Wednesday, 1 February 2012

The LASPO bill and the insurance industry: too close for comfort


Earlier this week the House of Lords voted on measures in government's Legal Aid, Sentencing and Punishment of Offenders bill (the LASPO bill), that which is intended to implement various reforms to the civil justice system proposed by Lord Justice Jackson. Fortunately, the vote resulted in a decision to delay implementation until April 2013.

As Lord Wallace of Tankerness put it, the drive to make radical and necessary changes has to be balanced against the need for thoroughness: "We believe that these are important measures and we want to implement them as soon as possible in order to control the costs of civil litigation. We wish to make sure that we get the details of these regulations and rules right, and that will inevitably take some time."

There will many observers who will have breathed a sigh of relief at the announcement by the Lords. Rushing through legislation is rarely a good idea. Time and thought are necessary to ensure that changes are fair, sensible and workable. At a time when a holistic approach is needed to resolve the problems in civil litigation and, especially, the personal injury sector, the LASPO bill, in its present form, is none of these things.

But just as I welcome the delay in LASPO's implementation, I cannot but be concerned by revelations of the cosy relationship between the government and the insurance industry. As The Guardian reported on Monday, insurers were given extensive access to the civil servants charged with drafting LASPO. The result is a bill that seems dangerously slanted towards insurers, benefitting the industry to the tune of hundreds of millions of pounds.

Thanks to a request under the Freedom of Information Act, it appears that the head of civil litigation funding and costs at the Ministry of Justice and the official in charge of the Jackson reforms, and his team gave the Association of British Insurers (ABI), the industry lobbying body, a great deal of information on their plans. This seems to have occurred with such regularity and willingness that Desmond Hudson, the Law Society's chief executive, described LASPO as "legislation for the insurance industry, by the insurance industry."

Naturally, the ABI rejects the charge of collusion. A spokesman said: "We have not said anything in private that we have not said in public and we have nothing to hide. We make no apology for providing evidence to policymakers to tackle the compensation culture and help reduce motor insurance premiums. The ABI, unlike the claimant lawyer lobby, has provided the evidence and analysis to support our public policy positions rather than rely on rhetoric and anecdote."

But, as the ever-readable Left Foot Forward blog says, "40 Conservative MPs, including the prime minister, chancellor, and minister of justice, have or had interests in the insurance industry." Chief among them would seem to be Jonathan Djanogly, the Justice Minister, whose shareholding in Aviva PLC amounts to a £97,000 conflict of interest. Evidently he is far from alone: the Central Conservative Party office and constituencies receive financial donations from a range of figures in the insurance industry and business connected to the insurance industry.

This week we have also seen Sir Fred Goodwin stripped of his knighthood. The Forfeiture Committee's decision to pour such ignominy on the man who played so large a role in the near collapse of the Royal Bank of Scotland has been welcomed by David Cameron. It seems to me, however, that the Prime Minister would do well to look closer to home. The government's house, when it comes to the insurance industry, is not in order.