Zurich sparks row on CFA early admission

Zurich Municipal and local authorities are at loggerheads over tackling the soaring cost of personal injury claims.

The public sector insurer wants local authorities to adopt a policy of early admissions in liability cases in a bid to curb the legal costs

- conditional fee agreements (CFAs) - of settling claims.

Speaking at a conference on CFAs, hosted by the

Local Government Association (LGA), Zurich Municipal claims manager Alan Hunter, urged local authorities to admit liability early if the claim is hard to defend.

He said authorities could save money because fast-tracked cases limit solicitors' success fees to 5% of the compensation awards.

He said: "Local authorities should be willing to admit early liability when a relatively simple case is presented to them.

"Now claimants' solicitors have the ability to charge a success fee, it becomes even more important for defendants to resolve claims quickly and efficiently, before costs escalate.

"Something has to be done to deal with the fact that 40% of insurers' outgoings go on legal costs."

But many local authorities were strongly against early admissions of liability, fearing it will make local authorities a soft target for claims.

Vivien Hutchinson, insurance officer at Bolton Metropolitan Borough Council, said: "It is not a
tactic we would use. We would only consider early admissions of liability if we have all the facts.

"If you do pursue that route then local councils would be paying claims that they could easily defend - indeed Bolton [council] has a good record of repudiating claims."

The LGA would not endorse its members' views.

LGA finance project officer David Maddison said: "It's up to the authorities to choose. If you settle quickly the legal costs don't escalate but people could see the council as a soft touch."

Zurich Municipal has commissioned research to investigate the impact of CFAs on councils.

The results will be announced at the LGA conference on 2 July.