Norwich Union calls for insurance claims shake-up

Personal injury claims below 1,000 should be blocked, according to insurance giant Norwich Union.

11:11 08 December 2004

Personal injury claims below 1,000 should be blocked, according to insurance giant Norwich Union.

The move comes as increasing numbers of people claim for "frivolous" reasons, spurred on by no-win no-fee companies and their televised advertising campaigns.

Norwich Union has said the huge jump in the number of claims is pushing up premiums for the general public.

The insurer has backed recommendations from the Bar Council, which is calling for the way personal injury claims are processed to be reformed.

As well as a minimum claim of 1,000 the Bar Council would also like to see an end to legal fees being paid on claims below 5,000.

"Claims management companies and solicitors have exploited the public's expectations in terms of what is compensatable and the amounts that might be achieved," commented Norwich Union's director of technical claims, Dominic Clayden.

"The inevitable consequences have been an increase in frivolous and vexatious claims, and an explosion in claimant's [legal] costs. The latter now represents 40 per cent of all payouts.

"During the last year we have been working hard to raise the national debate around the cost and process of compensating people for personal injury and to show that the current system is slow, costly and inefficient."

Norwich Union has proposed that:
-The wrongdoer should have the first opportunity to resolve the claimant's problem;
-That no legal costs should be payable where there is no dispute, with legal costs only be payable for legal advice, not for claims handling;
-There should be complete transparency of the process by which damages are calculated and, in particular, the damages for pain, suffering and loss of amenity for the most common injuries;
-That rehabilitation has to be first consideration and failure on the part of either the compensator or claimant to embrace this should be reflected in the amount of the settlement;
-That breakdowns in the process should be mediated before litigated;
-That managers of workplaces and public places should demonstrate the learning from accidents and manage improvement in risk or face penalties.