- Ambulance chasing law firms facing crackdown by ministers in move that could see insurance premiums drop
- Justice Secretary Chris Grayling wants to 'turn the tide on Britain's compensation culture'
- The fees lawyers can make for processing minor injury claims are to be reduced by more than half
- New limits will be placed on 'no win, no fee' cases
- The cost of car insurance could fall 10-15 per cent as a result of reduced payouts
Insurance premiums are expected to fall as ministers attempt to halt the gravy train for 'ambulance-chasing' lawyers.
Justice Secretary Chris Grayling will say today it is time to 'turn the tide on Britain's compensation culture' as he sets out reforms designed to slash rip-off legal fees and prevent insurers, claims firms and garages selling on details of accident victims.
So-called 'referral fees' are being banned, and the fees lawyers can make from processing basic claims for minor injuries suffered in road accidents will be cut by more than half from £1,200 to £500.
The Government is also imposing new limits on what lawyers can earn from controversial 'no win, no fee' cases.
Experts predict a 10 to 15 per cent drop in motoring premiums over the next 12 months as the changes take effect.
The existing system has pushed up legal costs and damages, and is blamed for a boom in whiplash injury claims, making car cover more expensive for all.
Ministers say it has also forced up insurance premiums in other areas, leaving schools, community groups and local authorities fearful of staging events and activities.
Mr Grayling told the Daily Mail: "We are turning the tide on the compensation culture. It's pushing up the cost of insurance, and making it more expensive to drive a car or organise an event. It's time the whole system was re balanced."
Referral fees were legalised in 2004 by the last Labour government, leading to a boom in the claims management industry. The cost of personal injury claims doubled to £14 billion in ten years.
Police, insurance companies, unscrupulous lawyers and breakdown firms have been accused of conspiring to profit from unsuspecting members of the public.
Fees are paid to claims management companies, garages and insurance firms which provide details of accidents to personal injury lawyers in a business estimated to have been worth £3 billion a year.
Claims managers then bombard motorists with texts and phone calls offering to help them to pursue compensation claims for alleged injuries.
The practice of referral fees has also left many hospitals, local councils and businesses with large legal bills.
Personal injury work is worth around £1.8 billion a year for solicitors, while the NHS is paying more than £1 billion a year in damages
The Legal Aid, Sentencing and Punishment of Offenders Act, which has just come into effect, prohibits payment and receipt of referral fees in personal injury cases by solicitors, claims management companies and insurers.
Claims firms are also being banned from offering upfront cash incentives or other gifts to those who bring cases to them.
Mr Grayling said that fees in 'no win, no fee' cases in the civil courts would also be limited. Previously, it has been possible to claim a 'success fee' on top of damages from defendants, often doubling what lawyers earn. Now, defendants will have to pay only the damages and the lawyer's basic fee.
From July, Mr Grayling said, a system used to settle payouts for road accidents quickly and simply without expensive court cases will be extended to also include claims for accidents at work and in public places.
The so-called 'claims portal' will also start handling claims up to the value of £25,000, up from £10,000 now.
The minister also promised action to crack down on the spiraling number of whiplash claims.
The Ministry of Justice has consulted on proposals to set up independent medical panels to improve injury assessment and allow the more questionable claims to be more easily challenged in court by insurers.
Simon Douglas, director of AA Insurance, said: 'The reforms should go some way towards bringing "no win, no fee" type whiplash injury claims under control and will thus reduce the costs of claims.'
