Opportunistic CMCs targeting retailers to blame for surge in liability claims

Claims management companies (CMCs) are targeting retailers with speculative employers’ and public liability claims to maintain revenue streams lost as a result of the motor reforms, AXA has said.

According to a survey by the insurer, the percentage of public liability claims against retailers’ rose to 5.1% in 2014 from 1.9% in 2009, while claims frequency for employers’ liability almost doubled to 45% from 23.6%.

In a separate study on compensation culture the insurer found that the second highest cause of ‘nuisance calls’ made by CMCs was in relation to accidents occurring in public places – rising by 15% over the past year.

AXA chief executive, commercial lines and personal intermediary Amanda Blanc said: “It is clear that the rise in claims against retailers cannot be explained by the sector suddenly becoming more risky.

“Many retailers are being targeted by opportunistic claims farming companies who view claimants as a potential revenue stream rather than someone who needs help and the increase in the volume of claims would seem to support that view.

“The recent rapid year-on-year increase of so-called “slip and trip” claims are key factors in higher premiums. The rise in CMC activity seeking to encourage employers’ and public liability claims coincided with a restriction on their ability to profit from motor claims and it would appear they are now actively targeting the UK’s business community to source more potential clams.”

The insurer added that the increase in speculative claims for the retail sector was reflected by a drop in the quality of the claims, with many lacking supporting evidence.

AXA’s repudiation rate for employers’ liability claims had grown to 30% from 19% in 2010, while its rejection rate for public liability claims has risen to 46% from 39%.

Blanc added: “The environment for retailers of all sizes is still challenging and many – particularly smaller companies – are struggling to keep their heads above water.

“The actions of these CMCs, in bringing high volume and often spurious claims against employers, can be highly distracting and time consuming for retailers trying to focus on the all important job of trading and keeping people in employment.”

Join the debate in our new LinkedIn specialist discussion forums