Legal Aid for Accident Claims to be Replaced by Insurance Cover
In the not too distant future we can more than likely expect to see the abolition of Legal Aid and the emergence of BTE or Before the Event insurance cover where accident claims are concerned.
Most personal injury claims are in fact dealt with by no win no fee arrangements between the claimant and hos or her lawyer, but for medical negligence claims, where it is very difficult to assess liability at an early stage, or for highly complex claims, where solicitors are not willing to take the risk of no win no fee at the outset, legal aid still is important.
Currently, Legal Aid enables members of the public to fund claims for compensation through clinical negligence or personal injury which would otherwise prove impossible, but the costs are expensive and there may be a political agenda in that medical negligence claims are costing the NHS billions per year in compensation. The Government, although it would never admit it, may be seeking to lessen the number of claims and therefore lessen the cost to the NHS.
The replacement of Legal Aid with (Before The Event Insurance) BTE insurance is a proposal which most ministers prefer and the funding of legal costs via this method is an alternative which is also backed by Jonathan Djanogly, the Justice Minister. Before the event insurance is a type of insurance policy to protect against an event, and is the same type of insurance for example you would get to insure a car. After the event insurance in contrast is used for protecting against a costs order, after an accident or occurrence has already happened and where legal proceedings are contemplated.
Mr. Djanogly has claimed that the government intends to promote the funding of legal expenses incurred through accident claims with BTE insurance and he believes that, when this proposal comes into play, we will see a considerable drop in the costs of insurance cover.
However, not everyone is in agreement with Mr. Djanogly or in favour of the proposal and the shadow minister, Andrew Slaughter, is concerned that, not only will the proposal prevent many deserving and honest claimants from getting the justice they are entitled to, but will also act as a ‘get rich, quick’ scheme for insurance companies.
With annual BTE insurance premiums estimated to be somewhere in the region of £150.00 and insurance companies looking to gain £1 profit for every £2 made in BTE insurance premium payments this proposal is going to prove big business for many insurers.
The idea of replacing Legal Aid with BTE insurance has been churning around in the governmental pipeline since the 1990s and it seems that the re-emergence of this idea may have been prompted by Germany’s thriving insurance market.
With just under 50% of Germans being covered by legal expenses insurance policies could it be that the UK is soon to follow Germany’s lead?
A consumer survey carried out in 2010 asked 2000 consumers if they would consider paying a £75 annual insurance premium as a safeguard in covering unforeseen legal costs. Over two thirds of the consumers interviewed said they wouldn’t consider paying the premium and just 14% could see the value of BTE insurance cover.
These results don’t really bode well for the government’s proposal and it has to be said that, if Before the Event insurance is such a cut and dried, sure fire way of ensuring justice for those who could otherwise not afford to make a claim would it not have been brought into play some years back?
It would seem that the government have a lot of work to do before bringing about the changes to the way in which accident claims are dealt with and will need to convince the general public that parting with their cash in exchange for insurance cover is a beneficial move.
They will also have their work cut out convincing the majority that insurance companies are honest and will stick to their word rather than worming their way out of paying the claimant’s legal fees.
In theory this proposal may make financial sense but something that perhaps the government haven’t considered when opting to follow Germany’s lead is the difference between UK legal costs and Germany’s legal costs.
Legal costs in Germany are fixed whereas costs in the UK are uncertain and vary from case to case meaning that neither the claimant nor the insurer have a clear cut idea of what to expect when a claim for compensation is put in place.