Wealth Creation

I’ve been driving for a long time now and fortunately I’ve not had many accidents over the years. Recently however, a momentary lack of concentration meant that I rolled into the car ahead. It was such a non event. “Did I just hit the car in front?” I asked my wife. Unfortunately the answer was yes and the occupant of the other car quickly parked up and leapt out. We exchanged details and I asked if I could try a quick repair. He let me reach behind the bumper and push it back out to its original shape. I retrieved the unbroken number plate from the ground and offered to visit him later to re-fit it. I honestly think that if that had been my car I would have stuck the number plate back on and that would have been it. Indeed my car still carries the slight scuff on the bumper. This gentleman wasn’t like me though.

When I next spoke to him he said he wasn’t feeling well and had pain in his arms. I suspected a fraudulent whiplash claim was on its way. Some months later I was served ‘papers’ from the court (a fairly recent bullying tactic I’m told) which annoyed me because there was never a hint that my insurance wouldn’t pay. It was quite interesting, however, because it provided all the details of the claim.

Obviously there was the cost of the car repairs (about £600 which I don’t begrudge him at all), then the compensation for the night in hospital and the 3 weeks off work (about £1200) not to mention the inability to look after grandchildren for 6 weeks and, most incredibly, the costs of having doors re-fitted by a tradesman which had been planned as a DIY job (£360). He went to casualty twice, his GP 4 times, had 3 x-rays and had 12 sessions with a physiotherapist (over £500). It was also illuminating to see that this gentleman had been involved in a similar accident every 5 years for the last 15 years.

His claim amounted to about £3,000. In total, however, the insurance claim was over £10,000. So that’s £7,000 for the legal, medical and insurance ‘professionals’.

Now I’ve spent many years trying to improve manufacturing businesses by driving out waste. The core of the Lean Philosophies (Toyota, Matsushita, Taguchi and others) is that anything that is wasteful, is detrimental to society as a whole. It seems, however, that some other professions are driven by a different sort of philosophy. Indeed the creation of waste (more hours on the job) provides an excuse for a larger bill. Although almost all this claim was driven by a “what’s the most I can get” attitude by the individual, it illustrates that some ‘service’ industries seem able to increase margins through inefficiency and while that might generate wealth for ‘ambulance chasers’, it is detrimental to everyone who needs to buy insurance.

Still, somebody needs to earn enough money to buy luxury products, so maybe we do need well paid legal professionals after all.