Insurers have called on the Government to provide tax relief on legal expense schemes following backing from Treasury Minister Jonathan Aitken.
Aitken told the Society of Conservative Lawyers that he was keen to see an extension of private insurance to ease the burden on the legal aid budget.
Legal expense insurers have welcomed his support but claim more could be done to encourage new schemes.
The Legal Protection Group wants to see tax relief made available on legal expense insurance to help stimulate the market.
DAS, another legal expense insurer, claims that substantial savings in the legal aid budget could be made by transferring personal injury and consumer contract disputes to private legal insurers for as little as u5 per year.
Paul Asplin, assistant general manager of DAS, says: "We would highlight personal accident and consumer contract disputes in the civil courts as the two areas which could be removed most easily from the State sector."
But Nicholas Bradley, litigation partner with Davies Arnold Cooper, refutes any suggestion that insurers have neglected the legal market.
"Instead of taking positive steps to answer loud and justified criticism of the way the legal aid budget is spent, ministers are trying to pin the blame on the insurance industry for failing to offer a workable alternative," he says.