Posted: March 26th, 2015 10:10am +00:00

EL and PL claims against SME retailers on the rise

SME retailers are facing a surge in claims, according to recent research.

Between 2009 and 2014, public liability (PL) claims more than doubled, while employer’s liability (EL) claims nearly doubled in the same period, data from insurance company AXA shows. This includes personal injury claims due to things like slips, trips and falls.

AXA says that the rise in claims activity supports the growing view that claims management companies (CMCs) are targeting retailers in a speculative manner in order to maintain revenue streams. CMCs have seen a decrease in profits recently, due to new legislation regarding motor claims.

In 2009, AXA reports that the percentage of retailers’ policies claimed against for PL was 1.9 per cent. This rose to 5.1 per cent by 2014. The frequency of claims for EL was 23.6 per cent in 2009 and went up to 45 per cent by 2014.

CEO of AXA UK’s Commercial Business Amanda Blanc says the rise in claims against retailers cannot be explained by the sector suddenly becoming more risky. “Many retailers are being targeted by opportunistic claims-farming companies who view claimants as a potential revenue stream, rather than someone who needs help,” she says, pointing to the increase in the volume of claims as support. “The recent rapid year-on-year increase of so-called ‘slip and trip’ claims are key factors in higher premiums,” she adds.

Ms Blanc says that the rise in CMC activity to encourage EL and PL claims has coincided with a restriction on the companies being able to profit on motor claims. She believes that these companies are now actively targeting the UK’s small business community to find new business.

The data shows that the increase of speculative claims for the retail sector is reflected in the quality of claims dropping.

AXA’s repudiation rate for EL claims in 2010 was 19 per cent. It’s now at more than 30 per cent. Meanwhile, the PL repudiation rate has risen from 39 per cent to 46 per cent in the same period. This steep increase demonstrates that the claims being submitted are speculative in nature and lack any supporting evidence.

Retailers of all sizes are currently experiencing challenges, due to the economy and market changes. These issues have had an even more marked effect on smaller companies, many of which are struggling to survive. With CMCs bringing in a high volume of often-spurious claims, retailers are facing even more pressure, as the claims can be distracting, time-consuming and costly at a time when the businesses are simply trying to stay afloat and keep people in employment.

“In addition, the cost of insurance is correlated to the volume of claims and it appears that the actions of a minority of unscrupulous individuals are pushing up the cost of doing business for the honest majority – and this group does not appreciate that exaggerated or fraudulent claims has a broader social impact,” explains Ms Blanc.

The good news is there are ways retailers can protect themselves against speculative EL and PL claims. Ms Blanc recommends keeping clear and comprehensive records of all staff training, accident handbooks and who is responsible for what in the workplace.

Dedicated claims management software – such as JCAD LACHS – can also help these businesses deal with claims quickly and efficiently.

JCAD LACHS, offers reporting functionality, enabling you to monitor any trends within your organisation. This allows for more accurate forecasting and potential for mitigating rises in certain areas by recognising any issues and resolving them quickly, thus saving your organisation time and money.

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