New proposals to reform the law on personal injury actions by clamping down on false claims will cut the cost of insurance, the Minister for Justice has said.
Mr McDowell said his proposals were a direct attack on "compo culture" which could only have a positive effect on insurance premiums.
People who submit false or exaggerated claims, and lawyers who "aid and abet" them in the preparation of such claims, could face up to 10 years in jail, according to the heads of a Bill published by the Minister yesterday.
The Bill also provides for the dismissal of actions where false or exaggerated evidence has been tendered, and a requirement that court document be backed up by a sworn affidavit.
Mr McDowell claimed there was a "culture of exaggeration" and a "significant level of fraud" in many insurance cases, although he was unable to quantify the size of this fraud.
There had been a marked change in behaviour since the insurance industry had opened its confidential phone line and the judiciary started clamping down.
"Yet the compensation culture is by no means dead. The stake has yet to be driven through its heart," he said. People who brought forward false claims still had a good chance of getting away with it.
The Minister warned that if genuine cases were "polluted" by false or exaggerated claims, "the whole thing goes down the tubes".
So, for example, if a person who was knocked down claimed loss of earnings when he wasn't working, the entire claim would be dismissed.
Under the proposals, the limitation period for bringing forward personal injury claims is being reduced from three years to one, and would-be claimants will be required to provide notification and full information at an early stage of the legal process.
The Minister is proposing the wider use of mediation to settle claims before they reach trial, and courts will have the power to have pre-trial conferences to shorten the length of trials.
Provision is also made for the appointment of neutral medical assessors.
Income that was not declared for tax purposes will be excluded from the determination of damages, and courts, when determining damages, will be able to take into account any damages previously awarded to a plaintiff.
Mr McDowell said the compensation culture had placed excessive burdens on businesses and ordinary individuals with negative knock-on effects for the whole of society.
In many cases, the continued viability of firms was endangered by the high cost of insurance.
The full text of the Civil Liability and Courts Bill will be published in the autumn and is expected to become law by the end of the year, he said.
Main proposals:
• up to 10 years' imprisonment for submitting false evidence or
affidavits, or instructing a solicitor falsely
• reduction of the limitation period for personal injuries actions
from three years to one
• all statements of fact to be backed by sworn affidavit
• a greater use of mediation to settle claims
• appointment of neutral medical assessors
