Norwich Union report calls for creation of a modern compensation system

Article date: 7 December 2004

A report by the UK's leading insurer, NorwichUnion, has called for a modernisation of Britain's compensationsystem.

The report recommends more radical change in theway injured people are supported and the need for resources to bemore efficiently engaged. The insurer believes a greater emphasison rehabilitation would help to bring an end to the 'have a go'culture - something that many commentators believe is making usaverse to taking even the smallest risks, through fear of beingsued.

Talking at the launch of the report -A Modern CompensationSystem: Moving from Concept toReality - Norwich Union's directorof technical claims, Dominic Clayden, said: "During the last yearwe have been working hard to raise the national debate around thecost and process of compensating people for personal injury and toshow that the current system is slow, costly and inefficient.

"Claims management companies and solicitors haveexploited the public’s expectations in terms of what iscompensatable, and the amounts that might be achieved. Theinevitable consequences have been an increase in frivolous andvexatious claims, and an explosion in claimant's costs. The latternow represents 40% of all payouts.

"The report highlights what we think are thekeys to an effective system of compensation. We want to put theclaimant first by reducing the adversarial nature of the system andshortening the investigation process to enable swiftercompensation. One of the problems within the existing system is thedelivery of care, specifically the public/private and competitivecost, which has been challenged by the Chief Medical Officer".

Mr Clayden continued: "It's not just aboutcompensating people quickly and fairly, it’s also aboutchanging the behaviours that created an unsustainable system andthe ‘have a go' culture in the first place."

The insurer believes the key features of atransformed compensation culture are:

  • The wrongdoer should have the first, and unfettered,opportunity to resolve the claimant's problem. This should be timebound.
  • No legal costs should be payable where there is no dispute -legal costs should only be payable for legal advice, not forclaims handling.
  • There should be complete transparency of the process by whichdamages are calculated, and, in particular, the damages for pain,suffering and loss of amenity for the most common injuries.
  • Help first and cash later. Rehabilitation has to be firstconsideration and failure on the part of either the compensator orclaimant to embrace this should be reflected in the amount of thesettlement.
  • Shorter accident to restoration times, as currently,compensation takes too long to be delivered.
  • Broader, and more proportionate medical reporting.
  • Breakdowns in the process, whether about responsibility oramount, should be mediated before litigated.
  • Managers of workplaces and public places should demonstratethe learning from accidents and manage improvement in risk or facepenalties.


For further information, please contact:
David Ross at Norwich Union on 08703 66 68 65 or 07786 526350.

Notes to editors

  • Norwich Union is the UK's largest insurer with a market shareof around 14 per cent
  • With a focus on insurance for individuals and smallbusinesses, Norwich Union insures:
    • one in five households
    • one in seven motor vehicles
    • more than 800,000 businesses
  • Norwich Union products are available through a variety ofdistribution channels including brokers, corporate partners suchas banks and building societies and Norwich Union Direct.
  • Norwich Union’s news releases and a selection of imagesare available on the Aviva internet press centre at
  • An ISDN facility is available for studio quality broadcast. Callthe press office on 08703 66 68 68
  • For all life & pensions media enquiries 08703 66 6873
  • For all other media enquiries 08703 66 68 68
  • Members of the General Insurance Standards Council
  • Members of the Aviva group

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