Personal Injury Claims Statistics: Is there a Compensation Claim Culture in the United Kingdom?

by

Caroline Anderson

An important ulterior goal is to give at least a preliminary evaluation of the contention that both the number and the cost of claims have been driven to record levels. If the figures bear this out, it would lend support to those who consider the UK to be gripped by a compensation culture, and undermine the Governments view that, although the compensation culture is a myth, the publics erroneous belief that it exists results in real and costly burdens.

Compensation Recovery Unit statistics say that the number of claims has increased only by three per cent in the last five years. The more detailed figures reveal that not all types of injury have reflected in this small increase. In particular, it is notable that accident claims have actually declined, and it is the substantial rise in claims for disease that accounts for the overall increase.

The Insurers Bodily Injury Awards Studies. Throughout the period studied, legal costs, including both claimant and defendant costs, averaged 30 per cent of the total motor personal injury claims. This means that legal costs continued to increase by more than double the rate of the rise of national average earnings.

National Health Service statistics provide that there has undoubtedly been a very great increase in clinical negligence claims in the last 30 or so years. The Pearson Commission reported in 1978 that the number of claims of malpractice against doctors and dentists (including those in private practice) had been running at about 500 a year. By 1990-1991, the estimated number of new medical claims made against the NHS in England had risen to between 5419 and 6979 for the year. The Oxfordshire study reported a steady growth in new claims in the period 1974-1998. In answers to Parliamentary questions in 2005, the number of claims made from 1996-2004 was broken down, using information supplied by the NHSLA. These figures confirmed the continuation of the downward trend in claims numbers that has been evident in recent years. They now are close to the lowest estimate for the year 1990-1991, coming down from a peak in the period 1997-2002.

Cost of claims.

A complete picture of the NHSs annual expenditure on clinical negligence compensation in England is available from 1996. This reveals a general upwards trend up to and including the year 2004-2005. The figures are startlingly higher than those available for the start of the 1990s, when the annual cost of clinical negligence compensation was reported to have been GBP 53.2 and GBP 51.3m in 1990-1991 and 1991-1992 respectively. Even these are very much higher than the estimated figure for 1974-75 of GBP 1m. In claims for clinical negligence that were closed by the NHSLA in 2004-2005, defence and claimant costs were equal to, respectively, 13.76 per cent and 19.81 per cent of damages.

Outstanding liabilities for clinical negligence.

One of the most frequently misapplied statistics in the current compensation culture debate is the annual estimate of the NHSs outstanding liabilities for clinical negligence (including both known and unknown but expected claims, and taking into account the likelihood of settlement). This has risen from GBP 3.2 billion in 1999 to GBP 5.9 billion in 2003 and GBP 7.8 billion in 2004. The figures refer to liabilities that the NHS claims will arise over a longer period of time, and are very much greater than the sums that are actually paid out on an annual basis. Estimating the cost of outstanding liabilities is an exercise that is fraught with difficulties and the resulting figure representing a worst case scenario has been heavily criticised. Although the estimate of outstanding liabilities is frequently cited in the press and media, it must be handled with care. It would be quite wrong, for example, to use it to calculate the percentage of the annual NHS budget that is currently spent on clinical negligence compensation.

These figures provide the basis for an initial examination of the claim that a damaging compensation culture has developed in the UK in recent years.

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