Insurance companies are to join with some of the UK’s biggest retail brands in a new campaign to crack down on no-win-no-fee legal claims.
The Association of British Insurers is working with carmaker Ford, supermarket chain Asda and pub group Whitbread to call for reform of the UK’s injury compensation system that has led to a surge in spurious but costly legal claims.
ABI research has shown that the number of personal injury claims received by insurers has risen by 72 per cent from 2002 to 2010, leaving consumers, businesses and taxpayers forced to pay more.
Government bodies such as the NHS have been hit hard by the claims culture that leaves the losing party in a dispute to shoulder all legal costs.
The NHS paid out over £257m in lawyers’ fees as a result of claims in the 2010-2011 financial year, while UK motor insurance has seen premium increases of 40-60 per cent due to whiplash and other injury claims.
About £2.7m is paid out daily from motor insurance premiums to claimant lawyers, the ABI said.
It has pointed out that Canada, Australia, Germany and Ireland have all taken action to reform their compensation systems to prevent such claims being pursued.
Legal costs related to such claims usually vastly outweigh the actual damages awarded to a claimant in a successful case.
ABI director general Otto Thoresen said reform would allow more genuine claims to be paid more easily.
“Our current civil litigation system is failing too many genuine claimants – the very people it should be protecting,” he said.
“The position is not irreversible. Other countries have taken action and we must do the same. Excessive legal costs must be reduced.”