POTENTIAL INCREASE IN SMALL CLAIMS TRACK LIMIT

The Association of British Insurers (ABI) have once again called for an increase in the small claims track limit from £1,000 to £5,000. This change has been proposed with the aim of reducing motor insurance premiums by settling lower value personal injury cases in a more cost-effective way.

Where a personal injury (PI) claim falls within the small claims court, the solicitor cannot recover their own costs, regardless of whether the claim is successful or not.

Currently, the majority of PI claims fall outside of the limit, however increasing it to £5,000 will bring the majority of claims within the small claims track.

As solicitors would no longer be able to recover their costs from the opponent, it is expected that they would attempt to recover them from customers’ damages or from any legal expenses insurance policy that is in place.

Such a change, therefore, has the potential to massively impact on the legal expenses insurance market, including the rates charged under the current operating model.

We will watch developments in this area very carefully, and are already establishing alternative models that would enable customers to receive assistance under their legal expenses insurance policy, whilst retaining 100% of their damages, but without the need to significantly increase premiums.

For further information about the proposed changes, please contact your Account Manager, or email marketing@arclegal.co.uk