Will holiday claims become the new PPI?

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When I qualified as a solicitor in the mid 1980s, there were around 30,000 solicitors on the roll. There are now around 135,000 practising solicitors, as well as an increasing number of paralegals. It has long been my view that the growth of the legal profession has exceeded the growth of the work available for all those lawyers, and this has to, some extent, driven the claims culture which we suffer from (or depending on your point of view, benefit from) today.

 

Over the last 10 years, a significant industry has grown up making claims against banks for mis-selling PPI insurance, and as well as the lawyers, this has spawned a whole industry of claims companies, who bombard us with calls, clog up our email accounts and even invade our social media accounts. That industry re-adjusted its sights a few years ago towards flight delay claims, encouraging all of us to seek compensation for our 3 hour flight delays, with the judiciary actively encouraging the growth of this market – particularly when it is simple to recover compensation significantly in excess of the flight costs.

 

The claims companies seem to charge a remarkably consistent level of fee for this type of work –   25-30% of the damages recovered seems to have become the accepted norm – and when you see some of the numbers bandied around for the total amounts paid out for both PPI and flight delays, it’s not difficult to realise that a lot of people have got very rich on the back of encouraging these types of claims. If you have never seen this data, it is eye watering. The Financial Conduct Authority keeps data on PPI claims paid. For the 4 years from 2012, the annual figures are £6.3 billion, £5.3 billion, £4.5 billion and £4.5billion – and 25/30% of that will have gone to the claims companies!

 

I suspect that both of these particular claims markets are beginning to dry up – the government has announced that it is going to impose a cap on future PPI claims in 2019, and the airlines have increasingly recognised that, however much they might argue about whether it is reasonable to expect 1 flight in 100,000 being affected by a bird strike[1] as not being something extraordinary, the courts are against them, so are settling an ever increasing number of flight delay claims. As a result, those claims companies and lawyers who have ridden the crest of the claims wave for the past 5 years are having to turn their attention to new sources of income.

 

Increasingly, the straight forward legal claims are now subject to fixed costs regimes. For obvious reasons, the lawyers in particular, want to find something relatively easy to argue, where they are not subject to those restrictions on costs.

 

Since the advent of the Package Travel Directive in 1990, making tour operators responsible for all parts of the holidays they sell, and particularly since the growth in popularity of all inclusive holidays in the late 1990s, the travel industry has seen a growth of claims for illness incurred during holidays. The argument is relatively simplistic:

  • I booked an All Inclusive holiday
  • I got sick during my holiday
  • I spent all my time in my hotel – as my holiday was All Inclusive, why would I want to go anywhere else?
  • The cause of the sickness must therefore have been something caused by the hotel
  • If I can also show that others at the hotel were sick at the same time, this must strengthen my case.
  • I am therefore entitled to compensation.

 

What that argument fails to recognise is that actually, there are a variety of factors causing sickness during a holiday – changes in climate – if it is very hot, people get dehydrated, and this causes illness; changes in diet – all inclusive encourages people to eat and drink too much; simple over-consumption of alcohol; as well as changes in the water, which affect the bacteria we all have in our stomachs. One of the leading experts in Travellers’ Diarrhoea estimates that anyone staying in a different environment – such as a Londoner spending a week in Cornwall, can expect in 5% of cases to suffer some form of sickness caused by the changes in the water.

 

The circumstances leading to the explosion of claims were that the industry grew rapidly in the Caribbean (particularly the Spanish Caribbean) as well as Egypt, and it is true that sickness levels were significantly higher in those areas. The tourism supply chain (hotels, restaurants etc) are not entirely without blame, in that hygiene standards can be less rigorous than in parts of Europe, and the local populations do not always have easy access to clean running water, or to a culture of cleanliness. Nevertheless, the larger tour operators in particular, have spent huge amounts of time and money working with their suppliers to attempt to improve hygiene standards, and ensure a more rigorous approach towards information management – so the hotel can prove that it is taking the appropriate steps to ensure that customers are not ill.

 

Nonetheless, the last few years have seen the claims companies and an increasing number of lawyers looking at this area as an opportunity. I was interested (actually, irritated) to read on one solicitor’s website recently that “Illness on holiday is normally caused by food poisoning”. You would have thought that solicitors would check their facts before making such a claim. There is not a lot of clear evidence on causes, but most of the experts believe that most cases of gastro-intestinal illness in travellers is caused by water, not food.

 

As well as the typical routes to market for the claims companies and their lawyers – social media, website “calls to action”, advertising etc, the claims firms are getting increasingly aggressive and directly focussed on holidaymakers – from big banner adverts in airports, both in destinations and in the UK, to leaflets handed out to holidaymakers in destinations, holidaymakers are directly targeted, and encouraged to think that if they have been ill, it will be easy to secure substantial compensation – one such company even claiming that if you have been ill and travelled on a package holiday, “we can definitely get you £2500 each” – and interestingly, this is stated to be “with or without medical evidence”.

 

The travel industry, and the lawyers and insurers representing the industry, have traditionally been reluctant to defend many of these claims – largely because of the concern that the claimant lawyers manage to run up massive costs, and it is often cheaper simply to pay off the claim than defend it. In addition, the claimant firms often rely on weight of numbers – if more than one person has been sick, the cause must have been the hotel, and there is a fear that judges will accept that argument.

 

The industry does however need to prevent itself becoming the next sector which is inappropriately financially penalised by the claims culture. We need to demonstrate that the hotels we work with are generally taking the right steps, and only compensate those whose illness was genuinely caused by failings on the part of the hotel. We should also encourage a change in the law to ensure that lawyers stop getting rich by claiming disproportionate costs for holiday illness claims.

 

Let’s get a fair and balanced approach in our sector before it is too late! We don’t want holiday illness claims to become the next PPI.

[1] These are figures produced by the US FAA – number of bird strikes which cause some sort of aircraft damage.