Lawyers get bcar insurance/b cash - bCar Insurance/b | News | Confused.com
By Steven Birch
Personal injury lawyers are swallowing up 10p from every £1 spent by drivers on car insurance premiums.
The Association of British Insurers (AIB) revealed that the high legal costs for setting personal injury claims following road accidents are adding around £40 a year to the cost of car insurance.
AIB analysed more than 50,000 personal injury claims to compile the results, finding that legal fees were almost doubling the amount insurers had to pay out.
For average claims of £2,430, the AIB discovered that insurers were being forced to fork out for a further £2,100 in legal fees.
Overall, insurers are now paying an estimated £2.7 million a day to personal injury lawyers, which is around 10% of all car insurance premiums.
The study shows that the legal profession is benefiting to the tune of 87p for every £1 in compensation for claims valued below £5,000.
Nick Starling, the ABI's director of general insurance and health, said: "A compensation system that can deliver £2,000 of compensation at a cost of as much as £5,000 is dysfunctional.
"Excessive legal costs are a symptom of a civil litigation system that is broken and in urgent need of fixing."