A family’s story
The insurance industry continually accuse the public of generating a ‘compensation culture’ yet, the fact is – “compensation culture” has been disproved as a myth by at least 2 separate government reports that found that it was just a matter of perception, largely caused by media stories about compensation culture.
The accident involved a mother who was driving her young daughter home from school. She was sat, strapped in the back seat of the car doing her homework and was unfortunately injured when the mother crashed the car. The daughter sustained a cut to her eyelid extending into her forehead, an injury requiring immediate hospital treatment, stitching and leaving permanent scarring.
The mother, who was at fault, informed her insurers, a well-known company, of the accident and detailed the damage to her car and to her daughter. She did not seek to make a personal injury claim on behalf of her daughter.
She next received a letter from her insurers advising that the car would be dealt with but also advising her that she had no right of action on behalf of her daughter as she was the policy holder and therefore her daughter could not make a claim. They said that they were sympathetic to her daughter’s injury and would therefore like to make a gesture of goodwill in the sum of £5,000 for her injuries.
The mother had not thought of seeking compensation for the injury and was more concerned at that stage for the wellbeing of her daughter. The insurers began ringing her at night explaining that her daughter had no claim and that this goodwill payment ought to be accepted. It was only after she was advised by them that she if she did not accept the offer now it would be withdrawn that I was contacted.
I wrote telling them that I was acting for the daughter and that the father was the next friend. I advised them that the daughter had a right of action regardless of their ridiculous letter about the mother being the policy holder. They wrote confirming their position but doubled their offer.
I issued proceedings, liability was admitted and in due course the matter was dealt with in the Mayors and City County Court, my client receiving substantially more than the insurer’s “goodwill” offer of £5,000.
The story illustrates, in my view, that insurance companies cannot ever be trusted when dealing with members of the public direct. People with a modest value claim who attempt to deal with it themselves are unlikely to be fully compensated for their losses.
The insurers’ present aim is to try and remove independent claimant’s lawyers from the system. Not only do they want to save themselves costs they are also focused on driving down the level of damages that they pay out to injured parties.
To back up their agenda they make false statements about increasing whiplash claims and potential premium savings and this propaganda is repeated without question by government ministers and media alike.
A study by Confused.com showed that insurance premiums increased an average of 19.2% in 2016 despite the costs of claims falling. In 2015 – £3.6bn was paid out against £4.1bn in 2013, down from £8.3bn in 2010.
Profits meanwhile have soared, figures for the 4 main car insurers show an increase in profits of 14% for Direct Line, Admiral announced record profits and an increase of 11% in the car division, Aviva announced profits up 20% and AXA showed increased revenue of 7%.
In 2012, when the ABI led reforms of civil litigation costs were pushed through by Cameron’s government the insurers said that premium savings would be passed on to motorists. They have not been and instead insurers’ profits have swelled. Louise Ellman, chair of the Commons Transport Select Committee said “The bottom line is that the insurance industry promised that they would reduce premiums as whiplash claims fell and, if they haven’t done it, they’ve reneged on their promise.”
The same lie is now pushed out again to seek further advantage for the insurers over the interests of injured people. The Justice Secretary complains of a “predatory claims industry” and “minor, exaggerated and fraudulent” claims. I ask the question – how many actual “fraudulent“claims are insurers paying out? Surely, if they are known to be fraudulent they are rejected and cost nothing – or is this term simply bandied about by the insurers to justify their aims? The ABI figure for proven fraud is only 0.05% of total claims made.
Anyone who has had an accident and reported it to their insurers might also wonder why they are quickly contacted by one of the insurers’ panel firms of lawyers asking if they want to bring a personal injury claim. Their details will have been sold on by the insurers. The reality is that they are happy to push a personal injury claim as long as they can take some profit back from it rather than allow it to be dealt with by an independent firm of lawyers.
The current view of Government
Liz Truss, The Justice Secretary says “For too long some have exploited a rampant compensation culture and seen whiplash claims as an easy payday, driving up costs for millions of law abiding motorists.” Not according to the ABI’s own figures or the government’s own investigations.
According to Lord Young in his 2010 report for the Government: “The problem of the compensation culture prevalent in society today is …… one of perception rather than reality.”
Professor Lofsted asked to review health and safety reported in 2011 that: “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 perception of it is caused by the ABI and insurers planting stories in the media with inflated figures for fraud and premium increases caused by it.
So, at the behest of the ABI, Ms Truss wants to raise small claims court limit for all claims from £1,000 to £5,000. This means that the claimant’s lawyers would not get paid costs for acting in the claim, and in reality many injured people would have to act for themselves. This would apply to all claims, not just whiplash claims. This does not address the problem of alleged “compensation culture” or fraud it is simply to assist insurers to avoid paying damages to those wrongfully injured.
The impact on injured people
Although a loss of £5,000 may not seem much to her, it is enough to put families of an injured workman into real financial jeopardy. With a small claim limit of £5,000 they would be forced to try and seek the recovery of their losses from a negligent party on their own without the assistance of a lawyer, while the insurers would continue to use their lawyers without restriction of expense.
Contrary to Ms Truss’ view compensation is not a windfall of extra cash – it is restricted by the court system to put an injured person back in the financial position as though an injury had not occurred. It is only paid if the victim is successful in establishing the negligence of the other party. It is not free money.
The insurance industry’s next target? – their wish to raise fixed costs in all civil litigation up to a level of £250,000 thus ensuring an uneven playing field for the vast majority of seriously injured people.
The system is not broken or in need of reform, the latest call for change is just part of the never ending attack on access to justice by the insurance industry.