Holiday Claims: A Culture of Compensation?

In March 2013, I was invited to make a presentation at the Association of British Travel Agents (ABTA); today they call themselves ABTA The Travel Association. I decided to discuss 'Perceptions & Futures' in which I revealed the nature and role of HolidayTravelWatch, the Consumer Perception of what goes wrong in holidays, Consumer Protesters and Campaigners. what our Organisation thought about the Travel Industry and what future lay ahead in this uneasy balance between Consumers and Industry.

One important area I touched on was 'The New Legal Market'. At that stage we were already experiencing the consequences of a government's careless words, almost before the ink was dry on the ballot papers in 2010, on what they saw as the evils of a 'compensation culture'. Just as we saw when the previous government announced its 'reforms' on road traffic accident costs, the Legal Industry reacted in a manner that can only be described as 'making hay whilst the sun shines'. The rise of marketing, prompted by this government's own Legal Aid, Sentencing and Punishment of Offenders Act, saw the Legal Industry deploy and employ a wide range of tools, to find that 'low hanging fruit'!

In my presentation to ABTA I provided a warning in 2013 about the rise of a new Legal Future; I highlighted:

  1. That I had been watching the debate around claims since 2000;
  2. That the Claimant Solicitor had been caught 'napping':
    1. The changes being proposed were based on 'fundamentals' rather than on fact;
    2. I pointed to the prediction that 90% of all Law Firms would disappear in 10 years;
    3. It was also being predicted that in 5 years, there would only be 25% of Solicitors still employed, and
    4. The threat of radical change was was posing a real threat to Citizens trying to Access Justice (I recounted how there was already a rise in the number of people bringing their own claims to court without representation - I also stated that this affected even those members from the Travel Industry in the room, because they too would discover the 'fundamentalist'-style changes would affect them in their own lives);
  3. I predicted the rise of the 'Super' Claims Manager, with Law Firms and Claims Management Companies working on a scale not seen previously, and
  4. That would mean more, not less Claims!
  5. I also predicted that it would produce less skill in the market - effectively Law Firms and Claims Management Companies were all Travel Law Experts now!
  6. I offered that this was likely to lead to a lack of satisfaction amongst Consumers and a great deal of frustration for the Travel Industry;
  7. I asked the assembled ABTA members to reflect upon these predictions and recognise that the 'Golden-Age' of HolidayTravelWatch was likely to be consumed by an ever more aggressive Legal Market!

These were warnings that have proved the test of time and now we see how this timid Legal Market has responded to the threats to their very business models; 'live for today - let's not think about tomorrow'. Compare the general Claimant Solicitor communities actions to that of the Insurance Industry and their clients (backed by very proactive Defendant Lawyers); what you see is a weak political lobbying effort by Claimant Solicitors compared to an Insurance Industry whose strategic approach to these issues started to my knowledge back in 2000! Claimant Lawyers I have spoken to often say to me that they 'don't do politics'; my response is that everything that you do as a Solicitor is political - the Law is Political - its consequences are political - you have no luxury in standing quietly in the sidelines hoping that the government will accede to tepid arguments!

The government's own quarterly statistics cry that Civil Claims have risen by 10% (January to March 2016) without providing a clear breakdown on what the cause of the problem is!

When you make a Personal Injury Claim, you have to register your claim with the Compensation Recovery Unit (CRU); this allows government to reclaim the cost of NHS treatment and any benefits you may receive following your injury.

Because of the difficulty in finding a full breakdown of Civil Claims made, the CRU provides the closest we can get to understanding the nature of Civil Personal Injury Claims. Below is the breakdown of annual 'registered' Personal Injury Claims since 2007, from two sources - The National Archive and the DWP Compensation Recovery Unit. It is broken down into 6 claims types. With regards to holiday claims, it is likely that they will fit into the 'other' category but will only form part of what 'other' actually categorises:

Year:Clinical Negligence:Employer:Motor:Other:Public:Liability not Known:Total:
2006/7 8,575 98,478 518,812 3,522 79,841 1,547 710,784
2007/8 8,876 87,198 551,905 3,449 79,472 1,850 732,750
2008/9 9,880 86,957 625,072 3,415 86,164 860 812,438
2009/10 10,308 78,744 674,997 2,806 91,025 3,445 861,325
2010/11 13,022 81,470 790,999 3,855 94,872 3,163 987,381
2011/12 13,517 87,350 828,489 4,435 104,863 2,496 1,041,150
2012/13 16,006 91,115 818,334 17,695 102,984 2,175 1,048,309
2013/14 18,499 105,291 772,843 14,467 103,578 2,123 1,016,801
2014/15 18,258 103,401 761,878 12,972 100,072 1,778 998,359
2015/16 17,895 86,495 770,791 11,388 92,709 2,046 981,324

