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Proposed Changes Could Result In Lower Car Insurance Premiums

At the moment, the legal system in Britain forces all personal injury claims to go through the courts and be judged on an individual basis. Many of these claims crawl through the courts at a leisurely pace, the result being expensive court costs. Even worse, for every 0 51 that is paid out in compensation, it has been estimated that the legal profession receives 40p for their legal work. This amounts to the British legal profession receiving an estimated 0 52 billion a year just from personal injury claims ¨C unbelievable isn¡¯t it!

The insurance companies have to cover these costs, and it¡¯s costing them so much that it has been estimated that for every car insurance premium, around 0 5200 of it will be going towards paying these personal injury claim legal costs.

The Association of British Insurers has decided to step in and bring this practice to an end, and has made a proposal. The ABI wants personal injury claims to be settled by an independent arbitration system, instead of by the courts. It would work by setting compensation payouts for set types of injuries, a system that has been operating successfully in Ireland since 2004. There, legal costs have been lowered by three quarters.

If the arbitration system proposed by the ABI is introduced, each case would involve far less time and energy to resolve, so naturally the costs would be far less. In Ireland, a back injury that recovers within 12 months is allocated the English equivalent of 0 511,000. A neck whiplash injury recovering in the same time span would receive a payout of the equivalent of 0 59,400.

Ian Crowder, a spokesman from the AA, reiterated the benefits of cutting the lawyers out, pointing out the fact that ¡°the soaring costs of personal injury claims have been a significant contributor to insurance premium inflation. If they could be brought under control, premiums could be cut.¡± It¡¯s something that we all wish for. Well, almost everyone.

The British Association of Personal Injury Lawyers is the only party that don¡¯t want to see an arbitration system introduced in Britain. Their objections are based on two beliefs, firstly that the injured would lose their right to an individual hearing and would be at the mercy of the insurers. Secondly, that their research showed the initial offers made by insurers to be half of the final compensation reached. They also state that two thirds of defendants at first denied liability, that¡¯s what takes these cases to court.

The experience of arbitration in Ireland so far has not highlighted any of the issues highlighted by the British Association of Personal Injury Lawyers as a problem. Compensation values in Ireland have not decreased since arbitrations, and people get their money up to 3 times more quickly. What¡¯s more, legal costs have been reduced to a quarter of their previous level