The government's review of the claims process is welcome, but it must build on Lord Woolf's reforms and encourage the Civil Justice Council, says Lord Hunt

The insurance industry has had more reviews than most West End productions, but there is one study of vital importance which has just started.

This week, the government's Better Regulation task force will commence its review of litigation. The study, described as important by chairman David Arculus, is going to look specifically at four points:

  • Whether the risk of litigation promotes good practice and compliance with the law
  • The impact of the fear of litigation on the public and private sectors
  • The efficiency of the claims process
  • Whether the system is accessible for everyone - or does it encourage abuse?
  • The scope appears to cover litigation generally, but there is an obvious focus on injury claims. The review by the task force, which is part of the Cabinet Office, may well have been prompted by the reports on employers' liability insurance by the Department for Work and Pensions (DWP) and by the Office of Fair Trading (OFT).

    Teresa Graham will lead the task force's work on litigation. Her view is enlightening: "Everyone says that litigation has got completely out of hand in the US, and I don't want to see that happen here. People must be able to gain redress for genuine harm they have suffered. But the fear of litigation can be very stifling. School trips get cancelled, firework displays fizzle out, playgrounds get pulled down, volunteering is hampered...the list goes on."

    Many will see this as a response to the growing feeling of a "compensation culture". Some commentators will point to an apparent modest reduction in the number of compensation claims handled by insurers. However, the cost of claims continues to rise at a rate substantially outstripping inflation and there is undoubtedly more willingness to claim for "anything and everything".

    Both the OFT and the DWP identified the growth in legal costs as an area of increasing concern. The government should welcome, as a start, the deal struck by the Civil Justice Council on fixed costs for road accident claims under £10,000.

    Disappointingly, this will strictly apply to only claims for accidents occurring after 6 October 2003. Both sides may well choose to apply the agreement to all cases already in the system and should be encouraged to do so.

    You may recall that when insurers welcomed Lord Woolf's civil justice reforms, it was on the basis, as Lord Woolf stressed, that the reforms had to be accompanied by proper and effective controls of legal costs. Although there are now moves in the right direction, the situation is still unacceptable.

    Costs have escalated in what has been sold to claimants as an allegedly risk-free environment. Those misleading slogans - "where there is blame, there is a claim" and "it won't cost you a penny" - have coincided with the abolition of civil legal aid and the introduction of conditional fee agreements.

    I do hope that the task force will concentrate on bringing order to this chaos and give an important impetus to the vital work of the Civil Justice Council.

    Lord Hunt is senior partner of national law firm Beachcroft Wansbroughs