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The Association of British Insurers (ABI) is recommending changes in the personal injury claims procedure. According to them, the current process is cumbersome and complex. Claims are delayed unduly and legal fees have become exorbitant.

They feel that the current system discourages many people with legitimate injuries to claim what is rightfully due to them because of fear and misunderstanding of the system. On the other hand, AIB believe that people who have learned how to work the system are filing exaggerated claims that they believe need to be discouraged with punitive actions. AIB is calling for an independent arbitration system similar to the one set up last year in Ireland.

Already, according to AIB, the Irish system is doing what it set out to do. Claims costs have been reduced by three quarters, they have put an end to long, lengthy legal battles and yet, ABI says, the compensation to injured parties has not been reduced.

In their evidence before the Constitutional Affairs Select Committee that is looking into the issue, ABI said that out of every £1 that is paid out as compensation, 40p goes for legal fees. The No Win - No Fee system has encouraged unscrupulous solicitors and claims management firms to "front load" their costs so that many charges are already in place even before the insurance company has a chance to accept liability and offer compensation. This is one of the many things that are pushing up claim costs.

ABI's proposed system would make the process of filing a claim much simpler, would put emphasis on rehabilitation of the injured party and would include penalties for people wanting to defraud the system by claiming exaggerated figures.

A spokesman for ABI said, "Many genuine claimants are being deterred from claiming because the system is slow and expensive. Many ill and injured are not getting the care and rehabilitation they need." The hope is that the new proposed system would eliminate that.

ABI also believes that less emphasis has been placed on rehabilitating the injured party and getting them back to work, instead the current system focuses more on a lump sum gotten at the end of a complex, time consuming, and expensive process. They recommend that this emphasis change.

ABI has approximately 400 members who supply 94% of all domestic insurance services in the country. In 2003, ABI members paid out £4.5 billion in compensation for personal injury claims that occurred either at work, in a public place or on the road. ABI says that £2 billion is paid out each year in legal fees resulting from these types of cases.