Britain's compensation culture is out of control, insurance chief warns

Axa chief Paul Evans said 'ambulance chasing' firms who have made a fortune from fraudulent or exaggerated whiplash claims were now turning to new injury battlegrounds such as 'stress' triggered by a road accident or 'deafness' caused in the workplace by too much noise.

And he warned the UK was at a risk of turning into the US, with soaring insurance premiums and companies or social groups too worried to stage events where someone could fall over and sue them.

He was speaking after a report by MPs on the Transport Select Committee this week declared a greater amount of proof should be required from anyone submitting whiplash claims following a road accident.

The Committee noted it was also worried about reports from the industry that as the authorities finally begin to tackle whiplash, claims management firms are turning their attention to other perceived loopholes.

Mr Evans told the Daily Telegraph: "We are seeing more claims for stress coming through, and deafness or loss of hearing through noise in the workplace, more claims on employer liability. Again like whiplash these are things that at the time are nearly impossible to prove.

"With whiplash we have had to prove fraud beyond any reasonable doubt, and there is about a one in 10,000 chance of proving that so often we have to pay or face even higher costs."

He added: "The compensation culture is becoming a real issue for society.

"It's a cultural shift, from an era where people thought 'I want to keep my costs down and fix the car' to 'How can I profit from this?'"

"In the current recessionary environment people are looking for money from anywhere, but if we're not careful we will end up having the same problems in the US, where the problems are writ very large."

Research from Axa earlier this Spring said deafness claims made on commercial insurance policies were up 160 per cent on 2009. Axa said that while many claims were genuine, there was evidence of a "growing number of fraudulent claims".

The company said it was too early to put a figure on claims for stress caused by road accidents, but that it was a worrying trend. Claims management companies are also advertising online that Britons could be "eligible for compensation" even if they lose their appetite at work, as it could be caused by pressure from the employer.

Whiplash claims fell last year as the Government crackdown on the problem finally begin to reap some reward.

Mr Evans said that on average motor insurance policies fell by an average of aruond 10 per cent or £40. They could fall by another £50 if the measures called for by the Transport Select Committee take effect.

He said: "The Association of British Insurers says whiplash adds an estimated £90 to premiums so hopefully we've got another £50 to go."