Is 'industrial deafness fraud' the new whiplash?
The insurer Aviva has seen a 378% increase in the number of claims for 'industrial deafness' over the past four years.
It received 2,400 claims in 2009 but this rose to 11,467 in 2013, up by more than four times.
Insurance group RSA, which owns the More Th<n brand, has also seen a significant increase in industrial deafness claims over recent years. In 2013, it received more than 800 new deafness claims a month, compared to 450 in 2012 and 300 in 2011, a spokesperson told Moneywise.
Meanwhile, across the industry, the number of claims has risen from 9,000 in 2002 to 55,000 in 2012.
A spokesperson for Aviva told Moneywise the influx has been caused, in part, by the changes made by the government in 2013 to clampdown on so-called 'compensation culture'.
He said: "It is no coincidence that the peak in Noise Induced Hearing Loss (NIHL) claims came just before the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) reforms."
The LASPO reforms drastically reduced free entitlement to legal advice which, along with other policies coming into effect in 2013 to try to tackle the growing number of fraudulent whiplash claims, has seen a fall in the number of related claims. Whiplash claims are believed to add £50 to the cost of car insurance for every driver.
Earlier this month, the Association of British Insurers (ABI) said: "There is growing evidence that claimant law firms are turning their attention to industrial deafness claims which attract substantially higher legal fees."
It added that the average legal fee a claimant lawyer received for settling an industrial deafness claim last year was £10,500, compared to £500 for a whiplash claim. "Given the average compensation award for an industrial deafness claim was £3,100, this means that for every £1 an insurer pays out in compensation to the claimant, they pay out just over £3 in legal fees to the claimant's lawyer," the ABI explained.
The RSA spokesperson added: "We agree with the ABI that this is an area 'claims farmers' and fraudsters are actively targeting and requires reform. Currently, approximately 70% of claims are rejected. Of those claims that are paid, typically claimant lawyers' costs account for at least 75% of the overall settlement, which is wholly disproportionate to the modest levels of compensation paid to the claimant.
"We are doing all we can to combat this fraud but believe that the government should be doing more. We believe that the government should do more to address the issue."
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.