Press release

Turning the tide on compensation culture

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Major law changes are turning the tide on the growing compensation culture, Justice Secretary Chris Grayling said today.

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Major law changes are turning the tide on the growing compensation culture which has forced up insurance premiums and left schools, groups and authorities fearful of staging events and activities, Justice Secretary Chris Grayling said today.

From today, in the latest stage of a series of reforms, the fees lawyers can make from processing basic, uncontested claims for compensation for minor injuries suffered in road accidents will be reduced by more than half – from £1,200 to £500.

The change will make no difference to the amount of compensation victims will receive for genuine claims but will reduce the unnecessary additional bills faced by insurers and enable them to pass on savings to their customers.

It is part of a package of reforms which have taken effect in recent weeks to tackle the high cost of premiums which have affected not just drivers but also school, groups and authorities trying to insure themselves so they can stage events and activities. They also include:

  • no win, no fee law suits transformed so lawyers will no longer be able to double their fees if they win, at the expense of defendants and their insurers.

  • the banning of “referral fees” paid between lawyers, insurers, claims firms, garages and others for profitable claims. Recommend a friend deals will also be banned.

  • claims firms banned from offering upfront cash incentives or other gifts to people who bring claims to them.

Justice Secretary Chris Grayling said:

“We are turning the tide on the compensation culture. It’s pushing up the cost of insurance, and making it more expensive to drive a car or organise an event. It’s time the whole system was rebalanced.”

Today’s changes will not be the end of the Government’s work to tackle the growth of compensation culture.

From Wednesday 31 July 2013 the Claims Portal, used by lawyers and insurers to settle payouts for road accidents quickly and simply, will be extended to also include claims for accidents at work and in public places. It will also start handling claims up to the value of £25,000 (the current maximum is £10,000).

Action is also being taken to crack down on the number of whiplash claims – the Ministry of Justice has consulted on proposals including setting up independent medical panels to improve injury assessment and increasing the small claims court limit so more questionable claims can be challenged in court by insurers.

Notes to Editors

  1. The costs lawyers can recover via the Claims Portal system (used to process uncontested road accident compensation claims for up to £10,000) have been reduced to reflect the amount of work involved and the reduced expenditure on referral fees.
  2. Changes to no-win no-fee deals and the ban on referral fees were brought in on 1 April 2013 as part of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
  3. For more information contact the Ministry of Justice press office on 0203 334 3536. Follow us @MoJPress
Published 1 May 2013