Same old same old in insurance and personal injury debate

Caveat: Compo culture is not a recent scam. Vested interests from all sides have fuelled it for years

Public worries about “compo culture” scams forcing up the cost of motor and other insurance are nothing new. Photograph: Dave Meehan

Public worries about “compo culture” scams forcing up the cost of motor and other insurance are nothing new. Photograph: Dave Meehan

 

All this furious talk of soaring insurance premiums and dodgy whiplash claims really does raise people’s hackles. We might all do ourselves an injury if we don’t calm down and take it easy.

Febrile talk is everywhere. An opposition Fianna Fáil TD tells the Dáil that landowners in her constituency are at the mercy of “compensation culture” due to the risk of claims from people trying to access national monuments across their land.

A Fine Gael backbencher tells another Dáil debate that insurance claim “racketeering” is “rampant” in his area. Not be outdone, a Fianna Fáil backbencher from the same constituency shoots back about the “compo culture” faced by local authorities: “School yards, public parks, town footpaths, manhole covers and telephone poles are seen as a means of making easy money, and it has proved that some people are making a career of it.”

A letter writer to The Irish Times harks back longingly to the Athenian law courts of 2,500 years ago, when a prosecutor could be barred for failing to win enough support from a jury. Could some version of this idea be transposed into Irish courts to “halt the gallop” of personal injury solicitors, the writer wonders? Should their clients face the possibility of fines and they of disbarment if they appear to lose a case heavily?

Meanwhile, a director of the Small Firms Association thunders that “compensation costs in Ireland are out of control” and, as a consequence, perfectly good businesses are struggling under the weight of their premiums.

Solicitors and their “chancer” clients are “scamming”, claims are “rocketing”, businesses crumbling, awards soaring, kids crying, mothers screaming, dogs barking, plates smashing, doors slamming, worlds ending . . .

It sounds like we’re having a national nervous breakdown. Please, make it stop.

Red-faced talk

To a passing reader, the learned contributions that I have highlighted neatly fit the zeitgeist of this red-faced talk of our “compo culture”. But those of you who have been following the recent debate closely may not recognise those contributions. That is because they are years old. We’ve been having the same conversation for decades.

The Fianna Fáil TD worried about “compensation culture” was Síle de Valera in 1994. The Fine Gael backbencher complaining of “racketeering” was the late Austin Deasy in 1995. The other Fianna Fáil TD who responded about public footpaths was Brendan Kenneally in 1995. The Irish Times reader with a penchant for the courts of ancient Greece wrote in 1998. The SFA director was Pat Delaney in 2000.

Nothing in this debate is new. Not the talk of a claims culture or of rising awards, or unbearable premiums, or unscrupulous solicitors. It is all old hat. Check the newspaper archives for any year you like. There was a slight lull between 2008 and 2012, when we had more pressing issues about which to have a national debate. But other than that, this “crisis” is like a scene from Groundhog Day.

They regularly have the same debate in Canada, England and Wales, the United States, Australia (where, like the Irish, they call it “compo culture”). There is the same discussion anywhere you find a common law system of legal torts, uncontracted civil rights that result in liabilities if they are breached, with compensation paid by the party breaching the rights. Personal injury is a classic tort.

That is not to say that the debate is not real. It is clearly true that some small businesses are plagued with rising premiums, their owners sick with stress and worry about how they will manage. It is also obvious that some claims are exaggerated, but that is a feature in most contested civil cases, and not just personal injury.

Adversarial system

Take a trip down to the commercial courts some day, and listen in to some of the disputes between businesses. When one company takes a case against another, they usually claim as much as they can and for everything: damages, costs, lost profits, Uncle Tom Cobley and all. It is an adversarial system. You fight your corner while the fight is on, and so does the other side. The best fighter with the best argument wins.

And, yes, it is clear that some claims, although we can never know how many, must be entirely false. This is true whether it is personal injury, defamation, or any other type of civil claim.

But if this conversation, this same vein-bulging debate, has been going on for decades, why are we all panicking about it so much right now? Have we reached some sort of statistical tipping point? Really?

Maybe we have. But the insurance industry, politicians and business groups said the same thing in the early 1990s, and the late 1990s, and the early noughties, and the late noughties. Yet the sun still rose in the mornings and we all continued on with our affairs.

We should be wary about getting caught up in competing febrile narratives that would have us believe that most claims are scams, that claiming is shameful, or that people couldn’t possibly deserve that much compensation for a little bit of whiplash. Or, on the other side, that if only this was a fair society they would get even more compensation.

Let’s not be useful idiots for elements within the highly profitable insurance industry, which, let’s not forget, is under the microscope of a European Commission looking for cartel behaviour, or lawyers, who are hired guns who will argue anything if there’s a fee in it.

The same debate has been ongoing for years, not because we’re all a bunch of scam merchants looking to claim for every slip or fall. But because competing interests have always fuelled it with expert reports and studies and statistics and surveys stuffed full of graphs and charts and egregious examples.

FOOTNOTES

- Many in the Dublin hospitality trade are complaining about a sharp increase in competition. It seems counterintuitive: incomes are growing and the economy is near full employment. Shouldn’t business be booming for operators?

The answer is that competition is becoming far more intense as a result of the difficulties facing the traditional retail sector, which is itself under pressure from the inexorable march towards online retailing.

As bricks and mortar shops close, they are often replaced by hospitality outlets willing to stump up rents that struggling traditional retailers won’t match. So while the economy is growing, the number of city food outlets is growing far faster. The issue hit home recently with the sudden closure of high-profile eatery Luna.

What impact will all of this have on Paddy McKillen jnr’s Press Up Entertainment group, which, it emerged this week, will open its 47th Dublin outlet, MacKenzie’s restaurant on Hanover Quay?

As the largest operator by far, Press Up must have been affected by the increase in operators. Yet the like-for-like impact of greater competition is hard to gauge in its consolidated accounts, because it has been expanding so quickly itself.

Portalon is the Press Up company that has always run its three Wagamama franchises in Dublin. Press Up this month moved to re-register it as unlimited, shielding its accounts for public view. But the financial statement it filed just ahead of the move to unlimited appears to show that Wagamama is feeling the pinch.

Food sales fell sharply over the year from €6.6 million to €5.78 million, while drink sales were down from €662,000 to €540,000. Staff numbers were cut from 162 to 118. Only stringent cost control brought the Wagamama franchise back into the black.

McKillen jnr has made a huge bet on the city’s hospitality scene. He must be hoping that the sharp increase in competition in the sector shakes out some of his weaker rivals, before it puts any pressure on his operation.

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