Claimant lawyers say new study proves compensation culture myth

Personal injury lawyers claim compensation culture is dead following the publication of the third bodily injury study.

"The study clearly highlights that the number of claims is falling and contradicts the compensation culture myth being perpetuated by the insurance industry," said Apil.

Commissioned by the IUA and the ABI, the Third UK Bodily Awards study, launched last Friday, showed a third of insurance paid by motorists is spent on paying bodily injury claims. After analysing around 1.1 million motor claims involving bodily injury claims, the report concluded the total costs of claims rose 9.9% a year in the past decade. The influence of no-win, no-fee was responsible for a 117% increase in claim costs between 1992 and 2000. Over the same period national average earnings rose 37%.

The severity of claims increased by 6.7% while the frequency of claims had increased 3%. Payments by reinsurers were particularly severe, with claims above £250,000 increasing 20% a year.

The study concluded that insurers are now embracing the rehabilitation code, but many insurers are calling for a more co-ordinated approach from the government with the NHS taking more responsibility for rehabilitation.

Allianz Cornhill technical claims manager Bob Rabbits said: "This has got to be team effort if we are going to make a difference. We want the NHS to offer better rehab facilities for patients of road accidents."

Others felt their hands were tied by the uncertainty of The Court Bill 2003, due to be debated in the House of Lords on 27 March. The bill offers claimants the option to review payment depending on their needs and rising medical costs at regular intervals.

Lord Hunt, senior partner of national law firm Beachcroft Wansbroughs, said: "Claims have risen so quickly because the government abolished civil legal aid system creating a no-win, no-fee system.

"And it is now looking to introduce periodical payment plans combined with reviewability linked to retrospective and backdated charges that will lead to uncertainty in the industry."