The Institute and Faculty of Actuaries (IFoA) has said that the average legal costs for small, whiplash-like claims now stands at £2,500 per claimant, an increase of 15% since 2010, showing that the Claims Portal failed in its original aim to reduce costs.
The IFoA did however, say that the Legal Aid, Sentencing and Punishment of Offenders Act introduced in April this year "could potentially reduce the cost of legal fees" but made no mention of any impact made so far by the reduction in recoverable costs within the Portal.
The body has also predicted that the cost of claims for 2013 will be £371 per policy, up from £354 last year.
According to the IFoA, the costs of insurance claims for private motor insurance rose by 7% in the last year despite a 15% drop in quoted premiums, contributing to the expected rise in cost of a typical motor insurance premium.
Commenting on its findings, the institute said that for every case involving a lawyer, an average of £2,500 was spent on legal fees for whiplash claims. It also said that each small third party personal injury claim now costs insurers more than £10,000 on average to settle, compared to £8,400 last year.
The IFoA did however, say that the Legal Aid, Sentencing and Punishment of Offenders Act introduced in April this year "could potentially reduce the cost of legal fees".
"The impact of this claim inflation is significant and contributes 85% of the numbers of small injury claims, and just under half the cost," said David Brown, one of the authors of the IFoA report into whiplash costs.
Brown, also said that whiplash-like injury claims have continued to increase for third party motor insurance even though there has been a fall in the number of damage claims.
"This inflation of cost to insurers does not mean that claimants are proportionally receiving more. For these types of claims the average amount typically received by claimants has remained at around 45% (of the cost to the insurer) since 2010," he added.