The UK Government has released its new Justice Bill, which contains measures to scale back “no win, no fee” legal arrangements which have contributed to rising motor insurance costs.

It has adopted most of the measures recommended by Lord Justice Rupert Jackson in his review into civil litigation funding.

Among the measures contained in the bill are moves to prevent lawyers from recovering success fees, stop the recoverability of most after-the-event insurance premiums and introduce a new type of “no win, no fee” agreement known as a damages-based agreement.

The UK insurance industry has supported the reforms, saying it hopes they will change the country’s so-called compensation culture, which has seen a spike in personal injury claims arising from car accidents. This has hit insurers’ motor loss ratios and driven up motor rates.

But the Association of British Insurers’ (ABI) decision to back Lord Jackson’s proposals and recommend they be implemented in full has upset some members with legal expenses insurer Elite last week resigning from the ABI over its response to the Bill.

Elite, which underwrites after-the-event legal insurance, says the ABI’s response to the proposed reforms and their resultant impact on the after-the-event market was “not strong enough”.

“The ABI has made it clear that their core members’ interests are paramount, but as legal expenses insurers we do not matter,” Elite CEO Jason Smart said.

Fellow legal expenses insurer DAS left the ABI in October 2010, also in protest at the ABI’s response to the proposed reforms.