IMPACT OF LASPO ACT ON PERSONAL INJURY CLAIMS

One of the most significant reforms to personal injury claims contained in the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) was that success fees can no longer be recovered from the negligent third party.

Success fees have been replaced by Damages Based Agreements (DBA), which entitle a solicitor to up to 25% of their claimant’s compensation in the event that their personal injury (PI) claim is successful. It is important to remember that under a legal expenses insurance policy, policyholders are entitled to keep 100% of any compensation or damages they are awarded, as well as being covered for all legal costs incurred in making a PI claim.

Two years on from the introduction of LASPO, we have examined the impact of the reforms on claims activity under our Family Legal Expenses Insurance policies.

We have seen an increase in the number of personal injury claims: 8% in the 12 months up to March 2014 from the previous year, 12% in the following 12 months up to March 2015.

We expect that the growth in the number of claims is a result of customers realising the benefits of legal expenses insurance (LEI) over other arrangements that will see them having to pay some of their compensation away in legal costs. We have been actively working with our partners to convey the benefits of LEI to their customers, focusing on increasing the understanding of the benefits of the product when compared to other options available. This should, ultimately, lead to greater LEI sales conversations and subsequently claims activity.

The number of personal injury cases converting to panel solicitor has also increased since the introduction of LASPO. For the 12 months up until March 2013, just under 45% of all personal injury claims were being handled by our panel solicitors, whereas by the end of March 2015, this figure increased to almost 55%.

For more information about the impact of LASPO on personal injury claims, please contact your Account Manager, or alternatively email marketing@arclegal.co.uk

Call us on 0344 770 9000