Despite decreasing employment in high-risk industries, some insurers are
reporting a 50% increase in industrial deafness claims over the past
two years. What's behind the rise, and should insurers worry that this
is the new whiplash?
The statistics may seem simple - around 35 000 claims a year, success fees of up to 70% for lawyers, half the claims dropped once made - but in the world of industrial deafness claims, the figures tell only half the story.
Insurers, law firms and loss adjusters say there has been a surge in such claims, some reporting an increase of up to 50% over the past two years.
According to reports, insurers are receiving more claims for industrial deafness than any other industrial disease. And it's not just the numbers that are changing. It is believed that the quality, and origin, of claims is also evolving.
"In our experience there are more weak cases," says Stephen Croston, a partner in Keoghs' disease team.
"Traditionally you would get claims from industries associated with noise exposure, often from union firms, but we're now seeing cases from industries less associated with noise risks, where there's more doubt over exposure to excessive noise and where the extent of the damage, if any, is minimal."
Croston adds that, while the landscape was once dominated by metal working and similar sectors, there are now claims from plastics, farming and entertainment industries.
In some instances, would-be claimants are unable to provide proof of employment or other vital information.
RSA UK legacy director Faye Glasspool says that these newer claims are less "cut and dried" than those previously received.
"Claimants still have to prove their case, [and if they've been working in a less noisy environment] they'd have to show exposure over a greater period of time," she says.
"A few years ago with steelworks claims, however, it was so noisy that claimants didn't need a lot of exposure to suffer a loss."
Glasspool estimates that RSA has seen a 50% increase in claims since 2010, over half of which end up settling at nil as claimants withdraw from proceedings after being pressed on their claims.
"With half of them settling at nil, we've still got the claims guys handling those cases, and the internal cost to do so can be quite high," she says.
"Even the ones that settle, when there's no valid claim, we still have to spend quite a lot of time repudiating those."
She adds that more than 60% of what is paid out on successful claims is in respect to third-party costs. Fixed success fees mean insurers currently pay out between 62.5% and 70% in success fees in many cases.
The Laspo effect The increase in claims has been rapid. Insurers date the influx from up to 18 months ago, citing success fees as the cause.
There is also a belief among some commentators that solicitors and claims management companies are pushing as many claims through as possible before the Legal Aid, Sentencing and Punishment of Offenders Act comes into force in April 2013, incorporating the Jackson reforms and barring success fees.
Joe Noel, head of personal injury at Cunningham Lindsey, says that, in a bid to drive up claims, claims management companies have set up audiometry booths in shopping centres offering rapid hearing tests in areas where noise exposure may be higher.
"If there is a campaign, for want of a better term, on the part of a broader claimant lobby to drive these claims, there must be an increased number that are either meritorious to the knowledge of the claimant or wilfully fraudulent," he says. "I doubt that the percentages of the overall claims received are significantly more fraudulent than the percentage received previously, but there may be more that are speculative. Maybe they're having a punt."
There is also word of workers being induced to bring claims with offers of a free iPad in exchange for taking a hearing test, and claims management companies pressing ahead with questionable claims.
"Claims such as these have very little merit at the beginning of the process, which would indicate there's very little screening by the claimant law firms before they take the cases," says John Latter, UK executive claims manager at Zurich.
Latter believes that some lawyers are unconcerned about flooding the market, as a profit can still be generated even if only 50% of claims are successful.
Cold-calling connection Meanwhile, some commentators link the surge in claims to the exploitation of personal data. A July investigation by BBC One's Panorama showed evidence of cold calling at claims management companies, where phone directories take precedence over telephone preference services designed to stop such calls.
Jim Byard, head of disease at Weightmans, explains: "Claimants are being signed up on the basis they have been in employment, and CMCs are not making the distinction of working in manufacturing.
"It's primarily driven by advertising, be it cold calling or text messaging. These claims would not exist without the adverts."
The lucrative process has even sucked in professions outside the legal and claims landscapes. Alison Woolston, head of Garwyn's Birmingham occupational disease unit, says she has encountered audiologists who have provided sketchy evidence.
"We all know that there are certain medical experts who we question when we get their report," she adds.
This is not to say that any increase in claims can be attributed solely to a desire to "make hay while the sun shines", as Noel says, regarding Laspo's impact.
The increased awareness of industrial deafness also means that more legitimate claimants are now aware of their options, while the Employers' Liability Tracing Office, and the role it can play in helping claimants whose relevant employers are now defunct, may also help drive an increase.
Croston says: "The ELTO facility has made it easier for claimant solicitors and they've been able to turn more claims enquiries and referrals into actual claims."
Noel believes that falling employee loyalty around industrial heartlands hit by redundancies is also a factor.
