Implement compensation system changes 'without delay'

The Association of British Insurers (ABI) warned that the current compensation system was failing and urged the Government to implement changes "without delay". It said personal injury claims from motor accidents currently took an average of two years to settle, while workplace cases took three years.

It has been joined by business group the CBI and Citizens Advice in its call for the Government to introduce proposals it published last year for a faster and fairer system.

The ABI said during the past year 80% of the 250,000 motor accident personal injury claims received by insurers had been straightforward and non-contentious, but despite this it still took an average of 730 days to settle them. It said if the proposals were introduced, claims could be settled in just a quarter of this time.

It added that the spiralling legal costs arising from personal injury claims were impacting on the cost of insurance, accounting for 10% of motor insurance premiums.

According to Government research carried out in 2006, for every £1 paid in compensation, a further 43p is paid in legal costs.

'Less adversarial'

Under the proposals, lawyers would have only five days to inform insurers about a claim after they had taken instructions. Insurers would then have 15 days to decide if they were liable for a motor insurance claim and 30 days to decide for a employers' liability or public liability claim.

Insurers would also investigate claims themselves and negotiate a settlement if liability was clear, removing the need for lawyers to carry out their own investigations.

The Government also proposed setting out timescales within which settlements could be agreed, with the case referred to a district judge for a decision if an agreement was not reached on time.

Stephen Haddrill, director general of the ABI, said: "Our compensation system is failing many claimants. It is too slow, riddled with high legal costs and undervalues rehabilitation.

"Insurers want to pay compensation and arrange rehabilitation faster than the current system allows. The Government has grasped the need for reform. We look forward to implementation of their proposals without further delay. Every day without change is another day of unnecessary delay for claimants."

The CBI said it would work in partnership with other groups to put in place a system that was more claimant-centred, fairer, more streamlined and less adversarial, as well as enabling claimants to receive speedy treatment and return to work and normal life as quickly as possible.