The UK is the whiplash capital of the world - we need to change that

Luke Johnson: 8 out of 10 personal-injury claims from vehicle accidents are for whiplash - a world record. Let's stop this.

by Luke Johnson
Last Updated: 27 May 2014

We spend a lot of time criticising the Government, but on occasion we should give it credit. Take various changes to our legal system. The Jackson reforms, which came into effect in April last year, are helping to cut the costs of motor insurance for drivers.

In Britain, we have been paying almost 50% higher annual premiums on average than in France, because there whiplash-injury claims represent just 3% of all such bodily injury claims. That is a tiny fraction of the proportion in the UK, where eight out of 10 personal-injury claims from vehicle accidents are for whiplash - a world record.

The cost of these 'injuries' is estimated to be more than £2bn a year, much of it effectively fraud. But, in the past 12 months, the number of these doubtful claims has fallen sharply. Courts are throwing out legal and other costs that are considered disproportionate and insurers are taking a tough stance with 'claim farmers'. Automotive insurance premiums are falling, so honest consumers are benefiting. The losers are ambulance-chasing lawyers, bent doctors and cheating motorists.

Similarly, tighter regulation of employment tribunals has led to a pronounced decline in bogus claims. Since the introduction of a fees regime last year, the number of claims for discrimination and harassment has reduced by almost 80%. In my experience, many such actions were spurious or malicious.

As Matthew Hancock, the Minister of State for Skills and Enterprise, said recently, law firms and ex-employees conspired to 'ruthlessly exploit' the old model with unscrupulous claims against blameless employers.

There is likely to be an increase in mediation as a way to settle disputes, which will save legal fees and should lead to swifter resolutions. I believe one outcome of these reforms will be a greater propensity among entrepreneurs to take a risk and hire people, knowing that they will not be unfairly punished if the hiring doesn't work out. Over time, these improvements will lead to rising employment - a priority for any society.

Lawyers and unions are complaining about these modifications because their gravy train has been halted. Unions gain referral fees from law firms for industrial-injury cases, so they are part of the bandwagon.

But for those of us who believe in an enterprise economy and wish to see growth rather than stagnation and trumped-up litigation, this is great news, and I congratulate the current administration on its productive work.

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One of the great advantages of the digital age is that it is pretty easy to get hold of people. I make myself highly accessible by including my details at the bottom of this column every month, as well as on my weekly newspaper article.

But the drawback of this openness is that you are likely to receive a lot of unsolicited approaches for help. I am asked to give speeches, invest money, donate money, lend money, hire people, mentor entrepreneurs, join boards, provide internships, proffer advice, write articles and so on.

Most of the overtures want something for nothing. Websites want a free blog, startups mentoring, young entrepreneurs career advice, social enterprises want support. The ease of communications has emboldened everyone to ask. After all, a touch of chutzpah is necessary if you want to get ahead.

I don't blame those who petition me. Indeed, I should be flattered by the attention. And I encourage aspiring tycoons to be bold and resilient. However, if I acceded to every request from strangers, I would have time for nothing else.

I have gradually learned to be selective, because I have a day job, a family and charitable causes I like. This means I have to turn down a fair proportion of those who contact me for assistance.

Sometimes this feels a little uncaring, but I have to be fairly selfish, because otherwise my companies and personal life would unravel. I suppose you can't do everything.

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The collapse of the $35bn merger of giant ad agencies Publicis and Omnicom is being blamed on the egos of the two bosses, Maurice Levy and John D Wren. It seems neither really wanted to let the other take over. The price of the failed deal may prove expensive. Each agency has lost several major accounts recently, which may be fallout from the proposed union.

What is interesting about the leadership of the two firms is how long the two bosses have been in post. Levy, aged 72, has been in charge for 27 years; while Wren, 60, has run Omnicom for 17 years. And their great rival, WPP, has been ruled by Martin Sorrell, 69, for 28 years.

What is it about multinational marketing firms that allows these chief executives to stay in control for so long? It is not as if the men in question own dominant chunks of the equity, as opposed to tycoons such as Rupert Murdoch at Fox or Sumner Redstone at Viacom. There cannot be another comparable sector where the CEOs of the top three publicly owned firms have kept their roles for so long.

Can it be that institutional shareholders - and non-executive directors - are too scared that these figures are irreplaceable? The very idea is fatuous. I have always found that after a while anyone in such a demanding job becomes tired and stale, especially in a creative industry.

I strongly suspect that all three will retire - or be pushed - in the next few years.

Luke Johnson is chairman of Risk Capital Partners.

Follow him on Twitter: @LukeJohnsonRCP.

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