Now at first glance, you could argue that claims are rising, particularly when coupled to the government claim that there is a rise in claims being made before the court; I think that these statistics generally reveal that all categories of claims have either risen, fallen or have remained at a fairly neutral level - presently they are essentially on a downward trend. You then have to examine why 'spikes' have appeared in various claims types - is it simply the case that people have become greedy or have they become more aware of their rights over time; I would suggest that these rises have presented themselves for several important reasons:

  1. In April 2010, the government of the day introduced a Portal through which all motor claims up to £10,000 would be processed (remember, there was a lead in through Consultation which had already had an affect on the Legal Industry to try and beat the arrival of the Portal!);
  2. In the same year, the new coalition government almost immediately claimed that there was a rampant claims culture in the UK and were intending to take steps to resolve such a culture. In my view, this started to ring alarm bells amongst legal firms and they began to market themselves more widely;
  3. In 2012, the government introduced a ban on referral fees for cases under the strangely named Legal Aid, Sentencing and Punishing of Offenders Act - in my view, this gave birth to a much wider application of marketing services;
  4. In 2013, the upper limit for the Claims Portal was increased to £25,000, and
  5. The obligatory use of the Portal was extended to Employers and Public Liability Personal Injury Claims;
  6. The effect of this was to inject some certainty for Solicitors handling such claims in relation to costs, but it also introduced a recognition within Law Firms that to achieve past earnings, they had to market their abilities on successful case management of clients cases under the new regime;
  7. In November 2014, the government again announced in its Autumn Statement that it would change the way whiplash claims were made and that all personal injury claims of up to £5,000 were to be handled by the Small Claims Court - the apparent logic to this was that reforms needed to be introduced to deal with 'fraud' and to reduce motor insurance costs!
  8. In March 2015, the government then raised the cost of bringing a claim to court - the cause and effect was to see a rush of claims being lodged at court to ensure that they beat rising costs!
  9. Again in my view, although I think there is ample evidence to this since 2014, 2015 & 2016 has seen an explosion of so-called claims management companies and solicitors claiming that they are experts in a given field, including holiday claims!
  10. We should also factor in the rise of Ombudsman/Arbitrator type services following the ADR Directive, marketed by many industries as a way and methodology to resolve claims - we have heard about Consumer dissatisfaction on these routes which may contribute to the rise of civil court statistics.

In their Canute-like way, The Legal Industry keeps persuading itself that changes or reform will not be introduced, but history tells a different story!

There is no question that the Insurance Industry has for quite some time been able to push an open door to Ministers. A recent dialogue has revealed that even ABTA is getting in on the act and have had their own meeting with the Ministry of Justice! The press has been awash with stories of how fraud is being committed in the field of holiday claims and that the practices of some companies are beyond good taste - I agree! However, these very same companies, clearly holding evidence of fraud do not appear to be making the relevant criminal complaints to deal with these acts, in whatever jurisdiction! Equally, if industry is aware of both regulated and unregulated companies operating unlawfully in the Claims Market, they appear to be shy of reporting these instances to the Regulator; they should take a leaf out of our zero-tolerance handbook! But despite my agreement to some of their positions, rather than limit access to Justice for Consumers and recognising that the real issue is enforcement of the law, I have not been invited to the Ministry of Justice, nor it would seem am I about to be invited any time soon to meet the CEO and his Regulatory Officer at Jet2 Holidays following my recent letter to them following their recent outrage at the current situation. It even appears that the UK's Foreign Office has been persuaded to place a Travel Advisory for Spain, warning holidaymakers about claims management companies, but not persuaded it seems to improve its Travel Advisories on risk destinations!

There is one important question to be asked and answered: who perpetuates the conversation about 'compensation culture', the incessant push-me-pull-you over legislation and moral outrage, the sale and purchase of holidaymakers data, the discussion without a logical, careful and informed resolution - the government and its careless announcements, the live-for-the-day reactive legal industry, the insurance industry, the travel industry or the media, or is it the case that it is all of the above?

I have felt for a very long time that this is a one-sided debate, stacked in favour of Industry. I think that whilst 'Compensation Culture' is an easy headline, it fails to examine the cause and effect of dogma to the detriment of genuine Consumers along with the failure of some Travel Companies to deliver a safe product. Do I think we have a rampant 'Compensation Culture', no; I do however think that the legality and operation of the claims industry needs examination and enforcement, to do otherwise is using a sledge hammer to crack a nut! As I have been saying for several years; Consumers need to take extra care when starting down the road of making that important holiday complaint and not be persuaded to follow the yellow brick road and find advices they can trust to help them secure justice!

Tags: Compensation Culture Holiday Compensation holiday complaints

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