UK liability claims jump on inflation and new legal tactics, warns Clyde & Co

Rising inflation and new tactics from claimant’s solicitors seeking to maximise damages have seen UK employers’ liability (EL) and public liability (PL) claims rise substantialy, according to law firm Clyde & Co.

David Caswell and Simon Jones, partners at Clyde & Co, report a sharp increase in the average value of general damages paid for claims under £25,000 since autumn 2022.

“Rising inflation means that the Judicial College guidelines for lower value general damages claims for pain, suffering and loss of amenity are quickly out of date, and claimant solicitors are looking for higher damages,” they said.

The pair warn that a string of changing trends, including more expensive chronic pain claims, waiting lists for experts between 12 and 18 months, higher fees for experts, and higher loss of earning claims as wages rise, have come together to inflate the cost of EL and PL damages.

“For businesses and their insurers, it all adds up – substantially,” Caswell and Jones said.

While these factors are shaped by changing economics, Caswell and Jones said some other changes are being driven by new strategies deployed by claimant solicitors.

They report a rising trend for claims submitted to the Ministry of Justice portal for claims under £25,000, which insurers often settle to keep costs low and admit liability, that are then dropped while the claimant’s solicitors build a case for maximum damages and costs.

“Sitting behind all this is the frequent impetus from claimants’ solicitors… to maximise what their clients are seeking by pushing different aspects of claims or driving up the damages sought. In the current climate, some claimants may also be more inclined to try their luck by raising weak or spurious claims or exaggerating them, and some of our clients are seeing numbers of claims rise,” said the Clyde & Co duo.

Businesses and their insurers must mitigate the impact of EL and PL claims inflation with strategies and tactics of their own, they said.

“Some of these trends have been gaining traction for some time, but in the current environment of rising costs and high inflation, the impact of failing to take action to contain damages could be severe. It all comes down to strategy: ‘opponents’ have theirs, so it’s vital that businesses and insurers have them too,” Caswell and Jones said.

Prevention is more important than ever against accidents and eventual claims through well-designed risk management processes, backed up by proactive intervention should an accident occur, they added.

Insurers should also be alert to claims posted in the sub-£25k portal that may escalate, the pair advised.

Data analysis can help reveal the types of solicitors and their likely behaviours, in particular identifying those seeking to maximise claim values, and the tipping point for settlements, they said. At the same time, insurers are increasingly using AI-driven technology to review medical reports and gain insight into the best risk mitigation strategies to meet the challenge of rising claims costs.