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Bogus claims to be thrown out as government steps up insurance fraud crackdown.

By Tim Hayward
Technical Claims Manager

Data released by the Association of British Insurers on 30 May 2014 found that the value of fraudulent insurance claims uncovered by insurers rose to £1.3 billion in 2013, representing an increase of 18% since 2012.

This data underlines the true scale of the problem and the urgent need for reform. QBE has already been party to a number of successful prosecutions in both commercial motor and employers’ liability cases. 

So, as we continue to take robust and proactive steps to fight fraud on all fronts, we welcome the support of the government which has announced significant reform to crackdown on insurance fraud in personal injury claims.

The straightforward aim of the reform is to allow insurers to pay nothing towards fraudulent claims, with the expectation that those savings will then be passed on to policyholders. This will apply to all injury claims, across all lines of business and could have a significant impact on the claims landscape in the UK.  And that has to be good for everyone concerned.

It has seemed perverse that, under current legislation, a claimant is still entitled to recover damages which are not fraudulently claimed, despite trying to recover other damages which are. That position has rightly troubled many insurance and defendant legal practitioners for some time, with a perceived injustice and the absence of a sufficient deterrent to commit fraud.

The reforms will allow a court to dismiss the entire claim where it is found to be “fundamentally dishonest”, the same test which is used under the recently introduced Qualified One Way Costs Shifting (QOCS, introduced April 2013). Such a finding of dishonesty deprives a claimant of QOCS protection and leaves them having to pay the defendant’s costs. This reform goes a step further and removes any entitlement to recover damages.

The full package of measures to tackle insurance fraudsters includes:

  • requiring courts to throw out compensation claims in full where the claimant has been fundamentally dishonest – to stop people who have had an accident from exploiting the system by making bogus claims or grossly exaggerating the extent of their injuries
  • plans to ban lawyers from encouraging people to make claims by offering them incentives like cash or iPads
  • reducing questionable whiplash claims by improving medical assessments, ensuring they are only conducted by independent accredited professionals, and setting fixed fees for medical reports this year
  • introducing new rules this year to restrict the practice of settling whiplash claims without confirmation of the claimant’s injury.

Your contact

Your contact

Tim Hayward

Tim Hayward

Casualty & Property Claims Manager