The UK's Compensation Culture Explained

News & SocietyPolitics

  • Author Jim Loxley
  • Published August 29, 2012
  • Word count 525

The so called ‘compensation culture’ of the United Kingdom has been one of the media's favourite topics for sensationalist journalism for the past few years. However, much of it is precisely that. The media has made a point out of creating scapegoats and generally generating a great deal of hype surrounding the compensation culture phenomenon. It's true that car accident claims and whiplash injury compensation claims are clearly on the rise but let's take a look at what is really going on from the view of an insider for an explanation to how the car insurance premiums got so out of control.

The phrase compensation culture started getting bandied around in the late 1990s when the introduction of Conditional Fee Arrangements was seen in the UK legal system. This type of legal arrangement is also referred to as the ‘no win no fee’ claim. Because claims brokering companies were able to refer claimants to solicitors and other legal professionals for a referral fee, it wasn't long before people involved in car accidents and other types of personal injury case were being encouraged to start compensation claims. With the increase in the number of claims, it was only a matter of time before a few highly frivolous cases made their way through the courts. This was fuelled by the notoriously elusive nature of whiplash injury diagnosis. Once the media had picked up on a couple of such claims, it wasn't long before they were splashed all over the headlines. Once Great Britain entered into an economic downturn, people had a lot less spare money going round and somebody crashed into while driving, they were all too aware of an easy four to five-figure sum of money which could be made.

The brokers, which are also known as claims management companies, are regulated by very strict series of rules in order to stop them from encouraging people to start car accident claims or to contact them using unsolicited means to encourage them to take legal action. However, as word got around that these regulations could be broken without authorities such as the Information Commissioners Office taking legal action, it wasn't long before many companies started trading illegally and cold-calling people to make claims. It was basically a combination of the economic downturn, the elusive nature of whiplash injuries and a lot of media hype which added to the mix which caused the UK's compensation culture to spiral out of control.

In spite of what any sensationalist media stories may say, this is the crux of what happened. There is no one party to blame and it’s the result of a series of badly timed circumstances. With pending changes to personal injury law due to be put in place by the UK government in April, it looks like some positive changes towards stopping the compensation culture may soon be seen. However, even with these changes, there are no guarantees that this will be the end of the story. Until then, citizens of the United Kingdom will have to wait with baited breath to see if their car insurance premiums go back down to the previously acceptable levels.

Jim is a Director of car accident claims and personal injury specialist, My Compensation. The firm is a legitimate compensation claim company registered by the Ministry of Justice and covering the whole of the UK

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