‘No win, no fee’ change could be big deal for travel

Agents and operators could face fewer personal injury claims as a result of legal reform proposed last week.

The changes to the “no win, no fee” systemproposed by appeal court judge Lord Justice Jackson could “change the landscape” of claims against travel companies, some lawyers believe.

Under the existing system, which has been criticised for encouraging speculative claims, losing claimants do not have to pay legal costs.

The reforms propose claimants should foot the legal bill themselves if they lose. The potential costs of claiming are also set to increase under plans to scrap insurance covering lost cases.

Defendants would largely have to pay their own legal costs, whether they win or lose, and will have to pay the claimant’s legal costs should the claimant win.

Abdulanesh Alaraqu director of Brit Claims said the reforms would discourage speculative cases.

“At the moment, there is an ethos of ‘we might as well have a go’, but if the costs to pay should people lose increase, they may not be so willing to take action,” he said.

“It means lawyers will only want to take on strong cases. This will change the legal landscape of claims against travel companies.”

Claimants who win will be eligible for compensation payments that are 10% higher than now.

However, travel firms could still pay less if they lose, because a cap would be introduced on what a claimant’s lawyer can claim as a success fee.

The reforms are due to start in 2012.

Insurance Claims: Young Italian insurers’ association launches in Lo...

Insurance Claims: Young Italian insurers’ association launches in Lo...: "The Unione dei Giovani Assicuratori e Riassicuratori Italiani has officially launched in London to welcome members working in other countri..."

Insurance Claims: ch_fluidH = 1;ch_nump = "6";ch_client = "sajeda778...

Insurance Claims: ch_fluidH = 1;ch_nump = "6";ch_client = "sajeda778...

Insurance Claims: Towergate recruits Heath Lambert team in Aberdeen

Insurance Claims: Towergate recruits Heath Lambert team in Aberdeen: "Towergate Insurance Aberdeen has recruited Mark Webster and his team from Heath Lambert to lead the expansion of its operation.Mr Webster j..."

Insurance Claims: UK insurance sector volumes and profitability incr...

Insurance Claims: UK insurance sector volumes and profitability incr...: "The UK financial services sector has seen growth for the third quarter in a row, according to a new report from the Confederation of Britis..."

Reinsurance market performs as intended

Aon Benfield has released its latest Reinsurance Market Outlook report, which provides an overview of the trends witnessed at the 1st April reinsurance renewals.

The intermediary reveals that despite “a string of meaningful insurance events” and associated adjustments in pricing, the decline in US and European property catastrophe rates continues.

Few European programmes renew at 1st April but with regard to the US, the season saw property catastrophe rates for programmes including hurricane risks decrease by 5% to 10%.

Furthermore, the broker is predicting that the June and July renewals period will find price changes of flat to down 5%, for US hurricane-driven programmes.

The Japanese earthquake on 11th March did affect the renewals process, as many insurers opted to extend current programmes while losses were being assessed.

Where Japanese renewals took place, the costs of typhoon programmes increased by 5% to 10%, while most earthquake programmes increased within a range of 25% to 50%.

Aon Benfield Analytics chairman, Bryon Ehrhart, sums up: “The reinsurance market remains functional with its existing capital base, and we do not anticipate the need for material new capital flows into the reinsurance market to satisfy insurer demand for catastrophe reinsurance based upon the global events to date.”

He adds: “Throughout the recent, significant global events, reinsurance responded to the needs of global and regional insurers as intended, with material volatility shifted to reinsurers from the balance sheets and income statements of global and regional insurers.”

Also of note, reinsurance programmes covering New Zealand, where a second major earthquake struck Christchurch in February, do not renew at 1st April.

Last month, Aon Benfield formed a Market Analysis team within Aon Benfield Analytics in a move aimed at allowing Aon Benfield Research to focus entirely on academic and industry collaboration.

Lord Chancellor faces legal action over discount rate review

The Association of Personal Injury Lawyers (APIL) says it is taking legal action because the Lord Chancellor has failed to review the discount rate, despite announcing in November of last year that a review was taking place.

The discount rate is used to calculate the amount deducted from an injured person’s compensation to account for any income he or she may receive from investing their damages.

In 2001, the rate was set at 2.5%, based on yields generated by index-linked government stock (ILGS).

Since then, yields on ILGS have gradually declined and according to APIL, over the last three years the average gross yield has been less than 1%.

APIL has now issued proceedings for a judicial review, stating that the Lord Chancellor has failed to complete a review or provide a timetable for it.

The Association’s president, Muiris Lyons, says: “We are gravely disappointed that the Government has failed to carry out its review as injured people are continuing to be undercompensated, in some cases, by hundreds of thousands of pounds.”

He adds: “It has been nine months since we first brought this issue to the attention of the Lord Chancellor and we find it unacceptable that no meaningful progress has been made since then.”