Structural Factors Affecting the Number and Cost of Personal Injury Claims in the Tort System
E. Quill and R. Friel (eds), Damages and Compensation Culture (2016) 37-59
33 Pages Posted: 17 May 2015 Last revised: 23 Apr 2019
Date Written: May 8, 2015
This chapter examines Britain’s “compensation culture,” and the allegation that society has had to bear an increasing burden as a result of the rising number and cost of claims for damages for personal injury. The analysis is divided into two parts: the total number of claims brought each year is discussed first, and this is followed by an assessment of the overall cost of disposing of individual actions. The chapter gathers together information from a variety of academic and practitioner sources to produce a novel and up to date perspective upon the compensation culture debate.
Although it is indeed true that claims have increased, they have done so only with regard to specific types of injury. Among the key factors highlighted are the working practices of three institutions which form the bedrock of our claims system: liability insurance companies, claims management organisations and claimant law firms. Criticisms are made here of a “dysfunctional” insurance industry; this is followed by a description of the rise and fall of an even more criticised claims gathering industry; and finally, attention is focused upon the rapidly changing structure of the legal profession involved in personal injury.
In considering the rising cost of individual claims the major changes to tort damages awards are summarised. Reforms have been made not only of the method by which compensation is calculated, but also of the form in which the money is to be paid: periodical payments are now common in cases involving serious injury. Damages for pain and suffering have been raised substantially without appreciating the full policy implications, whilst compensation for financial loss has had to be revised to match the realities of the wider financial world. These reforms are placed in a broader context which sees the increasing cost of claims as an inevitable result of closer adherence to the principle of restoring the claimant to the financial position that was enjoyed before the injury took place. One of the conclusions drawn is that the structural factors identified here will continue generate concern about “compensation culture” for some time to come.
Keywords: tort, personal injury, compensation culture, liability insurance crisis, damages, legal profession, Slater & Gordon, periodical payments
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