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Daily Insurance Industry News
Monday 22nd of January 2018
September 5, 2011

ABI launches attack on compensation culture

by Gill Montia

Story link: ABI launches attack on compensation culture

Retailers and business groups have join forces with the Association of British Insurers (ABI) in the latest bid to combat the UK’s “have a go” compensation culture.

Argos, ASDA, Ford, and Whitbread are among the companies adding their weight to a new ABI report highlighting the reasons why the UK’s current system of compensation is failing too many genuine claimants.

According to the study, “spurious and exaggerated” personal injury claims plus excessive legal costs have made it harder for genuine claimants to succeed but have pushed up costs for consumers, local authorities and the NHS, with ABI figures backing the argument as follows:

The number of personal injury claims received by insurers leapt 72% between 2002 and 2010.

UK consumers pay £2.7 million a day to claimant lawyers through their motor insurance premiums, despite the fact that people get more personal injury compensation (typically an extra £289) more quickly, if they deal with an insurer direct.

In 2010/2011 the NHS paid out over £257 million in lawyers’ fees as a result of claims and for one national supermarket, personal injury claim costs amounted to the equivalent of the turnover of five of its stores.

The ABI also points out when Ireland acted to reform its compensation systems the cost of motor insurance fell by 16%, while in Germany reform has result in personal injury legal fees averaging €300, compared to £1,200 in the UK.

Meanwhile, UK insurers continue to call for action on the activities of some claims management firms, including an end to unsolicited texts and cold calls, and the ABI struggles on in its campaign for an outright ban on referral fees.

The Association’s director general, Otto Thoresen, sums up: “Our current civil litigation system is failing too many genuine claimants – the very people it should be protecting.”

He adds: “Compensators, such as insurers, retailers and local authorities, are committed to paying genuine claimants as quickly as possible. But too often this happens despite the system, not because of it.”

 

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