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Controversial changes to the ‘No Win, No Fee’ system
Date Listed: 13/04/2012
The general rise in motor insurance premiums has largely been associated with the ‘no win, no fee’ system which creates high legal costs from unnecessary personal injury claims. The Ministry of Justice intends to reform this system; news which has been welcomed by the Association of British Insurers (ABI).
The ‘no win, no fee’ system currently allows the claimant to embark on a lawsuit without having to worry about any large upfront legal fees; if a case is lost no payment is made. The new reforms would eliminate the ability of claimants to recover costly insurance premiums and lawyers fees from the loosing defendant; instead the costs would have to be paid out their compensation awards.
The benefits of the planned reforms would be a better deal for genuine claimants and insurance customers; this should mean lower legal costs and restrictions on insurance premiums.
Since the ‘no win, no fee’ system was introduced in 2000, the number of people making claims has risen which ministers believes creates a ‘compensation culture’. Britain has a reputation for being the ‘whiplash capital of Europe’; it has been estimated that claims for whiplash injury are adding £90 a year to car insurance premiums on average. Transport secretary Justine Greening proposes to ban claims involving low speeds and introduce medical checks from independent sources to validate injuries.
The original reforms were set to take place in October 2012 but have now been pushed back to April 2013.