A new report by Datamonitor estimates personal injury costs will rise by 15% to £9.7 billion in 2014 from £8.4 billion in 2010 due to growth in motor personal injury claims.
The report finds that claims will keep rising despite new regulations being brought in to deal with the problem.
The latest report by the independent market analyst also found that vehicle accident claims currently has the largest market share accounting for a little less than 80% of total personal injury claims, although number of road accidents have come down. The other reasons for personal injury claims are clinical negligence, employer’s liability and public liability.
“The rising costs of motor personal injury claims were one of the key reasons for the review of civil litigation costs by Lord Justice Jackson. With the continued aggressive TV and marketing campaigns by solicitors and claims management companies, there has been a rise in disproportionate claims, with exaggerated claim sizes and unnecessary costs, making regulatory changes essential”, said Barbara Kubis-Labiak, analyst at Datamonitor.
Even if the regulations are changed as suggested by the Jackson review committee, personal injury claims will keep on rising till 2014, albeit at a slower rate, said insurers and solicitors interviewed by Datamonitor. Banning referral fees is unlikely to have any impact either, since it does not address the issue of high solicitor fees. The industry is also unlikely to reduce fees in near future, the report found.
“Although we believe that changes to regulations over the next few years will do something to tackle rising costs, this will only result in a marginal slowdown. In fact, after taking into consideration all of the expected changes, we have only revised our long-term forecast for the 2010–14 growth of claims costs down from 5.4% to 3.7%. Therefore costs will remain a problem and time as well as further changes will be needed to finally bring costs under control”, added Kubis-Labiak.