Small claims should be disallowed Norwich Union says

The group wants bruises and non-disfiguring cuts to be excluded from compensation claims.

Also, successful claimants winning less than �5,000 should not receive payment to cover legal costs, NU argues.

The moves are necessary to end the UK's "have a go" compensation culture and put an end to "frivolous" claims, the UK's biggest insurer said.

High legal costs

Norwich Union said that such claims were clogging up the compensation system and leading to legal fees accounting for 40% of all payouts.

"Claims management companies and solicitors have exploited the public's expectations in terms of what is compensatable, and the amounts that might be achieved," Dominic Clayden, director of technical claims, said.

"The inevitable consequences have been an increase in frivolous and vexatious claims, and an explosion in claimant's costs. The latter now represents 40% of all payouts."

The insurer made a series of proposals for reform of the UK's compensation culture, including:

• Personal injury claims worth less than �1,000 should not be allowed
• Legal costs should not be covered in compensation cases where less than �5,000 is awarded
• No legal costs should be payable where there is no dispute over compensation
• Faster payment of compensation
• Breakdowns in the claims process, whether about responsibility or amount, should be mediated before litigated
• Medical rehabilitation has to be first consideration and failure on the part of the claimant to embrace this should be reflected in the amount of the settlement.

However, a report by market analyst Datamonitor, to be published on Friday, will describe the UK's compensation culture as a 'myth'.