Holly Deakin contributed to the writing of this post
Noise induced hearing loss (NIHL) claims are overtaking asbestos-related claims as the number one burden on insurers’ books.
Research by the Association of British Insurers (ABI) reveals the following staggering facts with regards to deafness claims:
- 250% increase in the number of claims between 2010 to 2013
- every £1 received by the claimant in compensation relates to £3 for the lawyer
- overall estimated cost of NIHL claims in 2014 reached £360 million
A recent development in this highly topical issue is the announcement by the Ministry of Justice (MoJ) to tackle the growing number and cost of NIHL claims. It may come as no surprise to hear that this news has been well received by the ABI and insurance sector.
The rise in Claims Management Companies (CMC) has fuelled the compensation culture which is driving this issue. CMC have been bombarding individuals with millions of nuisance calls and spamming techniques to encourage them to claim. Not only are these companies increasing the likelihood of fraudulent claims, but they are also making it harder for genuine claimants to seek compensation, due to the sheer volume of claims that insurers are receiving.
We are finally seeing these companies penalised for such behaviour. The Hearing Clinic has been fined £200,000 after hundreds of complaints were received following harassment through unwanted calls. The Claims Management Regulator has the power to impose fines of up to 20% of annual turnover and can even suspend or revoke trading licences of CMC. Approximately 300 CMC have received warnings from the Regulator, and over 100 have had their licences removed.
"Every £1 received by the claimant in compensation relates to £3 for the lawyer"
The insurance industry clearly wants stricter rules regarding deafness claims. The overarching point here is that genuine claimants who are suffering from NIHL should be able to fairly seek compensation. However, the fraudulent individuals who are being encouraged by CMC to claim need to be eliminated. The current requirements for claimants to demonstrate eligibility for deafness claims are:
- evidence of their employment
- medical evidence in the form of an audiology test which demonstrates the NIHL was due to noise exposure in the working environment
- submit the claim within three years of identifying that their hearing loss was due to noise exposure in the working environment
The ABI has made the following suggestions to help genuine claimants gain compensation:
- fixed legal fees to apply to NIHL claims, in a similar way to whiplash claims
- amendments to the current Claims Portal to ensure that more NIHL cases can be submitted through it
- medco be extended to cover audiologists so insurers can be reassured about the financial independence of staff carrying out hearing tests
It is no surprise that the announcement by the MoJ has been welcomed by the insurance industry. It is hoped that a practical framework will be developed which will make legal fees more proportionate and will ensure genuine claimants receive fair compensation in a timely manner. This strategy, coupled with the power of the Claims Management Regulator should drive out bogus claims and improve the process for genuine claimants.
The Institute and Faculty of Actuaries established a working party to investigate deafness claims. The ABI's update largely confirms their previous findings. The working party are examining whether the current claims system sufficiently accommodates the complex nature of current claims – a blog with our views on this report will follow shortly!