Jackson reforms - the Airmic response

Airmic response to the:
Proposals for Reform of Civil Litigation Funding and Costs in England and Wales
Implementation of Lord Justice Jackson’s Recommendations    
Ministry of Justice consultation dated November 2010   

Airmic Membership
Airmic is grateful for the opportunity to comment on the above consultation launched by the Ministry of Justice in November 2010.       

Airmic has a membership of nearly 1,000 individual members and represents the insurance buyers and claims handlers for about 75% of the FTSE 100, as well as very substantial representation in the mid 250 and other smaller companies.  Airmic members are responsible for insurance placements that represent about £5 billion of annual insurance premium.    

In many cases, Airmic members are also responsible for the management of one or more captive insurance companies and it is estimated that an additional £2 billion of insurance premium is paid into captive insurance companies managed by Airmic members.  In addition, a further £2 billion of insurance claims within deductible or other risk retention structures are paid by Airmic members.  Therefore, Airmic members control a total insurance and claims budget of about £9 billion.  

Given the importance of the proposals put forward by the Ministry of Justice, several Airmic members will also be submitting their own detailed company response to the proposals in the consultation document.  

Airmic Opinion
The development of this response has been co-ordinated by the Insurance Steering Group at Airmic.  This group has a range of senior risk managers as members and it co-ordinates the insurance lobbying activities of Airmic.  The group is chaired by a senior Airmic member who is employed as the insurance buyer for a large international manufacturing company.  The opinions set out below have been established by the Insurance Steering Group, following consultation with the Airmic membership.    

Airmic members believe that the legal costs associated with claims against their companies are usually disproportionate to the value of the damages claimed.  This disproportionate legal cost is especially the case for low value claims valued at £5,000 or less.

Accordingly, there is a need for processes and procedures to be enhanced to ensure that costs are proportionate to the nature, value and complexity of each individual claim.  Airmic has responded to previous Government consultations indicating that the legal costs associated with compensation claims should be reduced and the most cost effective track should be used for each claim.  Also, the cost of bringing claims to court should be minimised and the cost of referrals fees should be eliminated from the claims process.  

Therefore, Airmic is fully in support of the introduction of the Jackson reforms as a complete package.  The introduction of only a selection of the Jackson recommendations would not be beneficial in reducing the disproportionate legal costs involved in the current civil litigation processes and procedures.