Insurers ambivalent over no win no fee policy changes

Insurance providers have been divided over the government’s plans to reform no win no fee arrangements for claimants in personal injury compensation cases.
Claimants who win their cases will now need to pay the success fees of their no win no fee lawyers directly from their awarded compensation instead of the previous arrangement where the losing side was responsible for payment.  The government’s decision to go ahead with the reforms comes even after the Ministry of Justice’s consultation paper in November 2010 received opposition from 70 per cent of respondents.
The government is also planning to implement several other measures which include increasing general damages by 10 per cent and a cap of 25 per cent on success fees deducted from compensation awards in accident claim cases.  An additional ‘qualified one way costs shifting’ system is also to be implemented which will prevent losing claimants from having to pay the legal costs of the defendant.
Insurers and claimant representatives maintain however that the abolition of success fee recoverability will only result in the restriction of access to justice and put the compensation awards of claimants at risk.
General liability insurers and defendant representatives have fallen on the other side of the issue, stating that the current regime results in disproportionate costs.  One insurer pointed to statistical evidence stating that 2010 figures saw personal injury cases with claimant’s costs running 142 per cent of the amount of compensation actually received.
The MoJ published a response paper this week, stating that the reforms were a necessity in order to restore balance to the English and Welsh civil litigation system.
The paper stated that the new regulations will work towards deterring some weaker cases which are currently brought and that the entire measure package as a whole will aid in restoring much-needed fairness and proportion to the current state of personal injury claim compensation. This will be accomplished not by the denial of access to justice by through a restoration of a more fair balance throughout the system, added the paper.

Insurance providers have been divided over the government’s plans to reform no win no fee arrangements for claimants in personal injury compensation cases.

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