UK: Norwich Union report calls for creation of a modern compensation system

Published: 07 Dec 2004

A report by the UK's leading insurer, Norwich Union, has called for a modernisation of Britain's compensation system.

A report by the UK's leading insurer, Norwich Union, has called for a modernisation of Britain's compensation system.

The report recommends more radical change in the way injured people are supported and the need for resources to be more efficiently engaged. The insurer believes a greater emphasis on rehabilitation would help to bring an end to the 'have a go' culture - something that many commentators believe is making us averse to taking even the smallest risks, through fear of being sued.

Talking at the launch of the report - A Modern Compensation System: Moving from Concept to Reality (PDF 118KB) - Norwich Union's director of technical claims, Dominic Clayden, said: "During the last year we have been working hard to raise the national debate around the cost and process of compensating people for personal injury and to show that the current system is slow, costly and inefficient.

"Claims management companies and solicitors have exploited the public’s expectations in terms of what is compensatable, and the amounts that might be achieved. The inevitable consequences have been an increase in frivolous and vexatious claims, and an explosion in claimant's costs. The latter now represents 40% of all payouts.

"The report highlights what we think are the keys to an effective system of compensation. We want to put the claimant first by reducing the adversarial nature of the system and shortening the investigation process to enable swifter compensation. One of the problems within the existing system is the delivery of care, specifically the public/private and competitive cost, which has been challenged by the Chief Medical Officer".

Mr Clayden continued: "It's not just about compensating people quickly and fairly, it’s also about changing the behaviours that created an unsustainable system and the ‘have a go' culture in the first place."

The insurer believes the key features of a transformed compensation culture are:

  • The wrongdoer should have the first, and unfettered, opportunity to resolve the claimant's problem. This should be time bound.
  • No legal costs should be payable where there is no dispute - legal costs should only be payable for legal advice, not for claims handling.
  • There should be complete transparency of the process by which damages are calculated, and, in particular, the damages for pain, suffering and loss of amenity for the most common injuries.
  • Help first and cash later. Rehabilitation has to be first consideration and failure on the part of either the compensator or claimant to embrace this should be reflected in the amount of the settlement.
  • Shorter accident to restoration times, as currently, compensation takes too long to be delivered.
  • Broader, and more proportionate medical reporting.
  • Breakdowns in the process, whether about responsibility or amount, should be mediated before litigated.
  • Managers of workplaces and public places should demonstrate the learning from accidents and manage improvement in risk or face penalties.

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For further information, please contact:
David Ross at Norwich Union on 08703 66 68 65 or 07786 526350.

Notes to editors

  • Norwich Union is the UK's largest insurer with a market share of around 14%
  • With a focus on insurance for individuals and small businesses, Norwich Union insures:
    • One in five households
    • One in seven motor vehicles
    • More than 800,000 businesses
  • Norwich Union products are available through a variety of distribution channels including brokers, corporate partners such as banks and building societies and Norwich Union Direct.
  • Norwich Union’s news releases and a selection of images are available on the Aviva internet press centre at www.aviva.com/media.
  • An ISDN facility is available for studio quality broadcast. Call the press office on 08703 66 68 68
  • For all life & pensions media enquiries 08703 66 68 73
  • For all other media enquiries 08703 66 68 68
  • Members of the General Insurance Standards Council
  • Members of the Aviva group

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