Compensation Culture Essay

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COMPENSATION CULTURE WHAT IS A COMPENSATION CULTURE? The word “compensation culture” is widely used in recent years to refer to the recent phenomenon of too many claims in England and refers to a type of culture that encourages people to “blame and claim”, where people believe that they have the duty to be compensated for even the smallest thing. As it was stated by Lord Falconer in a speech held in March 2005, “compensation culture is a catch-all expression […]. It is the idea that for every accident someone is at fault. For every injury, someone to blame. And, perhaps, most damaging, for every accident, there is someone to pay”. COMPENSATION CULTURE: MYTH OR REALITY? Although it is talked a lot about this so-called “compensation culture” in Britain, it is not clear if it really exists. The answer to the question “is there a problem?” seems to change according to whom the question is asked. One of the most famous studies is the one conducted in 2002 by the Institute of Actuaries. This report states that there really is a growth in claims over the last years and, therefore, that there really is a compensation culture. According to the research, the total cost of the claims per year would be approximately £10 billion (1% of GDP). Obviously, this is a large amount of money, but it is difficult to know if could actually be used as a proof to state the existence of a compensation culture, if it is not compared with that of other countries. A separate study is the one carried out by the Task Force in 2004. The Government’s Better Regulation Task Force states that the UK’S expenditure for tort claims is 0,6 % of GDP: only Denmark spends less. This percentage, if it is compared with the previous one, is much lower. It is on this basis that the Task Force report denies the existence of a compensation culture, calling it even as a “urban myth”.

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