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Last Updated: Friday, 10 December, 2004, 12:24 GMT
UK compensation culture 'a myth'
A cash box
Claims numbers are falling but the costs of claims are rising
The emergence of a compensation culture in the UK, fuelled by no-win no-fee law firms, has been described as a "myth" by research group Datamonitor.

It said that, contrary to widespread perception, the number of personal injury claims was actually falling.

It said claims had fallen from 743,595 in 2000/01 to 706,715 two years later.

Rising insurance costs reflected the higher cost of legal fees for insurers rather than any increase in actual claims, Datamonitor said.

The cost of claims for insurers rose by almost 10% in 2004 to 7.2bn because of rising legal fees and medical bills, Datamonitor said.

By 2008, the total cost of meeting compensation claims in the UK will have risen to 10.2bn, it said.

Collapse

Anecdotal reports of schools cancelling sports days because of difficulties in obtaining insurance cover reflected this rise in claim costs for insurers rather than realistic fears that any claim would be made.

"The level of media coverage that surrounds personal injuries claims has created a myth about the rise in their numbers... but the underlying trend is that claim numbers are falling," said David Stephenson, market analyst at Datamonitor.

Mr Stephenson cited the collapse of no-win no-fee compensation firms the Accident Group and Claims Direct as key to the falling numbers of claims.

Datamonitor forecast that accident claim numbers will increase at no more than an average 0.1% per year over the next few years.

'Frivolous' claims

On Wednesday, Norwich Union, the UK's largest insurer, called for injury claims of less than 1,000 and non-disfiguring cuts to be excluded from compensation claims.

In addition, the insurer said that successful claimants winning less than 5,000 should not receive payment to cover legal costs.

The moves are necessary to end the UK's "have a go" compensation culture and put an end to "frivolous" claims, the insurer argued.

Norwich Union said that such claims were clogging up the compensation system and leading to legal fees accounting for 40% of all payouts.


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SEE ALSO:
Insurer urges end to small claims
08 Dec 04 |  Business
Firms warned over accident claims
10 Nov 04 |  Politics
Tories target compensation claims
23 Aug 04 |  Politics
Moves to protect school trip staff
14 Apr 04 |  Education


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