A recent report shows that compensation culture continues to hit UK businesses and local authorities, and highlights weaknesses in proposed legislation

According to Aon's second annual survey, businesses and local authorities would like to see greater Government consultation with industry and the public sector, with a view to introducing tighter limits on compensation awards and more ambitious reform. This would go further than the proposed legislation to address what organisations perceive to be the main drivers of the compensation culture: the growth of 'no win- no fee' legal services (84%); media advertising on the part of 'claims farmers' (70%); and reluctance among insurers to defend claims due to the lower costs of settling out of court (42%).

Aon's survey reveals that eight out of 10 (86%) of the organisations surveyed have been detrimentally affected by compensation culture this year, either directly or through rising insurance costs.