Compensation fears 'unfounded'

Fears that a US-style compensation culture is taking hold in the UK are unfounded, according to authoritative research.

A report into personal injury litigation by market analyst Datamonitor revealed that of a potential 1.8 million personal injury claims per year, only 614,000 were made to insurers in 2001 to 2002, and estimated that this would only rise 2.1% (to 627,000) by 2007.

However, even though the increase in claim numbers is not as dramatic as anticipated, the research showed that spiralling costs of compensation are forcing up premiums on cars, homes and businesses.

Martin Staples, who represents the Forum of Insurance Lawyers on the Law Society Council, said: 'I never thought the US culture of suing someone for every mishap would work over here anyway, simply because awards in the UK are made by a judge and not a potentially gullible jury.

'However, there has undoubtedly been an increase in "ambulance chasing", leading to household and motor premiums being hiked up - so the public pay for it in the end.'

David Marshall, vice-president of the Association of Personal Injury Lawyers, said: 'The compensation culture seems to have been a myth run mainly through the media.

There has definitely been a growth in claims over the past years, but this research seems to confirm that it was a temporary phenomenon caused by the sudden increase in TV advertising by claims companies.'

A Law Society spokesman said: 'The arrangements for funding cases in England and Wales mean that, unlike in the US, there is no incentive for nuisance claims to be brought, and [there is] proper protection for defendants who successfully defend a case.'

The report also concluded that while law firms are winning the battle for respectability over accident intermediaries - such as The Accident Group and the late Claims Direct - marketing skills were letting them down.

Liz Hartley, Datamonitor insurance analyst, said: 'Law firms will always have a funding problem when it comes to marketing and they acknowledge that.

However, solicitors will never have a better time to take advantage of the bad reputations accident intermediaries have acquired, and to really sell on their knowledge and respectability.'

Andrew Towler