Insurance giant Zurich is to establish a hitlist of personal injury (PI) firms in a bid to crack down on claimant practices that bring exaggerated costs orders against it.
The insurer has fired a warning shot to claimant PI firms after it successfully won a test case against claimant firm Delta Legal, which was found to be exaggerating costs by an average of £3,000 per case.
Delta Legal has approximately 100 bills in the legal system at any one time. The average legal costs claimed on cases dealt with by Zurich’s defendant firm Beachcroft are approximately £10,000 per case, which means Delta Legal has claims in the system of approximately £1m per month.
Zurich UK technical claims manager Steve Thomas told The Lawyer: “We’ve decided to take court action to stamp out this behaviour and reduce unnecessary claims costs.
“When for every pound we spend on damages a further 93p goes to lawyers in legal costs, it’s time to take definitive action. This case is intended to send a strong message to legal cost negotiators that, if a bill is dishonest, we’ll take the matter to court without hesitation.”
Thomas said Zurich would now look to build a national database to track claims costs in a bid to pinpoint problem areas.
The insurance market had refrained from taking legal action against claimant firms after the Ministry of Justice (MoJ) proposed sweeping reforms of the PI sector in May 2007.
However, the watered-down nature of the MoJ proposals, which will now only apply to motor-related claims rather than to all employers and public liability claims, has spurred insurers into action.