Personal injury claims have been driving motor insurance premiums for years, because the British legal profession get paid 40p for each £1 paid out in compensation. This could soon be changing, as this article discusses.

Car insurance premiums could be falling soon

The legal system in Britain currently means that all personal injury claims have to go through the courts individually. Many personal injury claims crawl through the courts { personal secured loans } at a snail's pace. The result is lengthy and expensive court costs, and for every £1 that is given in compensation, it has been estimated that the legal profession gets 40p. These costs have risen at such an exponential rate that the British legal profession gets around £2 billion a year just from playing its part in personal injury claim court cases.

These costs have to be covered by the insurance companies, { mortgage rates } and such is the cost to them that it is estimated that £200 of the average yearly car insurance premiums is to cover these legal costs.

It is because of this that the Association of British Insurers is proposing that personal injury claims should be taken from the courts, and instead into an { loans } independent arbitration system. This would set compensation payouts for different types of injuries, and would follow on from a similar system started in Ireland in 2004. There, legal costs resulting from personal injury claims have been decreased by 75%.

At the moment, personal injury claims go to court { home insurance } and are considered individually. If the arbitrator proposed by the ABI is set up, reference payments for each type of injury would make a huge difference to the time and effort involved in a court case. Using the Irish system as an example, a back injury that recovers within a year is allocated the equivalent of £11,000 and a neck whiplash injury, also recovering within a year, would receive a compensation payout of the equivalent of £9,400.

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