"Maybe there is an issue with cynicism replacing stoicism in terms of employees who are either at risk or have been made redundant," he says.
The advancement of regulations around noise exposure, however, is less clear cut as a cause of the surge in claims.
The current Control of Noise at Work Regulations have been in force since April 2006, but the vast majority of claims currently presented date from the 1960s to the 1980s.
Byard says: "The claims that relate to the 2005 regulations are very modest in number. We should be seeing what we've witnessed since the Thatcher years: a dramatic fall in the number of people employed in the manufacturing industry. The number of new deafness claims should be falling."
Indeed, Woolston believes that employers' increased awareness of new legislation could counteract many of the new claims. Employees were previously provided with hearing protection, but its use was not enforced.
"Nowadays companies are enforcing and recording the wearing of hearing protection," Woolston says. "Claims may tail off because employers know what they've got to do."
No Jackson reprieve
The shadow of the Jackson reforms looms long over industrial deafness claims, but insurers would be wise not to view it as a panacea.
Insurers will have decisions to make about the handling of claims, according to Croston, as they will be unable to recover their costs.
"On a case-by-case basis it could end up cheaper for an insurer to pay a weak claim than to successfully send it to trial under the new regime," he says.
"You can pay all these cases because they're fairly cheap and you're not going to get your costs back if you win at trial. However, by doing so you could encourage future claims.
"Alternatively, you could take a hard line and fight the cases but incur significant unrecoverable legal costs. "It's going to be ever more challenging post-Jackson, and insurers are going to have to make an early decision on which cases they want to fight and which they want to settle."
Equally, the extension of the Ministry of Justice portal to include employers' liability claims in April 2013, the same time as Laspo's implementation, could prove pivotal. It remains to be seen whether deafness claims can be effectively incorporated into the portal.
"Unless the MoJ tackles the issue of fixed fees outside the portal it will actually encourage claimant lawyers on these claims to push the claims outside the process where they can access higher fees," says Latter. "As in motor at the moment, in the MoJ process you have some attractive fixed fees for admissions, so when you admit liability you attract a fixed fee in the MoJ portal process. "We would hope this would come in for casualty and EL disease along similar lines. But, of course, as soon as you allege things like contributory negligence or you repudiate a claim based on the information presented, which in many cases is not adequate, although the nature of the claims notifications forms in the portal should eliminate some of the gaps, that claim immediately comes out of the MoJ portal process.
"It depends where the MoJ decides to play in that area. It's uncertain at the moment, but we hope there will be some good news coming out of the end of that."
High volume
Meanwhile, insurers are striving to ensure that legitimate claims are paid quickly, but say that the volume of claims makes this challenging.
"If we could get rid of the 50% that settle at nil and just have the 50% genuine claims, they probably would go through the process quicker," says Glasspool.
Byard adds that not all insurers have the resources to deal with the surge in claims. "It's a sad fact that there are genuine claims in there, and claims that need to be paid, where the claimant is able to satisfy the causation link and employers have been historically in breach of duty," he says.
"But there is also a cost to that. The insurer has to devote resource to handle the influx."
Indeed, while industrial deafness has been described as the ‘new whiplash', it is probably this which is the clearest distinction: whereas legitimate claims of industrial deafness can be proved with medical evidence, whiplash is more subjective.
"If it's a genuine claim an audiogram will show evidence of noise-induced hearing loss," Glasspool explains. "It's a question of genuine claimants ensuring they appoint the right solicitor."
Where noise-induced deafness can be found, it produces what Glasspool describes as a "backwards tick shape" on an audiogram, distinct from other forms of deafness.
This is particularly important because many claimants are in their mid-50s to late 60s and may be suffering normal age-related hearing loss, says Woolston.
"In their medical reports, many people say they thought their deafness was caused by old age, but when they were tested it turned out they had noise-induced deafness as well," she adds.
Indeed, effective testing and improved diagnosis guidelines mean that, although more claims are being pursued for industrial deafness, it is not clear whether more claims are successful.
Instead, it is the investigation that becomes the costly process for insurers, rather than payment in the whiplash comparison.
Insurers, loss adjusters and lawyers all report that deafness is not easy to fake when properly investigated.
As for the whiplash comparison, Latter believes that numbers of deafness claims are expected to lower because of a combination of factors, including Laspo, better regulation and a gradual migration away from heavy industry in the UK.
"When you think about it, as long as there are cars there will probably be whiplash claims, whereas over time we expect the level of deafness claims to decrease markedly," he says.
"We expect this to decrease from a flood to a trickle in future years, whereas whiplash, until car manufacturers devise a car that doesn't crash, is going to stick around."
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