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APIL Speaks Out - Compensation Culture and Insurance Premiums

View profile for Jon Rees
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As a lawyer who helps people with spinal cord injuries, I have a close interest in the wider issues within the field of personal injury law. There is always a lot of talk around ‘compensation culture’ and when I caught BBC Breakfast last Friday morning it seemed to be a case of here we go again, but it was good to hear someone speaking up on behalf of Claimants – Ben Thompson on BBC Breakfast News, interviewed Neil Sugarman, President of APIL, the Association of Personal Injury Lawyers.

It is important to look more closely at who is saying what and why where the ‘compensation culture’ is concerned.

Broadly speaking this is the insurance landscape:

•    Insurers need to sell insurance
•    The premium revenue is invested; hopefully not too much has to be paid out
•    Tough market, decades of undercutting each other to secure market share
•    Popular malaise - only 1.5% of us are injured each year, 98.5% aren’t
•    98.5% of the of those reading or watching are thus ‘interested’ in being told they could save money if only people stopped getting injured and claiming compensation, and/or lots of them are bringing fraudulent claims because there is nothing wrong with them. 

APIL campaigns for better health and safety so that the risk of injury is best managed. But people will always be injured. You can’t abolish or ban people getting injured. Health and safety is so often derided particularly in the media but nobody can sensibly argue we would be better off without rules and regulations on health and safety. The impact of reform in this area in recent years has been to make it harder and in many cases more expensive for those who have been injured to access justice, seemingly because of  ‘the compensation culture’. 

In BBC Breakfast’s programme, Neil Sugarman from APIL said that the line peddled by the insurers’ lobby that premiums would be lower if there weren’t so many claims is essentially nonsense. He quite rightly alluded to the fact that the insurance industry PR machine has secured just about every advantage it could possibly have sought in its battle with injured people and those who represent their interests. They promised that if its reform proposals were accepted - and they were - premiums would fall. 

As an aside it is reasonable to suppose that if claim numbers fall (but injury numbers remain constant) this would place a greater burden on the state in terms of statutory sick pay, medical costs, state benefits and the like that usually get picked up in the compensation claims process. People still get injured, but if claiming compensation to cover those costs is more difficult than it was it seems to follow that the tax payer’s burden has increased – but that is for another blog at another time!

Premiums have not gone down. They have gone up. 

Injured people have still been injured but claim numbers have gone down.

That’s right, claim numbers have gone down but premiums have gone up. This over a period where the population has gone up and more cars are on our roads – so presumably premium revenues are pretty healthy too and there should be less being paid out as compensation. 

The insurer response to this turn of events is that premiums haven’t gone down because of a rising fraud problem. It’s difficult to assess from Government figures whether there are more fraudulent claims now than there were previously. Insurer stats often seem self serving but it wouldn’t be surprising in a system re-engineered largely to suit insurers’ processing requirements if the number of people who might try it on had increased. 

Solicitors work on a no-win-no-fee basis and they have had to streamline their services to fit within fixed fees proposed by insurers. Their gate keeping and risk assessment role is important but does it deter the determined fraudster as much as it might have done? I’d like to know the actual numbers here – is there a danger that the tiny minority are being painted as the great majority again? Look more closely at who is saying what and why.

Back to what is known in so far as the compensation culture is concerned. The actual data for those who want to know whether there is a compensation culture or whether claim numbers are going up uncontrollably is held on the DWP website. The government’s own figures on actual claim numbers are clear. There is a definite downward trend.

Click on this link and take a look at the numbers:

It got me thinking about the tiresome and lazy out of control ‘compensation culture’ angle so often peddled in the media. Here are my suggestions for alternative headlines where the compensation culture is concerned. These are based on actual Government statistics (remember the Government has to be informed about every claim pursued and issues a certificate so it can keep track of what the State is spending on benefits because of personal injury that insurers of those who caused the injury are required to repay):

•    Compensation Claim Numbers Lowest in 6 Years (or even better, Compensation Claims Lowest Since Records Began)
•    981,324 Compensation Claims in 2015/2016 – down 2% from previous year and continuing steady downward trend from 6 year high of 1,048.309 in 2012/13
•    17,895 Clinical Negligence Claims Last Year – lowest in 3 years
•    Employer Liability Claims Lowest in 3 years – 86,495 people sued their Employer last year
•    Public Liability Claims Down by Nearly 10% in the Last Year
•    Motor Liability Claims Down by Nearly 10% compared to 5 years ago
•    Population Now 65.34 Million - 1.5% of the population made a claim last year. 1.64% of the population claimed in 2013 (the year where compensation claims peaked at 1,048,309)
•    Downward trend in compensation claims continues.

Oh to be a journalist to make the headlines above punchier. Or a statistician to look more closely at what is actually going on here and how it relates to NHS and social security spend (and premium levels). Oh to be able to put all of this in a wider perspective than insurers and the media have presented it when driving through changes that penalise injured people but were said to be necessary so that premiums (that have gone up) could go down. 

If you would like to speak with Jon about a spinal cord injury claim or any matter raised in this blog do get in touch or @JonReesTweets