Rallying against a risk-averse society

Post Magazine and Norwich Union went on the road to Glasgow, Manchester and Birmingham to canvass opinion on the extent and nature of compensation culture. David Worsfold reports

"Myth or reality?" was the subtitle to the three roadshows on the compensation culture - and separating myth from reality lies at the heart of the debate on this topic, regardless of where you go in the UK.

Diverse audiences in Glasgow, Manchester and Birmingham all struggled to agree about what sort of claims culture we are in. The divisions were sometimes as you would expect: claimant lawyers with their robust challenge to the notion that a compensation culture exists finding themselves at odds with defendant solicitors and risk managers painting a picture of a more claims-conscious society. Sometimes there were divergences you would not have predicted: public-sector bodies frightened to say "sorry" any more alongside private-sector firms trying to learn to apologise.

There were also regional differences. Scotland, where legal reform has been more prudent, finds itself looking over Hadrian's Wall with concern.

It fears that legal reform, especially the introduction of no win no fee arrangements north of the border, could see transaction costs drastically increasing and resulting in further satellite litigation.

In Manchester, there was far more criticism of accident management groups and rogue claimant solicitors than elsewhere. This criticism should perhaps not be so surprising: the north-west has always been seen as a more claims-aware region and some of the larger of the new breed of claims farmers have been based there. What might be surprising to some is that there was a wide degree of agreement around the table that much of this was undesirable. No-one wanted to live and work in a risk-averse society - but people did want to live in a risk-aware world, where health and safety took top priority.


Craig Gibson, a claims manager with Norwich Union, opened the seminar series by stressing the nature of the challenge that he felt society was facing: "How did we sleepwalk into denying our youngsters the opportunity to learn the things we learnt by trial and error?"

He set about answering his own question by highlighting the growth in individualism over the last 20 years. "You are what you have nowadays" is how he summed up present-day attitudes, contrasting those with a more community-minded spirit in previous generations. He also pointed an accusing finger at the Access To Justice reforms, which he said had encouraged a get-rich-quick mentality and sparked a huge rise in the proportion of claims costs that are now spent on legal fees.

Mr Gibson posed the question: what will success in combating the rise of the compensation culture look like? Top of his list was better health and safety - a point that won widespread agreement at all the seminars.

He also put rehabilitation on the spotlight, arguing that we had to move away from a culture where everything was measured by the sum paid out at the end: again, there was no dissent from this point.

When it came to legal costs, and his demand that solicitors do more to add value to the claims process, he found less agreement round the table.

Claimants are being stigmatised by the media's constant emphasis on the myth that there is a rampant compensation culture, argued Patrick McGuire, an associate with Thompsons in Scotland. "Too much emphasis in this debate is being put on the claimant. This leaves people to believe that the solution is to stop claiming ... People often hesitate in seeing through a claim because of the fear of reaction from friends and colleagues", argued Mr McGuire.

Genuine claimants are victims of someone else's negligence, for instance through poor health and safety provisions. By putting pressure on people not to claim, this could "nurture a complete disregard for the health and safety of others". This could end up increasing the number of claims, as standards fall.

Gordon Keydon, partner with Simpson & Marwick, said Scotland had less of a problem with the compensation culture than England and Wales because there were more controls in the legal system, where the principle that the losing party pays remains. His view was that no win no fee systems "gives lawyers an unhealthy interest in the claims they are pursuing".

He outlined the differences in the Scottish legal system that he felt helped to maintain a better balance between claimant and defendant. Top of his list was the more realistic approach to cost recovery: "In England, Lord Woolf forgot to write the last chapter of his book, which is why there has been so much satellite litigation on costs." No-one dissented from this point. In addition, claimants could still apply for Legal Aid in Scotland; and there were very few conditional fee agreements and very limited legal expenses insurance - hence no arguments about premium recoverability.

However, Mr Keydon did like some of the English reforms, such as pre-action protocols and exchange of information.

He raised another point that was to become a constant theme of the seminars - the danger that people are settling claims for economic reasons, regardless of merit.

The broader picture was painted by Adam Bruce, director of public policy at McGrigors, and he showed how the compensation culture had moved from being an issue for lawyers and diary columns to one for think-tanks and legislators. He felt that, with political heavyweights such as former cabinet minister Stephen Byers and Treasury Select Committee chairman John McFall taking an interest in the subject, it was "only a matter of time before we see some government action". Indeed, just two weeks previously, Education Secretary Charles Clarke raised the issue at the annual conference of teachers' union NASUWT, saying: "The blame culture, the compensation culture, should not stop teachers from taking trips for fear of being sued if anything goes wrong".

Much of the debate in Glasgow centred on people's perceptions of what was going on in society, and how they were being moulded by the media reaction to it.


Picking up some of the themes that were debated in Glasgow, Craig Gibson put more emphasis on increases in transactional costs, saying that there had been too much argument about costs following the Woolf reforms. Additionally, he focused on the issue of differing perceptions about the compensation culture - in particular, that solicitors were "too slow, too impersonal and don't involve people".

The media has made the myth that there is a compensation culture, claimed Alan Gore QC, representing the Association of Personal Injury Lawyers.

This myth did not stand up to scrutiny he said, using the latest statistics on claims from the Compensation Recovery Unit to prove his point. They showed that after three years of marginal rises, 2003 saw a significant drop in the overall number of claims received, although this was not the case on every area. Disease claims, for instance, had jumped sharply mainly because of the miners' compensation scheme reaching its closing date during the year.

