Why All the Noise Over Deafness Claims?
With occupational deafness claims up as much as 50% over the past two years, Kin Ly looks at whether claims farming are to blame and asks what the industry can do.
The insurance industry has seen a sharp rise in occupational deafness claims over the past few years, a trend that looks likely to continue with leading insurers forecasting further increases for 2012. Three of the UK’s largest insurers – RSA, Zurich and Aviva – have said increases are a result of claims farming. In the last two years, RSA has seen a 50% increase in new noise induced hearing loss claims, and predicts a further increase for 2012, while Zurich has projected a further 25% rise for this year – a trend it witnessed in 2011 when it saw deafness claims increase by 25% on 2010. Additionally, Aviva also saw a 25% growth in such claims in the past two years.
Insurers say the rise is predominately a result of claims farming and marketing efforts used to encourage compensation claims. While evidence of deafness claims farming in particular is thin on the ground, general reports of farming suggest it is prevalent among the industry as a whole, with reports of face-to-face cold calling and text messages, as well as marketing efforts in the form of TV and radio advertising.
Compared with other diseases, occupational deafness claims have one of highest repudiation rates. According to RSA, 50% of the insurer’s deafness claims were declined, which it says could be linked to claims farming bringing in illegitimate claims. Where damages are agreed, RSA typically pay over 60% of the overall settlement to the claimant’s solicitor.
Zurich also noted a similar trend, rejecting higher numbers of deafness claims. Mike Klaiber, claims disease manager at Zurich, says, “The quality of deafness claims received is generally poor, for example, legal liability is not often attaching. This suggests that because of the nature of claims farming, many deafness claims tend to be speculative.”
He adds, “There appears to be limited filtering, which has resulted in claims being intimated
without much examinations of the merits. Anecdotally, this appears to be a trend witnessed across the insurance market and not just at Zurich.”
Changing Claims Landscape
With this rise, the insurance industry is now receiving more claims from those working in light to medium engineering industries, as well as from those working in heavy engineering environments.
The change in landscape suggests workers in light to medium engineering environments could be targeted by claims farmers, says Faye Glasspool, director of UK legacy at RSA: “We’re receiving claims from sectors that are using light machinery as well as your typical noisy heavy construction environments that have generally been the producers of claims in the past. Medium to heavy engineering employees have been targeted already and now it seems that smaller policy holders from light engineering jobs are being aimed at.”
Zurich has also experienced this change first hand, receiving claims from a number of people working in light industries including storemen and painters and decorators. While the insurance industry generally believes claims farming are one of the contributing factors to deafness claims growth, the Claims Standards Council – a trade association that represents claims management businesses – disagrees and says the growth is down to union campaigns and education.
Andy Wigmore, policy director at the council, says: “I have not noted any prolific advertising or claims farming with regards to deafness claims – it is very easy to see who does what because regulation is quite tough, particularly around advertising. The rise is down to the unions and their ability to educate the members more so than claims farming.”
Of the 1,000 claims management companies that the Claims Council Standard monitors, not one has put forward a deafness claim notification, Mr Wigmore confirms.
What Can the Industry Do?
Despite discrepancies in the debate over whether farming has contributed to the rise in deafness claims, there appears to be a real issue around the use of marketing methods to source potential claimants.
The insurance industry stresses it is committed to paying out compensation where it is owed, but needs to clamp down on farming. Ms Glasspool suggests insurers need to raise awareness of claims farming and the potential effects it has on the industry. She also proposes that the Solicitors Regulatory Authority should look at some of the allegations made, and the insurance industry as a whole needs to take a firmer line.
Farming has been an issue for some time, where aggressive marketing has resulted in high numbers of whiplash claims over the years. What is clear is that the industry has experienced an increase in deafness claims as high as 50% in the last two years, with some insurers projecting further rises. Without a serious clamp down on farming, deafness claims could soon become the new whiplash. i 1. The medical examination: the claimant is unable to justify that they have a hearing loss sustained as a result of their working environment. 2. Limitation: an individual has three years to make a claim after being made aware of any loss in hearing or other hearing injuries as a result of their working environment. However, it is now difficult for claimants to say they were not aware of the opportunity to claim after union campaigns of the 1980s and 1990s. 3. Proving liability: it is difficult to prove the employer is liable for any hearing injury sustained.
Deafness claims are generally declined on three common grounds:
Case study: Baker v. Quantum Clothing and others
Zurich defended a high profile decision of the Supreme Court in April 2011, related to the test case Baker vs Quantum Clothing and others.
The test case concerns the liability of employers in the knitting industry of Derbyshire and Nottingham for hearing loss shown by employees during the years prior to 1 January 1990 – the date when the Noise at Work Regulations 1989 came into force.
Seven test cases were put forward, of which six were dismissed as there was no evidence of noise-induced hearing loss (NIHL).
One claimant, Mrs Baker, did have NIHL arising from exposure to noise between 8589 decibels during her time at Quantum between 1971-1989.
However, the court ruled that Quantum had not breached its duties at common law or under section 29 of the Factories Act 1961 to keep the workplace safe.
By a majority of 3:2, the Supreme Court ruled that employers were not liable for injury caused by exposure to noise of less than 90 decibels before 1 January 1990.
In response, Mr Klaiber says: “The decision reinforces the historic standard for noise threshold at which employers are held liable for any hearing loss and that this should not change retrospectively in the light of better present day knowledge.”
The article is reproduced with the permission of the Chartered Insurance Institute and it first appeared in the Aug/Sept 2012 edition of The Journal.