Accident figures are down but injury claims are up

The newest bit of news circulating the public consciousness has been that injury claims are on the rise, even though accident figures have gone down sharply – so what in the world is causing such a bizarre situation in the UK?

The Actuarial Profession recently reported that last year the number of personal injury claims went up by 18 per cent, while the number of road traffic accidents that led to bodily injury in 2011 went down by 11 per cent. This has caused many a puzzled Brit to scratch their heads and say, ‘wait a tick – what’s going on here?’

Well, it’s an excellent question, isn’t it? Most people would think that if there are less accidents occurring, there would be less accident claims being made – and it boggles the mind that this isn’t true.

Many people have blamed the so-called ‘compensation culture’ in the UK, claiming that the no win no fee solicitors are going out of their way to drum up business in order to pad their pockets. Under the current state of the personal injury litigation sector in the UK, lawyers can be awarded ‘success fees’ to be paid from the losing side if they prevail on an accident claim, so the inference is that ambulance chasing lawyers are enticing people to bring expensive claims for spurious or even illusory injuries.

It’s gotten so bad that the government has even stepped in, as there are plans set in place to prevent lawyers claiming these success fees. Pending legislation would change the no win no fee structure to have lawyers share in the compensation payment awarded to a claimant instead, which would result in much-reduced legal costs for insurers – and would mean that your insurance premiums wouldn’t go up so much on renewal as insurers don’t need to recover so much of these costs from their customers any more.

However, the biggest problem isn’t with law firms themselves but claims management companies, which act as ‘assembly line’ claims factories, churning out high volumes of claims for a profit. CMCs have been found to be highly responsible for the sudden glut in claims, as they tirelessly send unsolicited texts, spam emails, and make cold calls to anyone and everyone they can find in an effort to build a large base of prospective claimants before farming them out to lawyers that usually pay for the privilege of picking up new clients.

Luckily for us, the same legislation looking to limit success fees could also limit the scope of these CMCs and prevent them from some of their more harmful business practices. This could result in big savings for insurers as well, which should have a knock-on effect of reducing premiums for everyone – and with the economy rather wobbly as it is, extra money in Brits’ pockets is a good thing.