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Cost concerns for insurers as justice reform consultation reaches critical stage

10 June 2011

Proposals to further reform the civil justice system in England and Wales could increase the cost burden on insurers according to specialist law firm Browne Jacobson LLP.

This is one of a number of concerns being raised by lawyers at the City based firm as it prepares to formally respond to the Ministry of Justices latest consultation which closes in less than three weeks.

According to Browne Jacobson Partner Nichola Evans, who is coordinating the response on behalf of the firms insurance clients, the proposals raise many more questions that they answer and is urging the industry to make its voice heard:

"Many of the proposals are encouraging, eminently sensible and long over due such as the Governments support for rapid, cost effective justice for low value claims, both under the Ministry of Justice portal and on the small claims track.

"However it also raises major questions which will impact on claims for many years to come. The issues are complex and overlapping, and some of the proposals appear more likely to increase costs than to reduce them.

"In addition some significant reforms are proposed to the County Court and there is no information as to how these reforms will be paid for, for example, increasing the financial limit on chancery claims in the county court with no information as to whether specialist judges are available to hear those cases.

"The clock is ticking and we would urge insurers, if they have not already, to get involved and make their views heard either individually or through their industry bodies."

Amongst the proposed changes outlined in the Ministry of Justice consultation are plans to:

  • Extend the road traffic accident personal injury schemes financial limit

  • Extend the RTA PI Scheme for employers and public liability cases

  • Extend the portal system to process employers liability and public liability claims

  • Introduce fixed costs for all personal injury claims not covered by any extension of the RTA PI process

  • Extend fixed recoverable costs to other fast track claims

  • Introduce a system of mandatory pre-action directions, encouraging litigants themselves to resolve disputes without recourse to the Court process

  • Increase the small claims and fast track financial thresholds

  • Introduce an automatic referral to mediation in small claims cases

  • Increase the chancery limit in the County Court from £50,000 to £350,000

The Ministry of Justice consultation closes on 30 June 2011.

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Lakhbir Rakar

Lakhbir Rakar

PR Manager