The UK's so-called 'compensation culture' has been a hot topic for the past few years. There are a lot of credible parties that deny such a problem even exists. However, as industry insiders, we believe there is an issue with an excessive numbers of whiplash injury claims and other compensation claims being made. The media has been taking advantage to spin elaborate reels of sensationalist hype for the purposes of making sales. One of the best ways to arouse attention is to create scapegoat, a fictional story component for which everybody has a certain fondness. Some weeks it's cowboy claims companies, others it's bad-apple insurance firms.

The truth about the compensation culture is much more esoteric than some would have you believe. It all started towards the end of the 90s when personal injury compensation claims were removed from the Legal Aid bill in order to save the government money. The legal aid bill provides financial help to those who needed it for personal injury cases. The introduction of the no win no fee arrangement (known within the legal industry as the Conditional Fee Arrangement) was introduced. This meant that people could start compensation claims without having lots of money for legal professionals.

The second major component in the mix was in the economic downturn. With no risk of losing anything if the compensation claim was lost and much less money in people's pockets, more individuals were considering seeking damages if something went wrong.

The third component was a small number of unscrupulous individuals who gave a bad name to the claims industry. They started claims companies after having found ways to sidestep Information Commissioner Office (ICO) and Ministry of Justice (MoJ) regulations, sending those annoying (and, incidentally, illegal) text messages to people trying to persuade them into claiming compensation.

Ironically, the media itself was the glue that held the whole business together. As a few frivolous claims made their way through legal system, the media plastered these stories all over the front pages time and time and again, with bogeyman scapegoats added for extra measure. Once the newly-impoverished realised there was an opportunity to make easy money, it was not going to take much cajoling.

Now, major legislation adjustments are pending for April 2013. Time will tell if the changes to the legal system will reduce these factors and bring UK motor insurance premiums back down to a sensible level. We'll discuss more about this later but for now, consider yourself up-to-date on the truth of the compensation culture and how it happened. We sometimes get asked whether it's unethical to claim compensation due to the problems in the UK. We always reply with the same answer. Just because a few unethical individuals have made or encouraged compensation claims where they may not have otherwise happened, if you genuinely suffered a result of someone else's negligent actions then it would be unethical for you to suffer in silence through no fault of your own.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.