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Another look at the Jackson reforms17 Feb 2011by Donald MacKenzie We've being following the Jackson debate closely here as, potentially, it could help to reduce the cost to insurance companies of settling personal injury claims which is good news for the cost of car insurance. However, the aspect that we believe would have the greatest potential impact on containing car insurance costs, central to Jackson's proposals, is the scrapping of referral fees. The government, however, did not include this in their Jackson green paper consultation document, something that Jackson and the insurance industry has encouraged them to rethink. While a lot of the focus has been on the relatively expensive Conditional Fee Agreement (CFA) costs, to a significant extent the recent introduction of the fixed-fee road traffic accident (RTA) claims portal that processes claims of up to £10,000 (that's 75%) has already done much to contain legal costs in personal injury claims and the government will be increasing the ceiling for this system to £25,000. Leading legal academics (see our recent blogs) have weighed in, with justification, to state that the Jackson reforms are biased, not evidence-based and will reduce access to justice for the severely injured. There is a cogent argument that would suggest that the reforms could even contravene the Human Rights Act. Pro-Jackson commentators, including the Association of British Insurers (ABI), have pointed out the dysproportionality of legal fees in low cost claims, with legal costs being almost as much as the damages. When all CFA cases are looked at, legal costs are invariably more than the damages award. However, increasing the RTA claims portal ceiling to £25,000 will largely address this. Taking account of all the arguments and that 'raiding' of the damages to pay legal fees is unreasonably punitive of claimants, it is hard not to accept the recommendation of the Oliphant '11 wise men' and suggest that the government should appoint a commission of inquiry to gather and assess evidence about the costs of civil litigation rather than proceed largely on the basis of the (non-evidence based) Jackson report recommendations. |
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