LMA urges UK government to get tough on claims inflation

But the LMA also called on the Ministry of Justice to seize the moment and implement Lord Jackson’s recommendations, which include action on extending the use of fixed fees and banning (or capping) referral fees.

According to the LMA, the cost of settling personal injury claims is now the single biggest category of expenditure for motor insurers in the UK. This in turn causes rapid escalation of insurance premiums for Britain’s motorists and corporate fleet managers.

The LMA claims that this ‘inefficient’ claims system is being exploited by ‘middlemen’ and is leading to a personal injury claims system that is ‘imbalanced, expensive and unfair’ to defendants.

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David Powell, underwriting manager, said of the LMA response to the government’s consultation paper: “The high cost of personal injury claims is having a direct impact on the insurance premiums being paid by Britain’s motorists and, without reform of the personal injury claims system, these will continue to rise.

“We fully back the Ministry of Justice’s proposals to make CFA success fees and ATE premiums non-recoverable, but are concerned that the full package of reforms, such as extending the use of fixed costs and the ban, or cap, of referral fees, as recommended by Lord Justice Jackson, may not be fully implemented.

“Further, we do not support any alterations or alternative arrangements suggested in the consultation which would upset the careful balance struck by Lord Jackson between claimant and defendant interests.”

The LMA also warned that the government will face ‘significant pressure’ from claimant solicitors and other intermediaries with a ‘vested interest’ in the maintenance of the current claims system.

“We urge the government to disregard narrow vested interests, to consider the wider public interest, and to press on with the rapid implementation of Lord Jackson’s recommendations in full,” said Mr Powell.