The cost of compensation culture. Working party report

Document description

This paper considers what is 'Compensation Culture'. We've reviewed a range of events for which compensation is paid and have estimated what these cost UK plc. The ball-park 'cost of compensation' is roughly £10bn per year, over 1% of GDP. This cost has been increasing at 15% per year recently and is set to continue rising at over 10% per year. Over a third of the total is legal and administration expenses. This seems a fundamentally inefficient way of delivering compensation. The paper includes the results of two surveys of the UK actuarial profession and the general public. The average view of practitioners is that motor personal injury costs have inflated at 15% per year recently and double-digit inflation is set to continue. The continuing high inflation is mainly attributed to an increasingly litigious society and future legal changes.