How Important are Insurers in Compensating Claims for Personal Injury in the U.K.?*

To what extent does the institution of insurance influence a system of compensation for personal injury? On the one hand, some academics have suggested that insurance has been no more than a “makeweight” argument in the development of tort liability. On the other hand, others have claimed that insurance has had a substantial effect, even if this is often hidden or not discussed openly. This article lends support to one side of the debate by describing the enormous importance of insurers to personal injury litigation in the United Kingdom. It argues that all cases, in their wider context, have been affected by the practices of insurance companies. This is the case even though insurance is rarely mentioned by judges and largely ignored by textbooks on tort law. Insurers provide the lifeblood of the system.The article examines statistics relating to the number of tort claims brought each year and it notes the extent of insurer involvement. As the paymasters of the system, insurers not only compensate claimants but also fund the cost of legal representation, often for both sides. Insurers have reduced their use of defence lawyers and the extent that they institute formal legal proceedings. However, it is their bureaucracy which determines whether, when and for how much claims are settled, and it is their offices, rather than courts of law, that are the key places for tort in practice. The scope for compensating those injured very much depends upon the incidence of insurance protection, and the amount of damages paid can only be understood against the insurance background. Finally, the article considers the influence of insurers upon potential changes in the law. The importance of insurers ought not to be underestimated; without insurance, the system of compensation for personal injury would have collapsed long ago. The Geneva Papers (2006) 31, 323–339. doi:10.1057/palgrave.gpp.2510073