Whiplash claim legal costs rising
Sunday 3rd November 2013, 12:11AM GMT.
Government attempts to reduce legal costs from whiplash injury claims seem to be failing.
The average legal costs for small, whiplash-like third party injury (TPI) claims now stand at £2,500 per claimant, according to a report by the Institute and Faculty of Actuaries.
The institute said this was a 15% increase since 2010 “when the Ministry of Justice introduced new measures which sought, in part, to contain legal costs”.
The institute did add that the Legal Aid, Sentencing and Punishment of Offenders Act introduced in April 2013 could potentially reduce the cost of legal fees.
The institute said:
:: Despite a 15% drop in quoted premiums, the costs of insurance claims for private motor insurance rose by 7% in the last year, contributing to the expected £371 cost of a typical motor insurance premium;
- For every case involving a lawyer, an average of £2,500 goes on legal fees for whiplash-type claims;
- Whiplash-like claims account for 85% of the number of TPI claims and just under half of the cost;
- Each small TPI claim now costs insurers more than £10,000 on average to settle. For last year’s data this figure stood at £8,400.
“It now costs insurers more than £10,000 to settle small whiplash-like claims, a year-on-year increase of 26%.
“The impact of this claim inflation is significant and contributes 85% of the numbers of small injury claims, and just under half the cost.”
He went on: “This inflation of cost to insurers does not mean that claimants are proportionally receiving more.
“For these types of claims the average amount typically received by claimants has remained at around 45% (of the cost to the insurer) since 2010.
“We believe that the cost of claims for 2013 will be £371 per policy, up from £354 in the preceding year.
“Clearly, insurance claims have a significant impact on consumers but despite this, the average quoted cost of a motor insurance policy in the UK continues to fall and is now 21% lower than 2010.”