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The Actuary The magazine of the Institute & Faculty of Actuaries

Justice culture

Tony Silverman’s article (The Actuary, September 2003) highlights the lack of evidence for some of the insinuations in the GIRO paper ‘The cost of compensation culture’. As the article notes, these insinuations enjoyed enormous media coverage; this was partly because they were energetically promoted by the Faculty and Institute, by press releases, and other means. I agree with Tony Silverman’s criticisms. Furthermore I am, broadly speaking, in favour of a ‘justice culture,’ and I deplore the Faculty and Institute’s campaign against it.

Julian Lowe’s response to the article states that the GIRO paper does not set out any ‘view’ or ‘message’. This seems inconsistent with the paper, and also with the concluding sentence of the Faculty and Institute’s accompanying press release, which reads: ‘We believe that a more litigious society would be a bad thing….’ He refers to ‘silly or infamous compensation claims’ cited in the paper, but the facts of one of those cases as described in Tony Silverman’s article make me wonder about the fairness and accuracy of the other reports.

I have a number of further comments on the GIRO paper. We are told in the summary that the majority of ‘the public’ disapproves of changes in attitudes to compensation. However, on closer reading ‘the public’ turns out to be a few friends of general insurance actuaries. Did the working party consider the viewpoint of victims of serious accidents? If the working party asked only affluent comfortable people leading affluent comfortable lives, it would not be surprising if such people were very ignorant about the obstacles which face an injured person pursuing a justifiable claim for negligence.

In discussing an appropriate premium for after-the-event insurance, the paper incidentally notes that over 95% of bodily injury claims in the United Kingdom are in fact successful. This astonishingly high figure suggests that too few claims are pursued, not too many. The Tillinghast survey quoted in the paper suggests that in 1998 the United Kingdom had the lowest tort costs as a proportion of GDP in all the countries surveyed. These figures are not consistent with the insinuation of an excess of frivolous claims.

The foreseeable effects of the Faculty and Institute’s promotion of this paper are to make it less likely that people with justifiable claims for negligence will receive compensation, and to make it more likely that insurers can avoid paying such claims. This seems very similar to the Faculty and Institute’s lobbying in relation to genetics and insurance, about which I have written in these pages (The Actuary, November 2000) and elsewhere. In both cases, actuaries appear solely concerned with the interests of insurance companies and fortunate people such as themselves, and hostile towards the interests of people who are less fortunate.

Some actuaries may not see it this way, but other audiences to whom I speak or write often do.