UK car insurers enjoy £300m legal victory

BRITISH motor insurers yesterday celebrated a legal victory relating to a rise in personal injury awards, saying the decision will save them £300m.

The Court of Appeal ruled that the forthcoming 10 per cent rise in personal injury payouts will only apply to claims made after 1 April 2013 – and not older claims that are settled after that date.

The Association of British Insurers said the additional payouts would have added £13 to the cost of every UK car insurance policy.

The case came about as a result of government measures that hope to reform the claims industry. At the moment no-win-no-fee lawyers can claim a “success fee” from the insurer of the driver that caused the accident. Under the new system victorious claimants will pay the fee themselves, with the burden offset by the increased payouts.

Direct Line, which floats in London today, had warned that it could be hit for as much as £45m if the decision had gone the other way.