The government needs to implement its proposals to reform the personal injury compensation system as quickly as possible so that claimants get a faster and fairer deal, the ABI said.

The trade body said in its response to the Ministry of Justice’s consultation paper that a reformed, streamlined compensation system could dramatically cut settlement times for the average personal injury claim from two years to six months or less.

It said that reducing unnecessary legal costs was crucial to settling personal injury claims more quickly and efficiently.

While supportive of the streamlining tenets of the paper, it expressed “disappointment” that the raising of the small claims limit for personal injury claims to £5,000 was not included.

A general tariff tool for assessing damages and sanctions against claimant solicitors who fail to meet proposed timetables for admitting liability were also called for.

But claimant lawyers warned against proposals to bring personal injury claims under £25,000 into a new claims process, warning the move would “swing the pendulum towards costs cutting instead of fully protecting claimants’ rights”.

The Association of Personal Injury Lawyers said only road traffic accident claims with a value of £2,500 should fall within the new process, saying this would address the cases regularly cited by insurers as the ‘problem cases’.

But APIL welcomed proposal that claimants in low value, straightforward road traffic accidents would no longer needed after the event insurance.

However, it warned that there could be a significant increase in premium in cases which require after the event insurance.