Reforms introduced in April 2013 have helped cut average settlement costs by 4%
Legal reforms helped to drive down fees for motor insurance claims by two-thirds last year, according to research by the Institute and Faculty of Actuaries (IFoA).
David Brown, author of the IFoA report into motor insurance claims, said that falling legal costs had helped drive down the overall cost of a settled claim by an average 4%, despite the introduction of a 10% uplift in damages as part of the motor legal reforms that came into force in April 2013.
“Fixed legal costs have dropped some 65%,” he said. “That is quite a sizeable reduction per individual claim and that is certainly something we are seeing coming through in the settled average costs.”
The Ministry of Justice slashed the fees claimant law firms receive for a personal injury claim passing through the portal from £500 to £1,200 in April 2013.
The IFoA research also found that third-party motor injury claims had fallen by 10% in 2013 after the motor legal reforms.
This reduction in claims volume and costs coincides with a 35% drop in the number of claims management companies (CMCs) operating in personal injury, to 1,214 as of 4 April 2013.
This means the number of CMCs has now more than halved since peaking at 2,500 in 2011.
No comments yet