UK 'tops compensation table'

Compensation culture is blamed for "defensive" medicine

The UK pays out more compensation claims than the rest of Europe, running up a bill of around £10bn a year, a report reveals.

Payouts and legal costs are rising by 15% annually amid a growing "compensation culture", the Actuarial Profession report says.

The bill accounts for 1% of the nation's gross domestic product, and leaves the UK at the top of the payout list in the European Union, with 78,100 applications every year.

We believe that a more litigious society would be a bad thing because the costs, both financial and in terms of restricting activities, outweigh the benefits

Julian Lowe
Actuaries' Working Party

France is the second highest with 13,353 applications each year.

The cases included ordinary insurance claims and negligence involving the NHS, the police and local authorities.

The report, called The Cost of Compensation Culture, blames the rise on the growth of the "no win, no fee" arrangements in a series of test court cases.

And a lack of central focus from the government was also responsible, the report adds.

Julian Lowe, chairman of the Actuaries' Working Party which produced the report, said: "One of our key findings is that over a third of the total cost of compensation goes in legal and administrative expenses.

"This seems a fundamentally inefficient way of delivering compensation."

Colleague killed

Schools were increasingly vulnerable, with trips at risk because insurance premiums were so high and students taking action for the effects of errors in exam marking.

Post-traumatic stress disorder cases are growing rapidly in the armed forces and the police.

Compensation among police rocketed to £340m in 2000

One in every 220 soldiers has made a claim, including one who sued for seeing his colleague killed on duty.

The police compensation bill amounts to about 7% of the total police payroll, with claims having more than doubled in three years, the report says.

Compensation culture had "taken root" in the NHS, the report said, including negligence in operations and illnesses picked up while staying in hospital.

This has had an impact in other ways, such as lost management time spent assessing risks, and possibly worse health and safety.

Mr Lowe added: "Some have argued that the shift towards an individual's right to compensation has forced big business and public authorities to behave more responsibly.

"We believe that a more litigious society would be a bad thing because the costs, both financial and in terms of restricting activities, outweigh the benefits of providing better compensation to accident victims."