The so-called compensation culture is in the spotlight again following recent comments from Stephen Byers MP about crippling compensation claims against public sector health services and schools.
The debate focuses on the propensity of the general public to claim and this debate will no doubt rage on. But one fact is indisputable - more claims mean higher premiums for policyholders.
Two of the main costs of claims relate to legal/administration fees and wage loss. Both of these can be addressed by managing the claims from first notice of loss and by deploying rehabilitation programmes to help claimants get back to work as soon as possible.
Legal costs can represent up to 40% of compensation pay-outs and are one of the biggest contributors to rising claims costs.
Arriving at a fair and equitable settlement offer earlier helps to speed up the negotiation process and enables legal costs to be controlled.
To achieve this, claims handlers need to access expert information as soon as a claim has been notified.
Being proactive in the management of each claim from the first notice of loss means that insurance companies can move the case along more quickly and stop the claim pay-out from being swallowed up by legal costs.
Rehabilitation need not be restricted, as has traditionally been the case, to claimants with very large claims - often into the hundreds of thousands, if not millions, of pounds.
Helping claimants back to work benefits all parties and there is now advanced software that helps claim assessors understand the injury and occupation details of the claimant and measure the cost/benefit advantages of rehabilitation.
By looking at each claim with this database of expert information, insurers can, and indeed some already are, beginning to address the increasing number of claims that they now have to process.
Joe Pendle
Director of client services
Insurance Services Office
