Faster and higher compensation without lawyers

Research carried out for the Association of British Insurers (ABI) found that people who were not represented received an average of £289 more in redress and received their money around 95 days sooner than those who had legal representation.

Frontier Economics analysed more than 90,000 personal injury claims ranging from £1,000 to £25,000. The researchers found that across all the cases the average person who was not represented received £5,766 compensation after 503 days, while those who were got £5,477 after 598 days on average.

This was despite the fact that the legal costs of those who were represented averaged 85% of the total compensation they received.

The ABI found that for personal injury motor insurance claims people received an average of £85 more compensation 90 days sooner if they were unrepresented, while for employer's liability cases they got an average of £666 more at £4,496, 53 days sooner.

Legal wrangling

The one area where people received more compensation if they were represented was public liability claims. Claimants received an average of £607 more compensation at £4,317, although those who were not represented still had their money 103 days sooner.

The ABI said the research showed that those making claims would not lose out if a new, more streamlined personal injury compensation system was introduced, which minimised the legal wrangling.

Stephen Haddrill, the ABI's director general, said: "There is now no doubt about the need for reform of the personal injury compensation system.

"Our research shows that genuine claimants will benefit from a simpler, speedier system which minimises legal wrangling. Citizens Advice, local authorities and employer groups agree. We must work together to deliver a fairer, faster compensation system."

Fast-track system

Last December the ABI called for a new 'fast track' compensation system which it claimed could cut the amount of time it takes people to receive redress from three years to six months.

It wants the new system to apply for the 90% of claims that are for less than £25,000. It 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.

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.

According to the ABI, for every £1 paid out by insurers in personal injury compensation almost 40p goes to claimants' representatives. In small claims under £5,000, this rises to 93p paid to claimant representatives for every £1 of compensation in employers' and public liability claims, and 88p for every £1 in motor claims.