Henderson Insurance Brokers Teesside Director Jonathan Willett fears Government plans to crackdown on fake whiplash injury claims will be too bureaucratic.
The Government is to set up an independent panel of experts to investigate suspect injuries, which have escalated substantially under the ‘no win, no fee’ system.
It has also been reported that the Justice Secretary Kenneth Clarke wants to encourage insurance companies to challenge suspect claims by ensuring that more cases are heard in the small claims court as a way of reducing the threat of large legal bills.
The aim of Government’s crackdown is to try to weed out bogus claims which have sent insurance premiums soaring including those for businesses that run company car and lorry fleets.
It is estimated that the practice of ‘no win no fee’ adds an average of ten per cent to the cost of insurance.
Jonathan Willett said: “While the Government’s sentiment to try to weed out bogus claims is welcome, my worry is that some of the alternative measures could be as bureaucratic as the system they are trying to replace.
“Preparing for cases to be heard in the small claims court could be time-consuming and add costs to an insurance company’s bottom line. “The ‘no win no fee’ system is in desperate need of an overhaul, but it is imperative any new framework overcomes the problem rather than replacing one bureaucratic and costly burden with another. “The issue centres on the fact that people putting in a claim do not make a direct contribution to the costs of the legal case and this is set to continue.
“If they had to pay towards the legal fees they would think twice about trying to secure compensation for very minor injuries.
“The losers under the current system are all those, including companies which have fleets of vehicles, with motor insurance policies as the premiums are higher as a result.”
