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| Is there a Huge Rise in Claims? - C4F Archived News |
The public's fear that the number of injury compensation claims has increased since the introduction of claims management firms is completely founded, the rise in the actual number of claims has been astounding. In 2000 it was estimated that only 30% of people who had a valid compensation claim actually pursued one. By 2003, that number had risen to 66% - more than double. This has been perpetuated by claims management firms promoting the idea of claiming compensation as some sort of lottery win by having individuals appear in their commercials holding large cheques.
Norwich Union's Chief Executive Patrick Snowball commented at a recent conference that part of the problem was that today's culture was more "squeamish" and therefore expected compensation for things that our predecessors would never have considered. His comment was based on the reality that generations of UK citizens had lived through wars and struck a chord saying - "A lot of people can go through life and never see a dead body so when you do, you think you deserve compensation for it ..." Mr Snowball also gave some statistics showing that 96% of people are more likely to make a claim today than 10 years ago which is in line with our own statistics shown above.
One thing that has to be remembered, though, is that claims management firms do not "create accidents" in which there are injury claims to be made - the valid claims were always there but TV advertising has brought to the attention of the public that they may be due compensation for injuries whereas prior to this they would not have considered such a possibility.
No-one can deny that these people have a legal right to compensation, the main concern the public has raised is that this huge jump in the number of claims will drive up the cost of insurance as a whole. Again, this is completely true: Car insurance has risen approximately 30% each year since 2000. To combat this and bring insurance prices down, many insurance companies have started sideline companies offering lower premiums to drivers with 4 or more years no claims. This is intended to result in the "risky" drivers bearing the brunt of the costs resulting from the boom in injury claims in this sector. So of course this begs the question:
Why Are Claims Management Companies Doing This? - Solicitors themselves are legally barred from encouraging a person to make a personal injury claim, but there are insufficient legal statutes cover claims management firms who can push claiming as hard as they like in any sort of media. This has led to solicitor's firms employing the services of claims management firms to "recruit" claimants to their particular firm as this removes them from any possible professional misconduct.
But Why Are There So Many Claims Firms? - Many of you will remember the firm Claims Direct, to whom many attribute the blame for the current crisis. They sold insurance policies to their clients that would cover them in the event that their claim was unsuccessful, this insurance policy cost £1,500 and was either paid by the opposition in the case or (as in most cases) it was taken out of the client's compensation. Many claims management firms still offer such insurance policies though the average amount is £200-£600. Other firms, such as ourselves*, receive a referral fee for referring a client through to that particular firm to pursue the case. Some firms can charge anything from £300-£600 for a referral to a solicitor's firm depending on the case type. This makes it an incredibly lucrative market to be in which is why you will see several claims management firms advertising on television day after day. These high costs are generally pushed into the claims process and are sometimes paid as part of the total money awarded to the claimant which again contributes to the high cost of personal injury claims these days.
So What Can Be Done? - The foundation of the problem is in the current "pushy" nature of the hard hitting advertising trying to convince people that they should make a claim for compensation with the marketing angle of financial gain. Claims management firms are sometimes incredibly useful for helping to locate a solicitor's firm in your area or one who is able to pursue your particular type of claim. What is creating the surge in the number of claims is the un-restricted advertising available to claims management firms. In our opinion, claims management firms should be under the same guidelines as solicitors in that they should not solicit personal injury claims, only respond to those who are genuinely already looking to make such a claim. The public should be made aware of their right to claim but not by those that profit from such information.
On that particular topic I would like to add a quote from a recent article by EADT business editor Duncan Brodie who wrote: "With so many more people now able to engage in litigation, it should not, therefore, come as any surprise that many more are now actually doing so - and the sentiment that this is somehow a bad thing is horribly paternalistic. The real problem is not that so many people are engaging in litigation but that, from time to time, courts have found in favour of claimants whose weak, and sometimes downright frivolous, cases ought to have been struck out." An example of this would be Knowsley Council who in 2003 paid out £3million to 1,200 people who made claims that they had been injured by tripping on pavements. In 2004 it cut this bill to £2.2million by actually defending themselves in court.
The public are sometimes mislead into thinking that all comments regarding the "rise in compensation claims" stems solely from these personal injury claims arising out of regular day to day accidents in the UK. The largest contributor to the compensation costs this country is facing is "other" types of claim such as the recent spate of residents in Iraq suing the Ministry of Defence for injuries they received during attacks by British Soldiers. Another prime example would be the number of Britons dying of the disease asbestosis (from working with asbestos), which can take between 30 and 40 years to develop. Experts predict that more than 160,000 people will die of the cancer in the next 16 years. These and many other factors contribute to the rising costs of compensation which the tax-payer takes the burden. They are decided at a government level which we as a nation are generally unaware of. - Written 24/09/04*
Other Archived Articles:
> The Meaning of the Word Accident?
> Claims: The Rising Cost to the UK?
> Compensation Claims Pros & Cons
> The Claims Management Company
> Fraudulent Claims in the UK
> NHS Compensation Claims
*Disclaimer: This article has been marked as "archived" because, although most of the information may still be relevant, the article was written more than two years ago which may mean that some information may be outdated. Although this site is updated as often as possible the information provided may not accurately reflect the current laws, procedures and/or facilities available to you. To ensure that you get the most up to date information make sure you consult an actual solicitor before pursuing any action. The articles on this site are for informational purposes only and are not intended to advise any particular action or inaction. Please read our terms of use for more information.
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