We are the voice of insurance and long-term savings | Contact us

Dysfunctional and disproportionate ABI reveals how motorists are being taken for a ride by high legal costs

The full impact on Britain's motorists of the high legal costs in settling personal injury claims following a road accident is revealed today by the ABI. These costs now add an extra £40 a year to the average motor insurance premium.  

·  ABI's analysis of over 50,000 low value road accident personal injury n claims shows that settling the average injury claim of £2,430 costs an extra £2,100 in legal fees.
·  For every £1 insurers pay in compensation, an extra 87 pence is now paid out in legal costs for road accident personal injury claims valued at under £5,000.
·   An estimated 10%1 of every motor insurance premium is going to the legal profession. UK consumers are paying £2.7 million a day to the legal profession through their motor insurance premiums. 

At a Parliamentary event today, the ABI will call for an overhaul of the compensation system to provide faster, fairer and more cost-effective compensation to claimants, including implementation of Lord Justice Jackson's review of civil litigation. Guest speaker will be Lord Young, whose recent report on health and safety recommended reform of the system. 

Nick Starling, the ABI's Director of General Insurance and Health said: 

"A compensation system that can deliver £2,000 of compensation at a cost of as much as £5,000 is dysfunctional. Excessive legal costs are a symptom of a civil litigation system that is broken and in urgent need of fixing. Too often genuine claimants get the compensation they deserve despite the system, not because of it. The activities of some claims management companies in racking up high legal costs adds to the cost pressures that end up being paid for by motorists through higher premiums.  

"We agree with Lord Young that the recommendations of Lord Justice Jackson's review of civil litigation costs should be implemented in full as soon as possible. We need a simpler, faster, more cost-effective compensation system that gives claimants a much better deal. Reducing excessive legal costs is essential to achieving this."  

- ENDS -  

Last updated 01/07/2016