Mr Gore accepted that some claims were speculative and poorly founded: "Some of the mischief in the present system can be addressed by raising the expertise and knowledge of those involved in personal-injury claims".

He attacked fraudulent claims, saying that "one fraudulent claim is one too many".

Mr Gore alleged that "the media are guilty of scaremongering" and, in consequence, were blaming the claimant, promoting risk aversion and encouraging lawbreaking through poor adherence to health and safety regimes. He could see no reason why better approaches to health and safety should lead to people becoming risk-averse: "It is not accidents that generate claims, it is negligence. Reasonable care is a responsibility that we all have."

He praised some of the initiatives that were being promoted to reduce transactional costs: "Anything that promotes a less adversarial approach in compensation disputes is to be welcomed". He particularly highlighted rehabilitation: "It is an important - arguably the most important - element in compensation dispute resolution."

He attacked the no win no fee regime, arguing that it was reducing access to justice as it made claimant solicitors risk-averse. They were becoming more inclined to go for the easy cases with a greater probability of winning, leaving those with complex cases and/or many areas of uncertainty without representation.

Ailsa Adamson, a partner from Berrymans Lace Mawer based in the north-east, warned against complacency when looking at headline figures from the CRU. She pointed out that diseases claims were up 22%, stress claims up 37% and public liability claims up 8.7%. Stress claims had doubled since 1998.

She disputed Mr Gore's claim that the Access To Justice reforms had failed in widening the base of people who could bring valid claims: "There is access to justice, as you don't have to be penniless to access Legal Aid, as before - or in a trade union to get access to a solicitor. Any of us can enter into a no win no fee agreement."

This became one of the keenest points in the subsequent debate, with David Gilchrist from Composite Legal Expenses backing up Mr Gore's claim that people who previously qualified for Legal Aid were not getting representation. He said that after-the-event underwriters were nowadays very cautious and would not accept speculative claims for cover. This caution meant that many claims that would have previously been supported by Legal Aid were now being rejected.

Picking up Ms Adamson's point about the rise in public liability claims, Valerie Lovell from Blackburn and Darwin Borough Council said the worst claims experience in the UK public sector was in the north-west - often driven by street-corner canvassing by accident-management groups.

She also picked up a point made by David Ireland, group insurance director at Vinci, that employers had to learn to say sorry when accidents occurred and be more proactive in working with claimants. She said that 10 years ago, if an old lady had a slip-and-trip claim, she would have gone round with a bunch of flowers, said sorry and asked if there was anything more she could do to help. If she had broken her glasses, the council would offer to pay there and then. Now that has to wait until a formal claim arrives.

Dr David Toke, a sociology lecturer from Birmingham University, said that you could not divorce society's attitude to compensation from its attitude to risk. Society had to decide what risks it was prepared to take on; and, he said, responses to current major issues suggested that we are not living in a risk-averse society. He cited attitudes to mobile phone use and speed cameras as examples of a high-risk approach to life.

Risk and compensation were also related to the affluence of the society in question, with a higher value put on property than human life in some developed economies but undervalued, in insurance terms, in poor countries.

This served to prove that risk and compensation are socially negotiated.

The decline of the family, leaving us all to make our own way in society, was a significant contributor to the changing attitudes to compensation, he said. Nowadays, we are assessed in terms of money, whereas previous generations would have been focused on other measures, such as occupation.

For instance, a miner would have had a high social status in a mining community, giving him a greater sense of identification with his employer and community, and, therefore, making him less likely to make a claim against either of them.


Richard Acworth, NU's public affairs manager, led the debate in Birmingham.

He took up the theme of media-led perceptions, which were reinforced by emphasis on unusual cases and the constant barrage of misleading advertising.

He took on the challenge of defining what a "better" compensation system would be like by stressing the need for greater fairness and lower costs.

This would mean moving away from always having to apportion blame, and acknowledging that some things were just accidents.

David Marshall, president of the Association of Personal Injury Lawyers, turned the tables by arguing that "the no win no fee system and insurers' attitudes to it is causing a reduction in access to justice". As well as referring to the CRU figures, Mr Marshall cited recent reports from Datamonitor and the Department of Work and Pensions as further evidence that we are not in the grip of a compensation culture. He acknowledged that there was scope for reducing frictional costs. He said the Woolf reforms had front-loaded costs on every case and that that was not necessary: he was hopeful that the recently announced DWP pilot project would help address this.

He added that some of the underlying changes in attitude highlighted by others were part of a major change in the political landscape: "Both major parties have a policy of moving responsibility for claiming compensation away from the state to the individual." This was unlikely to change.

Julian Smart, a partner from Berrymans Lace Mawer's Birmingham office, found some common ground with Mr Marshall. He did not find the the approach taken by Mr Byers in quoting large ballpark figures particularly helpful.

He was also very critical of advocates of a no-fault system: "I don't agree that it is a feasible alternative. What is the point of good risk management if you are going to have to pay out anyway? If the new emphasis on risk assessment makes workplaces safer and public places better, then that has to be a good thing."

This point was taken up by both the brokers and risk managers around the table. Peter Bissell, head of group risk management at IMI, said a no-fault system would not lead to a lowering of health and safety standards and, because firms would end up having to pay in any event, there was a major incentive to improve standards.

Dr Toke's presentation provoked a wide-ranging debate on risk aversion, and how we might prevent some of the current media perceptions becoming reality. Lorraine Gwinnutt, head of legal and public affairs at Apil, was very critical of some of the public-sector responses to risk identification: "If hanging baskets are thought to be dangerous, the answer is not to take them down - it is to put them up with stronger bolts."

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have an Insurance Post account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: