Let's keep personal injury law under the microscope

Following the government's defeat on the Courts Bill, the funding of the High Court, county courts and Magistrates Courts has been in the news. As the Civil Justice Council rightly warned us, the government's decision to load the full costs of the civil courts on to court fees was not consistent with its aim of ensuring access to justice. Late at night and by a majority of one, the House of Lords wrote into the Bill in clause 87 that, in setting fees, the Lord Chancellor "shall have regard to the need to facilitate access to justice".

Held hostage to its own words, the Lord Chancellor's Department will have to rethink its position, which was described by Lord Woolf as "not tolerable".

There are more debates to come. Gradually there is more understanding that we cannot go on increasing the cost of claims every year by far more than the rate of inflation. Congratulations to the insurers and others in the industry who have at last succeeded in getting this message across. Invaluable in the debate will be the eagerly awaited Third Bodily Injury Awards Study commissioned by the IUA and the ABI which will be published tomorrow. The study has investigated injury claims trends in the UK and the forces driving them.

It is marvellous that virtually every large and medium sized UK motor insurer contributed to the study (as well as several small insurers). This confirms that the insurance industry is serious about pooling claims information to gain a better understanding of market trends.

There were four working parties in total, including the legal working party, of which partners from my firm were members and co-authors. This new study has investigated whether claims for UK motor bodily injury continue to escalate more quickly than general inflation. The previous two studies both showed that claims escalation had been running at more than double the rate of national average earnings. This cannot go on indefinitely. The trends were especially disturbing for reinsurers, as claims had risen even faster in percentage terms for the large awards.

Since publication of the 1999 report, almost every aspect of personal injury law has come under scrutiny. Inevitably, some of the resulting changes have put up insurers' costs even more.

Although details of the third study are being kept under wraps until tomorrow, the good news is that the use of rehabilitation by insurers and personal injury lawyers has increased substantially since the publication of the Rehabilitation Code in 1999.

The awards study provides the most comprehensive analysis of why bodily injury damages awards continue to rise at a rate that is considerably in excess of inflation.

The forces driving increased damages are not yet exhausted and accordingly the inflationary trend is set to continue into the future. We need to debate these issues much more seriously than ever before.

Lord Hunt is senior partner of national law firm Beachcroft Wansbroughs