Support to keep no win, no fee claims

Scrapping 'no win, no fee' arrangements won't prevent innocent victims of accidents getting compensation from insurance companies, according to the Association of British Insurers (ABI).

This rebuttal follows claims from the Law Society that the insurance industry had created a 'compensation-culture smokescreen' to hide the fact that assurance firms put the interests of shareholders ahead of consumers.

The war of words is in response to Government plans to make it harder for claimants to make use of 'no win, no fee' agreements, which are also known as conditional fee arrangements.

Huge profits
The Law Society estimated that insurers received 46.4bn in premiums in 2010, but paid out only 30.8bn in claims. It says these huge profits would only increase because the change to conditional fee arrangements would slash the amount of successful claims.

Law Society chief executive Desmond Hudson said: 'The reforms to civil litigation costs and funding, which the Government is proposing to introduce, will further increase the profits of insurance companies to the detriment of consumers.'

Facts are 'wrong'
However, the ABI refuted this by saying the Law Society has simply got its facts wrong.

The ABI said that figures quoted by the Law Society applied to the whole insurance industry, and motoring premiums amounted to 10.7bn, while claims add up to 10.3bn. Additional costs involved in settling these claims meant motor insurers made a loss of 1.8bn in 2010.

'UK consumers are paying 2.7 million a day to the claimant lawyers through their motor insurance premiums,' said a spokeswoman for the ABI.

'This is why, as the Government recognises, we need to improve the system to reduce the high levels of legal costs so that all motorists and genuine claimants get a fair deal.'