2006 - a legislative milestone

A year ago, I expressed some shock at the amount of insurance-related legislation the re-elected Labour government was proposing to push through. It looked an ambitious programme but, amid all its tribulations over identity cards, anti-terrorism measures, public sector reform and cash for peerages, it has delivered on the issues that matter to the industry.

We now have a completely reformed set of laws covering uninsured driving - something the industry has been campaigning for since the 1990s.

Close behind are the new anti-fraud laws. These will create a clearer set of fraud offences, again making prosecutions easier and convictions more likely. They are enshrined in the Fraud Bill which has not quite made it to the statute book yet, and awaits its final stages after Parliament's long summer break. On the whole, the insurance industry is pleased with this piece of legislation too, even though it stopped short of creating a specific new offence of insurance fraud.

Perhaps the biggest piece of legislation has been the Compensation Act, which passed through its final stages just hours before Parliament rose for the recess. This looks like one of the most insurer friendly pieces of legislation to hit the statute book in years.

It sets out new tests for the courts to apply when trying to establish negligence in liability cases based around the concept of 'desirable activities'. Whether this will be practical remains to be seen. It is, however, a signal to the courts that the government wishes to set some limits to the creeping advances of the compensation culture.

The most important provisions, however, will deal with the regulation of everyone involved in claims management. Criticisms have been levelled at these measures that they are shutting the stable door long after the Claims Direct horse has bolted. However, we should be content that the potential is now there to create a tough enough regime to stop similar abuses happening again.

The legislation might be in place but the regulations are not - yet.

The industry must act now to ensure the Department of Constitutional Affairs produces a decent rulebook and backs it with sufficient resources to deter anyone else from trying to make a fast buck by encouraging spurious or far-fetched claims.

Secretary, All Party Group on Insurance and Financial Services.