SMEs blame CMCs for workplace injury compensation culture – AXA

Claims management companies (CMCs) are the “principal contributor” to the growing compensation culture in workplace injury claims, according to small and medium sized enterprises (SMEs) polled by AXA.

A new report from AXA about the effect of workplace injury compensation claims on UK SMEs found that 84% of SMEs believe there is a compensation culture, and that 77% see CMCs as the main cause.

The AXA report also found that 79% of SME owners would like to see tougher medical examinations imposed for workplace related accident or injury claims in order to crack down on fraudulent activity.

Eighty-four percent support a new requirement for claimants to go through alternative dispute resolution  before pursuing a legal claim.

Almost a quarter (24%) of the SMEs surveyed said they had had a claim from a current or former employee against their employers’ liability insurance in the past five years.

Call for change

In its report, AXA also called for a series of changes to tackle compensation culture.

These included tougher sanctions for non-compliant CMCs, including a doubling of fines to £1m, and the power to shut down CMCs that flout privacy laws.

The insurer also called for the introduction of  more effective regulation to restrict the marketing activities of referral agencies such as CMCs and personal injury lawyers, and the use of independent medical panels for all personal injury claims, rather than just whiplash claims.

AXA underwriting managing director David Williams said: “There is no doubt and no question that those who are genuinely injured in the workplace should receive fair compensation.

“However, at a time when the number of workplace accidents is falling and the number of claims continues to rise, there is clearly something of an imbalance in the system.”

He added: “It is clear from this research that workplace injuries remain a major issue for SMEs – the lifeblood of the British economy.

“The cost of fraudulent workplace claims is bringing about the inevitable consequence of higher employers’ liability premiums. Small business owners have serious concerns and would like to see the government go even further with its reforms.”

Premium rises likely

Cass Business School professor Christopher Parsons added: “The AXA research suggests that there is a perception among employers of the existence of a compensation culture. It seems clear that the upward trend in employers’ liability premiums is likely to continue given the reductions over the years in Industrial Injuries Scheme benefits, which have increased the incentives to make employers’ liability claims against employers.

“Considering the increasing size of injury awards, which have consistently outstripped both earnings and general inflation, further rises in employers’ liability premiums seem likely even if accident rates continue to fall, as employers’ liability claims are more attractive to injured workers and are easier to make.”