Insurers say lawyers may lead to delay or lower compensation

Research for the Association of British Insurers (ABI) suggested that injury claims on motor policies take 90 days longer to settle if a lawyer is used.

Payouts are quicker but much lower if a lawyer is used to claim on an employer's liability policy, it found.

However, using a lawyer does lead to larger but slower payouts when claiming on a public liability policy.

"Our research shows that genuine claimants will benefit from a simpler, speedier system which minimises legal wrangling," said Stephen Haddrill, the ABI's director general.

When people make personal injury compensation claims using insurance policies they often employ a lawyer to pursue the matter, even though it is not necessary to do so.

In the sample, lawyers represented claimants in 76% of cases.

In response, Colin Ettinger, a partner at personal Injury lawyers Irwin Mitchell, said he found the ABI figures "highly suspicious".

"The insurance industry is beholden to shareholders... if they can cut out the legal costs they are often forced to pay, in order for individuals to pursue their legitimate claims, they will increase their profits," Mr Ettinger said.

"We would like to have a chance to see the methodology and the evidence behind these statistics to ensure their credibility as we find them highly suspicious," he added.

Quicker system

In 2005, the ABI launched a proposal for a faster and cheaper method of dealing with personal injury claims.

It argued that an arbitration system should be established for all such claims worth up to �25,000.

The ABI argued that it should have the power to decide all claims within six months, with a court case only as a last resort.

For its latest research economists employed by the ABI looked at 93,000 claims last year for sums between �1,000 and �25,000 from six big UK insurers.