But insurer warns against 'blanket' approach despite government pressure for mediation

Zurich is re-evaluating its procedures in personal injury cases, in a bid to increase its use of mediation.

The insurer said it was working on the fine detail of its review. David Southwell, personal injury claims manager for Zurich UK, said: "Revisiting mediation is something I am quite keen on. But it

is dangerous to take mediation as a blanket approach.

"We are reviewing the whole thing. It has limited application, but we will deploy it where possible."

The move comes as the Department for Constitutional Affairs steps up pressure on insurers to make more effective use of mediation. An amendment to the Civil Procedure Rules, which came into force at the end of April, requires defendant insurers to show they have made attempts to mediate.

Meanwhile, Allianz Cornhill this week criticised insurers for failing to use mediation as an alternative to litigation in personal injury cases.

Tony Newman, claims controller, said: "There is very little use of mediation in the industry. We have tried to educate insurers about its benefits, but they still haven't latched on to it."

He added: "For insurers it is hugely beneficial. We have monitored how much savings we have made through using mediation rather than litigation - last year it was £2.5m. We expect that to grow this year."

But other insurers played down the significance of mediation. AXA head of liability Matthew Scott said mediation was only applicable in the minority of cases.

He estimated that less than one per cent of personal injury cases will end in litigation.

He said: "There are more likely to be disputes over policy wordings rather than settlement fees."

Steve Maddock, technical claims director for Royal & SunAlliance, said mediation was an unnecessary tool that piled costs on the claims process.

He said: "The introduction of independent mediators on the majority of straightforward personal injury cases is unnecessary, as it merely adds another layer of costs to the process."