The tide turns on the compensation culture

The war on the UK’s ‘compensation culture’ continues. From 31 July 2013, the Ministry of Justice put into effect a new system for dealing with uncontested ‘slip and trip’ claims and other injuries sustained in the workplace or in public. This new system will streamline the system for compensation, and as a result, reduce the legal fees incurred in the process by the defendants or their insurers. Uncontested claims for employer liability and public liability that are below £25,000, will receive the same amount of compensation as they would have under the previous system. The difference is that they will be dealt with through an online out-of-court Claims Portal. This portal was previously introduced in April 2010, and used for settling uncontested claims for injuries suffered in motor accidents. The previous cap on claims is now being raised from £10,000 to £25,000 to match the new additions to the portal service.

Justice Minister Helen Grant says this is part of “turning the tide on the compensation culture which has pushed up the cost of insurance for drivers, schools and business – and taking another important step to reducing the cost of living for ordinary people.” Through channeling claims into a portal, the government is implementing a strict fixed costs regime, cutting down on costs incurred by insurers in the hope of eliminating the need for them to keep raising insurance premiums. High insurance premiums have been blamed for increasing the numbers of uninsured drivers and the ridiculous practice of avoiding any sort of event where there might be a risk of injury. Young drivers are also receiving higher quotes for insurance, pushing the cost of driving up. British insurers have thus welcomed the work of the Transport Select Committee, and called for a further focus on cracking down on whiplash claims.

This is the latest reform to be implemented in a series of changes aimed at controlling the rising cost of insurance premiums. Previous measures include an adjusted take on the traditional ‘No Win, No Fee’ arrangement with the burden of ‘success fees’ being transferred to the successful claimant, a ban on referral fees, reduced lawyer’s fees for small uncontested road accident claims, and a ban on upfront cash incentives usually offered by claims firms.

Will the expanded functions of the Claims Portal achieve the desired streamlining effect? When the portal was introduced for road traffic accident claims, it managed to reduce costs but arguably did not streamline the process. The new portal also will exclude claims under medical negligence, mesothelioma, accidents at work involving more than one defendant, and all claims over £25,000. Where the defendant chooses to dispute their liability, or alleges the claimant’s contributory negligence, the claim will have to be dealt with by court proceedings and not the portal. This is a distinct possibility, as while defendant employers do often admit to a breach in duty in work accidents, they rarely admit to liability to its full extent for the accident. Instead, the claimant has the duty to prove that the defendant’s breach caused the accident. Hence it remains to be seen whether the portal will lend swifter resolution to many cases and have a great impact on the industry.

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