The Government’s proposal to end recovery of conditional fee arrangements (CFA), success fees and after the event (ATE) premiums in an effort to reduce the spiralling cost of civil litigation, has been endorsed by the Lloyd’s Market Association (LMA). The LMA has also called for the Ministry of Justice to implement more thoroughly 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 which is, in turn, causing rapidly escalating insurance premiums for Britain’s motorists. The inefficient claims system, says the LMA, is being exploited by middlemen and is leading to a personal injury claims system that is imbalanced, expensive and unfair to defendants.
Commenting on the LMA’s consultation response, David Powell, Underwriting Manager, said; “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 warns that the Government will face significant pressure from claimant solicitors and other intermediaries with a vested interest in maintaining the current claims system. “We urge the Government,” adds David Powell, “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.”
Source : LMA Press Release
