A number of firms, including Ford, Asda and Argos have joined forces to condemn what they call ‚ambulance-chasing lawyers‘.

The firms, who are led by the Association of British Insurers (ABI), claim that they are fighting back following a 72% rise in the number of bodily injury claims which have been received by insurers since 2002 and that the rise, or possibly a large percentage of it, is able to be traced back to claims management companies which send texts urging potential customers to try to pursue claims against companies or insurers.

The ABI says that far too many personal injury claims have become ’spurious and exaggerated‘ and that organisations such as the NHS face losing thousands or millions of pounds every year. It says: „The current system encourages lots of people to think that there is a compensation culture that they are able to exploit with exaggerated and fraudulent claims. The price for this is paid by countless honest customers.“

Now, along with many other companies, it’s formed the Consortium for Compensation Reform, which demands an entire overhaul of the claims system. As evidence the ABI produces statistics showing that NHS legal fees have risen by 5 percent since 2004 while claimants‘ costs have risen 130%. It says that a particular supermarket chain revealed that the money it now gives towards compensation payouts is the same as the annual turnover of five of its stores.

The ABI also turns its fire towards whiplash claims, that have also risen sharply, partly because it is seen as an injury that is tough to diagnose.

The stance taken by the consortium comes almost 3 months after the government proposed a Legal Aid Bill to try to tackle the issue and which is to be debated shortly by a committee of MPs. The ABI’s involvement with the scheme has surprised some as insurers themselves have been in the spotlight for offering customer details to claims firms in substitution for a referral fee.

The Justice Secretary Jonathan Djanogly has attacked the use of referral fees in injury claims and the government is now committed to taking action to prevent them. The former Justice Secretary Jack Straw continues to be vocal in his criticism of the business which is estimated to be worth about 3bn and that is seen to increase the prices of car insurance for all the drivers. He said that the practice was a ‚racket‘ which should be banned.

Otto Thorensen, the director general of the ABI declared that many genuine claimants are losing out under the current civil litigation rules although the consortium’s actions have been heavily criticised by some in the law. Desmond Hudson, chief executive of the Law Society said that the ABI’s actions were self-serving towards the insurance industry and he also rejected the suggestion that ‚ambulance chasing layers‘ were bending the system.

He added: „Our problem is the proposals will mean that many individuals who suffer loss and damage won’t be able to receive compensation and the insurance industry will not have to pay anything out. One can see why the insurance industry might support such proposals.“

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