Rise in Fraudulent Claims? A Quarter of Small Businesses Experienced Employee Claims, Report Finds

AXA report reveals 84% of small businesses support reforms to combat UK’s “compensation culture”

In a report released today, AXA revealed that nearly a quarter of small and medium-sized businesses had received claims against their Employers’ Liability Insurance since 2009.

The findings support a growing attitude amongst employers that there has been a rise in fraudulent claims; as data shows an increase in claims despite a fall in reported workplace accidents.

This rise in liability claims has resulted in an increase in premiums, with 50% of AXA’s respondents stating that they have experienced a rise in their premiums since 2009.

Furthermore, AXA’s report states that 84% of employers believe that the UK has a compensation culture, with 77% sighting Claims Management Companies (CMCs) as the main reason for this.

84% of the employers said they supported new reforms and requirements, such as claimants going through an alternative dispute channel before placing a legal claim, but maintained that more was needed. For instance the majority of those interviewed called for stricter medical examinations and a restriction on CMCs’ marketing activities.

The AXA research insisted upon similar reforms on CMCs and medical examinations; as well as examining risk assessment procedures and the role of health and safety risk consultants. Additionally, the report appealed for the promotion of the place of insurers, more accurate reporting of industrial injuries and diseases, and the increase of information on health and safety guidelines.

Managing Director David Williams, Underwriting at AXA, addressed the report; noting the danger of fraudulent claims and the role insurers could play in tackling the issue.

“The cost of fraudulent workplace claims is bringing about the inevitable consequence of higher Employers’ Liability premiums.

“One thing we are calling for is the insurance industry to draft a code of conduct on best practice for health and safety for businesses and the voluntary sector. “This should include separate guidance focusing on risks specific to small and medium-sized businesses and would go a long way to helping businesses ensure that they are fully informed on the risks to staff and the ways to mitigate them.”

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