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A new compensation scheme is set to save the industry £1bn annually in legal costs. Claimsense has been set up by law firm Russell Jones and Walker working with claims specialist company Elision to speed up compensation payments.

Elision's managing director, Adrian Maurice said, "It has taken a lot of courage for both law firms and the insurance industry to be open to the change in business practices that this system demands. It is clear that we can refine costs without diminishing the service to claimants and this can only be a good thing for all concerned. "

Claimsense is the result of two years' consultation between insurance companies, legal partners, regulators, unions, the government, and the consumer. It's designed to reduce the time taken for the claims process down to three months from the present average of two years and is one of a number of new initiatives from the insurance industry aimed at reducing legal costs.

Russell Jones and Walker's Neil Kinsella said, "The benefits to lawyers are a fully outsourced service that embraces the changes demanded by the market, with a reduction in working capital requirement." and added that to ensure that lawyers were satisfied that the scheme is independent, it would be monitored by consumer groups.

"Claimsense will encourage the insurance industry to feel comfortable in helping develop a system which is transparent, ensures claimants get fair compensation and rehabilitation more quickly, and clearly shows unnecessary costs are being removed from the process. We all win and I am proud that Claimsense shows the way forward for the sector."

The launch of the new scheme comes after debate between the ABI and APIL and the reforming of the current compensation system. Claimsense's partners saw that they needed to lead the debate, and demonstrate a process equally acceptable to the insurance industry and law firms.

Claimsense is a shared file service accessible through a secure role-based portal. Access will be provided to claimants in the future to help them view the progress of their claim.

Although solicitors will be paid less than the statutory fixed fees under this scheme, this is expected to be balanced by efficiency savings.

Claimants supplied by AXA and RJW will be the first to be covered by the scheme, which will initially focus on low value road traffic accident claims. Discussions are presently taking place with other insurers.