Civil litigation reforms could see fall in car insurance premiums

Thu, 31 Mar 2011

Reforms to the way civil litigation cases are funded could help bring down the cost of car insurance, it has been claimed.

One of the major changes is to the 'no win no fee' system where the government is abolishing the recoverability of success fees and associated costs.

Under the current system, defendants must pay these additional costs if they lose.

But under the new regime, claimants will have to pay their lawyer's success fee out of the compensation they are awarded and will therefore take an interest in controlling the costs being incurred on their behalf.

It is hoped that this will bring a greater degree of cost control to the industry and keep lawyers' fees from getting too high.

Steve Maddock, managing director of claims at Direct Line Insurance, said this could have a big impact on the cost of car insurance.

"Currently ten per cent of every car insurance premium paid goes to the legal profession. The continuing rise of lawyers' fees has been a major contributing factor to recent increases in car insurance prices across the industry," he said.
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