Legal Cost Specialists

Myth busters

Another recent tweet from APIL (on 8 August 2012):

“Prof Löfstedt wrote in his recent report that no evidence has been presented of a compensation culture – it’s a myth, not reality.”

Again, sadly APIL provided no link to this report and it is therefore not entirely clear which one they are referring to. However, from a quick internet search it appears that the report they had in mind is Reclaiming health and safety for all: An independent review of health and safety legislation, Professor Ragnar E Löfstedt, November 2011.

If that is correct, a reference to a November 2011 report is hardly the kind of breaking news one normally expects to see on Twitter.

But, does the report actually reach this conclusion? From a quick glance at the same, the closest the Professor seems to come is the following:

“The ‘compensation culture’ (or the perception of it) in the UK has been the subject of several reviews over the last few years, but no evidence has been presented for its existence. … The evidence does seem to suggest the belief in a compensation culture is still having a significant impact on the behaviour and outlook of business, with the Better Regulation Task Force concluding that, although it is a myth, the perception of its existence, driven by media coverage, has a significant impact on the behaviour of both public and private employers”

What there appears to be is a total failure to undertake any kind of statistical analysis on claims numbers or even to properly define “compensation culture”.

Of course, one person’s “compensation culture” is another person’s “access to justice”.

The fact that the report refers back to the conclusions of the Better Regulation Task Force is revealing. As I have commented before, the Better Regulation Task Force’s conclusion that the compensation culture was a myth was based on the fact the total number of claims between 2000 and 2003 were broadly flat and then went down in 2003/2004. A reasonable conclusion based on the evidence.

Now let’s examine the evidence since then.

The CRU figures for registered RTA claims:

2006/07 – 518,821
2007/08 – 551,905
2008/09 – 625,072
2009/10 – 674,997
2010/11 – 790,999
2011/12 – 828,489

A 59% increase over the period.

CRU figures for clinical negligence:

2006/07 – 8,575
2007-08 – 8,876
2008/09 – 9,880
2009/10 – 10,308
2010/11 – 13,022
2011/12 – 13,517

A 57% increase.

CRU figures for total claims registered:

2006/07 – 710,784
2007/08 – 732,750
2008/09 – 812,348
2009/10 – 861,325
2010/11 – 987,381
2011/12 – 1,041,150

A 46% increase

(The only category to have gone down overall is EL claims and this is almost certainly due to changes in the nature of employment of UK workers and possibly changes to the law concerning asbestos related injuries.)

The claimant lobby can’t have it both ways. If the Better Regulation Task Force was correct to conclude that falling claim numbers was evidence there was no compensation culture, then the recent soaring in claims numbers must be evidence that one now exists.

When the facts change, I change my mind. What do you do?

5 thoughts on “Myth busters”

  1. I understand why you would say that as there has been an increase in claims registered there is a compensation culture.

    However more detailed consideration must be given to the figures. It appears to me that the numbers of RTA + clin neg. being registered from year to year rises and falls eg 06/07 – 07/08 – increase of 21966, 07/08 – 08/09 – increase of 79598 and 08/09 – 10/11 – increase 48977 (so number of claims registered incresed then dropped again).

    The overall increase (46%) can be put down to many factors such as better awareness of Claimants now that they can claim, more people given a reason to claim such as the recession. Naturally when the global and national economy worsens people look to different ways to increase income and making a claim is one of those. There need to be stricter measures in identifying those fraudulent claims rather than the Insurer simply paying the Claimant off with a nuisance payment. If the insurer does not believe the claim to be worthy then don’t pay out. Where a claim is found to be fraudulent stricter penalties must be put in place as a deterrent.

  2. On what planet can you employ someone to do a job, then cancel the instructions half way through and expect not to get charged for the work that had been done? What a plank.

  3. There is a compensation culture and it’s stemmed from a combination of media hype and unscrupulous claims management companies making semi-legal unsolicited contact. I’ve wrote on the matter for a number of legal publications. Claims companies are a legitimate and useful business model and have been given a bad name by these cowboys.

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