Compensation culture: does it really exist?
10 February 2012
A topic which is being widely debated by almost everyone at the moment is the so-called ‘compensation culture’. It has been blamed for the rise in personal injury claims as a result of road traffic accidents and the associated rise in motor insurance premiums.
The insurers pushing for reform have stated on many occasions that they believe the rise in motor insurance premiums is directly related to the rise in whiplash claims and claimant’s solicitor’s fees. The Government has been strongly influenced by this line of argument. The stricter rules in relation to claiming for whiplash and the proposed ban on referral fees, it is argued, will have a significant effect in putting an end to the ‘compensation culture’, thus bringing down insurance premiums.
As a result of this campaign, personal injury lawyers have been portrayed in a very negative light; branded as ‘ambulance chasers’. In fact the Daily Mail recently made light of whiplash injuries by saying “The explosion in whiplash is really nothing more than a racket, fuelled by crooked lawyers, dishonest doctors and a supine insurance industry”. This not only discredits hardworking accident solicitors but also doctors, who also provide valuable services and expertise to the public.
Nothing could be further from the truth. Whilst whiplash claims are difficult to diagnose due to their very nature, it is often the case that insurance companies will put forward an offer to settle without even requiring sight of medical evidence first.
Furthermore, there is a significant amount of evidence which points to the powerful insurance companies simply using this to line their own pockets further. An article on the solicitors journal website by personal injury solicitor Mr David Ellis drew particular attention to a recent article on the BBC website. In this article the chief executive of AXA UK and Ireland claimed that motor insurance companies have not been profitable for many years due to the cost of personal injury claims. However, AXA UK’s profits for the previous year were up by 34%. Admiral Insurance also announced pre-tax profits were up by 27% for the first 6 months of last year and in stark contrast to the argument being put forward by insurers and Government, Admiral announced that if referral fees were banned premiums would still go up in order to balance the reduction in the profits insurance companies make through such referral fees.
Furthermore, the article comments on the fact that two stories were published in the Guardian on 16 September 2011. The first alleged that financial firms with insurance interests have actually given the Conservatives £4.9 million in donations. The second story alleged that Jonathan Djanogly (Parliamentary Under-Secretary of State for Justice) has a personal interest in the insurance industry and consequently in the proposed reforms.
Our personal injury solicitors do not believe the proposed changes in legislation are there to protect the public from the rising cost of car insurance. All the evidence seems to point in the opposite direction, in fact the only people who will gain from this situation are the insurance companies. This begs the question, what will happen to innocent victims whose lives are affected as a result of another road user’s negligence. These victims are not to blame, yet they sustain injuries which potentially have an enormous effect on their lives and those around them. And will there actually be a reduction in the cost of insurance premiums at the end of all this? We fear not.
