Compensation Recovery Unit

Date of Issue: 25 January 2011 

Compensation Recovery Unit

Mr Kieran Donnelly, Comptroller and Auditor General, today issued his report to the Assembly on ‘Compensation Recovery Unit – Maximising the Recovery of Social Security Benefits and Health Service Costs from Compensators’.

Mr Donnelly said “The Compensation Recovery Unit plays an important role in recovering the cost of health service care and social security benefits in personal injury cases. Since 2002-03, it has recovered over £100 million from compensators, mainly insurance companies. This is commendable but there is scope for further improvement and my report makes a number of recommendations aimed at helping the Unit become more efficient and to maximise the amount it recovers.”

Main Findings

• Since 2002-03 the Unit has recovered over £100m of health service costs and benefit payments. In 2009-10, £8.2m was recovered in respect of health care costs and £5.4m in respect of social security benefit payments.

• The Unit relies on compensators notifying it when a claim for personal injuries has been made. Most notifications are made electronically through a system owned and operated by the insurance industry. However, the information provided to the Unit is not always accurate and is sometimes inconsistent with the injuries sustained.

• With some 2,000 incorrect forms being received each year, the Audit Office considers that there is significant potential for loss to the public purse. In addition, the report notes that some compensators may be failing to notify the Unit of potential personal injury claims.

• The Unit has put additional controls in place to check the accuracy of the forms it receives from compensators. It estimates that these additional checks result in the recovery of over £1 million a year. The cost to the public purse of these additional checks is some £110,000 a year.

• The industry has so far declined to change the system to improve the accuracy of the information provided. The Audit Office considers this unacceptable and has recommended that the Social Security Agency continues to press for change.

• The Audit Office has also recommended that the Unit obtains totals of the number of claims made to compensators to help identify possible under-notification. It has also suggested that potential trends in under-notification could be identified by the Unit through regularly reviewing and assessing information and statistics on personal injury incidents and claims from a range of sources. The Agency is currently considering how best it can work with the insurance industry to formally monitor trends in the registration of claims.

• Most Health Service Trusts are failing to provide information to the Unit on health service care provided to injured parties within the 14 day legislative target. The Audit Office found that the average time taken is 34 days. The Agency is currently working with DHSSPS and Health Service Trusts to improve on performance in this area.

• Between 2002-03 and 2010-11, the number of staff in the Unit fell from 84 to 48. The reduction in administration costs has resulted in a significant improvement in the ratio of costs to the amounts recovered: in 2009-10, the administrative costs were just over 8% of recoveries. However, this is significantly higher than the GB Compensation Recovery Unit figure of just over 3%.

• The Social Security Agency is continuing to look at ways of improving efficiency and has instigated a range of actions in response to the Audit Office report, including merging the Unit with its Debt Centre.

Notes for Editors

1. The CRU is part of the Social Security Agency and is responsible for recovering social security benefits and Health Service costs that are paid as a result of an accident, injury or disease. These costs are recoverable where the injured party claims and receives compensation, usually from an insurance company.
2. The Comptroller and Auditor General is Head of the Northern Ireland Audit Office (the Audit Office). He, and the NIAO, are totally independent of Government. He certifies the accounts of Government Departments and a range of other public sector bodies. He has statutory authority to report to the Assembly on the economy, efficiency and effectiveness with which departments and public bodies use their resources. His reports are published as Assembly papers.
3. This report is available from the Stationery Office throughout the United Kingdom. It is also available on the Audit Office website at www.niauditoffice.gov.uk. The report is embargoed until 00.01 hrs on Wednesday 26 January 2011.
4. Background briefing can be obtained from the Audit Office by contacting Brandon McMaster (028 9025 1077) or Karen Armstrong (028 9025 1016).