Car insurance premiums may soon come down

Recent estimates have stated that each time 1 gets paid out in
compensation for personal injury claims, the legal profession
gets 40p of it. Amazingly, the legal costs have increased so
extravagantly that the British legal profession now receive 2
billion a year through the lengthy legal battles relating to
personal injury claims.

Personal injury cases tend to amble very slowly through the
courts, as a result they are invariably extremely costly.
Consequently, approximately 200 of the average car insurance
premium is earmarked for a potential personal injury claim going
to court. If these legal costs could be reduced, then naturally
the car insurance companies would be able to reduce their
premiums.

With this aim in mind, the Association of British Insurers (ABI)
recently made moves to take personal injury claims out of the
courts and into an independent arbitration system. This has
already been done in Ireland in 2004 and proved to be very
successful, reducing legal costs by 75%.

Currently in the UK, each personal injury claim is decided on
its individual merit in court. The ABI has proposed that
reference payments be set for each type of injury, for example,
in Ireland, a back injury that recovers within one year is
allocated the equivalent of 11,000. A neck whiplash injury
however, which is resolved within a year, would receive an
automatic payout of 9,400.

Ian Crowder of the AA said: \These new proposals will aim to
take personal injury claims out of court and take lawyers out of
the loop altogether, thereby cutting costs significantly.\

He pointed out: \There\'s no doubt that the soaring costs of
personal injury claims has been a significant contributor to
insurance premium inflation. If they could be brought under
control, premiums could be cut.\

The British Association of Personal Injury Lawyers has expressed
some dissatisfaction about these proposals. They think that if
personal injury claims were taken away from the courts, then the
injured would be at the mercy of the car insurance companies.
They also stated that their own research revealed that initial
offers by insurers were, on average, 50% of the final
compensation agreed and that two thirds of defendants denied
liability at the outset.

Fortunately, objections made by the legal profession are not
supported by what has happened in Ireland since the changes were
made. Compensation values in Ireland have remained at similar
levels to pre-arbitration, but people receive their money three
times quicker and legal costs have been reduced by 75%.

Let\'s hope that these changes are made soon, and car insurance
premiums take a swift and significant fall to reflect them.