Datamonitor, the market analysts, have discovered that insurers do not believe personal injury solicitors will reduce their fees, despite the coalition’s plan to reform the system.
The insurance industry expects the cost of personal injury claims to increase for at least the next three years. In 2010, it was £8.4 billion and the cost is predicted to reach £9.7 billion in 2014.
One of Datamonitor’s analysts, Barbara Kubis-Labiak, said that the government’s intervention will result in a marginal slowdown and they have revised their forecast for the increase in claims costs from 5.45% to 3.7%.
The Ministry of Justice intends to cap lawyers’ success fees at 25% of the damages awarded in personal injury cases. This money will be paid by the claimant instead of the defendant and personal injury compensation will be increased by 10% to compensate.
One of the main reasons for the change in litigation is the increasing cost of personal injury claims, particularly those arising from road traffic accidents. Motor claims account for nearly 80% of all personal injury claims while employers’ liability, medical negligence and public liability also contribute, but to a lesser degree.
Meanwhile, the greater majority of law firms have left their bonus schemes unchanged in the past 12 months, but personal injury firms are likely to buck the trend and reduce bonuses next year.