The Compensation myth 3 – Compensation payments are too high

2 minute read  |  October 25, 2017

We revisit the myths and see if they still hold true in the hope that the phrase ‘compensation myth’ will finally be put to bed.

In last week’s article, we debunked the myth that workers are too ready to claim compensation, by comparing the drop in numbers across a wide range of compensation claims statistics from 2014 to present day.

This week, we take a closer look at the third of the seven myths;

Compensation payments are too high

The difficulty in assessing the cost of compensation payments in 2017 is that there are different ways of perceiving the data. The perpetual battle between insurance companies and personal injury solicitors means that actual numbers will vary based on your search criteria.

Sadly, Google shows us a sign of the times and a search request featuring compensation amounts leaves you overcome with page upon page of search results featuring claims calculators for how much your whiplash is worth.

One of the things that APIL and the TUC made clear in 2014, is something that I want to reiterate today.

‘Unlike in some other countries, compensation is strictly based on what the claimant has lost. Payments are based on guidelines and evidence and are designed to compensate for actual loss, including pain and suffering, loss of earnings and future losses, all of which are very carefully calculated. 

‘Future losses can include future loss of earnings, pension loss, cost of care, medical treatment, and accommodation and vehicle adaptions. Where the victim has died, bereavement damages, funeral expenses and dependency claims would be considered.’

So, the next time someone tells you they got £10k for whiplash after being rear ended in an Asda car park, approach it with a healthy dose of scepticism.

Access to Justice

Lobbying group, Access to Justice, commissioned economics consultancy firm, Capital Economics to analyse figures provided by 58 law firms, who combined, settled 171,939 RTA claims in the previous year. The numbers showed that less than 80% of cases settled for less than £5,000 with the average value of general damages reported to be £3,029.

Around 23% of settled cases settled for less than £2,000, and 90% of disbursements were incurred on claims that settled for less than £5,000, with an average gross disbursement of £624.

When you consider that pre LASPO stage costs for the RTA claims portal attributed to a hefty sum to most claims, it’s difficult to look at this with the right level of impartiality. It’s with that in mind that I’m unable to confidently label this as a myth or not.

Compensation payments are too high – Undecided.

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