personal injury to £5,000 is a logical step.

Any potential removal of legal representation is bound to raise concern that injured people will not get a fair deal. This is a challenge that compensators must face.

Any radical change to our compensation system will require all the stakeholders to adapt their behaviours. It is behaviour that needs to be reset if any new system is to work effectively and efficiently.

Norwich Union advocates several changes to the system that would stimulate this change:

  • Service levels for settling claims, ensuring people are helped more quickly
  • Transparency of both damages and costs
  • Amended limitation periods to encourage early notification
  • Give the wrongdoers the first opportunity to accept responsibility and agree the process by which compensation will be valued
  • Penalties for those parties who delay the lifecycle of a claim beyond prescribed and reasonable time limits.
  • Debate remains about the cost of the so-called compensation culture. It matters not whether the cost is £10bn, £8bn or £12bn, the fact is that we need to focus more clearly on the claims where people have genuinely been the victim of wrongdoing and truly deserve all the help and support the system can provide.

    ' Dominic Clayden is director of technical claims at Norwich Union