Insurers call for 'fast track' compensation system

The Association of British Insurers is calling for a new fast-track compensation system to be set up for people claiming less than £25,000.

It aims to help them get redress without going through a long and costly legal process, as it currently takes around three years for people who have been injured to get compensation. In claims under £5,000, for every £1 the victim receives, an additional 93p is paid out in legal fees.

In a bid to tackle this, the ABI is calling for a new fast-track system to be set up for the 90% of claims that are for less than £25,000.

This would include an easy-to-use claim form that would enable people to submit a claim without having to take legal advice, and a faster timetable that would give insurers just three months to accept or reject a claim.

Damages

There would also be a new public scale of damages that would set out compensation payments for specific injuries.

An independent arbiter would be set up for people to consult if they were not happy with an insurer's decision. If they remained dissatisfied with the arbiter's judgment they could still take legal advice and pursue their claim through the courts.

The ABI also wants the courts to be given more powers to throw out fraudulent and exaggerated claims.

The industry body said its proposals could lead to a "significant reduction" in the amount of money paid out in legal fees, which could in turn reduce insurance premiums over the long-term.

Stephen Haddrill, director general of the ABI, said: "Our proposals are a blueprint for much-needed reform of the personal injury compensation system.

"Too many people are waiting far too long to get a fair payout. This is because the compensation system is so adversarial. We are all paying more for our insurance than we need to as a result of the system's legal costs."

Wider reform

The Government has already taken steps to tackle the system by bringing forward a Compensation Bill.

Mr Haddrill commented: "The Government's Compensation Bill is a positive first step on the road to reform. But much wider reform is urgently needed to ensure we have a compensation system that cares about the people it is set up to help."

The ABI also put forward a series of proposals to improve the provision of care and rehabilitation for people who were ill or injured.

It said there should be tax incentives for employers to provide rehabilitation care through a new tax credit, as well as a new code of best practice to improve employers' responses to accidents and ill-health in the workplace.

The role of the Health and Safety Executive and the NHS should also be extended to promote rehabilitation.

The ABI said it would be discussing its proposals with the Government.