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Stop assigning blame in personal injury law, says Supreme Court judge

A Supreme Court judge has said that lawyers should not take the blame for the culture of compensation which exists in the UK. He said that those who describe lawyers as ‘ambulance chasers’ have it wrong, suggesting that the system is set up to encourage people to claim, with lawyers just doing their jobs, and not the ones who have created the current climate of excessive compensation claims.

Lord Sumption said that it was unfair to blame victims of accidents for being greedy. He said that accusing claimants is the wrong way to address the core issue, which is that the current law is ‘extraordinarily clumsy and inefficient.’ The system of blame which has been placed on claimants, he says, ‘often misses the target.’

He said that the public cannot blame people for using the system that is in place for them, saying: ‘If the law entitles the victim of an accident to compensation, it ill becomes us to criticise him for knowing it and claiming.’

Increase in fraudulent claims

There has been a large rise in the number of claims which are being made in the UK. The rise has been attributed, in part, to the increasing number of no-win, no-fee lawyers in the country, as well as the number of cold callers who are targeting people, and encouraging them to sue. The increase in the number of claims has seen an increase in insurance prices, and in particular, motor insurance. The worries extend beyond insurance, to the NHS, with a growing concern for the increasing cost of running the NHS, as well as fake claims.

An open letter, addressed to the Ministry of Justice, was written earlier this year. The letter, which was written by a group of tour operators, highlighted the risks that Britons face when travelling abroad, as a result of the increase in fraudulent claims which are being made in the country. The letter said that Britons face being refused access to a number of hotels and resorts abroad, as there has been a surge in the number of false compensation claims which have been made regarding holiday illnesses, including food poisoning.

The government promised, in the Queen’s speech, that they would endeavour to: ‘modernise the courts system and help reduce motor insurance premiums.’ This included a ban on claims being settled with no medical evidence being provided, as well as the introduction of a fixed tariff for those making whiplash claims.

While addressing the proposed changes to legislation, Lord Sumption spoke at the Personal Injuries Bar Association annual lecture of his concerns that these changes to legislation might not extend far enough to reverse the trend of increasing numbers of fraudulent compensation claims.

He said: ‘If the law says that we are entitled to blame other people for rather more of our misfortunes than hitherto, it is really rather absurd to complain about a culture of blame, as if this was somehow a symptom of our collective moral degeneration.’

In 1973, the number of personal injury claims in made in the UK was around 250,000. This number has increased dramatically, and in 2013-14, there were nearly 5 times as many claims made. An increase in the number of people claiming for road accidents was blamed for the 1,200,000 claims which were made, with 80% of claims made being for road accidents. Lord Sumption noted that the number of road accidents has not increased in this time, and that it is likely that one of the reasons for the increase in claims made is due to a better understanding of what people are able to claim.

It has been estimated that over a third of the costs which are involved in paying out on insurance premiums are due to legal and administration fees.

Experts have said that over 90% of claims which are made are against insured parties. Of the other 10% of claims, a large percentage of these are made against the state.

Lord Sumption said that faiures to provide adequate compensation, either by insurers on behalf of individual parties or the state, mean that insurance prices rise for everyone. He said that insurance is ‘effectively socialised’ and that the costs are covered in higher insurance premiums and taxes.

He also warned that insurers did not have ‘bottomless pockets’. He said that a long-term increase in the number of claims could see, in extreme circumstances, insurers who refuse to cover the sectors which are being exploited, something which has been seen in the US with product liability insurance.

He spoke about the flaws of the current legislation, saying: ‘A system which makes compensation dependent on fault makes little sense if the damages are being paid not by the persons at fault, but by society as a whole.’

He said that if the cost of covering people for personal injury is covered by the whole of society, then we are unable to distinguish between accidents and personal injury which have been caused by someone else, or have occurred by accident.

The system does not create a safer environment, he argues, but encourages those who are in charge of safety to eliminate all risk. This he says, detracts from their main focus, which should be to balance risk and the ‘adverse consequences of eliminating it.’

Despite his criticism of the system, Lord Sumption finished his speech by saying that he is confident that the system will survive. He said that the alternative system would be one which was fault free, and funded by taxation and compulsory insurance, which would be less wasteful, but would have a larger cost. He added that the current system teaches people about the proper function of the law, as well as personal responsibility.

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Thorley Stephenson SSC is an Edinburgh based law firm with expertise dealing with road traffic incidents throughout Scotland. Our team of dedicated staff are here to help you with any enquiry you might have. To speak to a member of our team today, call us on 0131 341 3825 for a consultation. Alternatively, you can contact us online by completing our online enquiry form here.

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