On 30 June 2014 the House of Commons Transport Committee published a reports entitled:
“Driving premiums down: fraud and the cost of motor insurance”
The aim of this report, the fourth in series published since 2011, was to address some of the common factors encouraging fraudulent claims and to respond to government proposals on the same.
In brief the report primarily deals with the following issues:
- Court response to exaggerated claims.
- Solicitors offering inducements.
- Pre-medical report offers to settle.
- Psychological injury.
- Medical panels.
The report also deals more briefly with policing and data sharing.
The Government has proposed that medical reports for whiplash injury claims should be supplied by independent medical panels, comprising accredited professionals, using a standard report form. These forms should be equally available to Claimants, insurers and the Court.
The Committee agrees with this proposal but added that the professionals need not all be doctors and that practitioners must be provided with information about the accident in addition to the medical records of the Claimant
The Committee draws attention to the case of Summers -v- Fairclough Homes Ltd  UKSC 26, in which an employee had grossly exaggerated his injuries and thereby the value of his claim. The Supreme Court, rather than striking out the claim, reduced the amount claimed (£800,000) to an award of £80,000.
This was said by insurers to be unduly lenient and inadvertently encouraging exaggerated claims. The Committee supports the idea that gross exaggeration should lead to a strike out, but also recognises the complexity of the law in this area. As such the recommendation is against the hasty introduction of further legislation.
The Government has indicated plans to introduce measures to require Courts to throw out compensation claims in full where the claimant has been fundamentally dishonest unless a ‘substantial injustice’ would result.
The Committee argues against solicitors being able to offer inducements (cash, computers, tablets etc.) to those considering making claims. It is widely accepted that this would encourage people to make fraudulent claims, whilst claims management companies were prevented from offering inducements in 2013.
The Solicitors Regulation Authority replied to a question on this subject from the Committee, indicating that:
‘…there was insufficient evidence for the imposition of a ban on solicitors offering inducements to claimants’
The SRA further commented that the principles which solicitors are required to follow ought to be sufficient to prevent the diminishment of public trust in the legal profession.
On 07 June 2014 the Government announced plans to ban the offering of inducements outright, such a measure being supported by the Committee.
From an insurer point of view the ability to make offers prior to obtaining a medical report makes sense, as it avoids the costs of defending a claim. It is however widely accepted that this results in the encouragement of fraudulent claims, particularly towards the end of the limitation period.
The Ministry of Justice has commented that it is:
‘attracted to introducing a rule to ensure that a medical report is completed before a claim can proceed’.
Insurers responded with the following concerns:
- they need to know that medical reports are worthwhile
- fees would need to be controlled
- reports would have no value where the injuries had resolved (i.e. minor injuries or where injuries occurred some time ago)
- any move to prevent early settlement will increase costs.
The Committee agreed with the general intention to prohibit the making of pre-medical offers, making some (unworkable) suggestions:
- reducing the period in which claims can be made
- requiring firmer, contemporaneous evidence.
Insurers indicate that separate reports are being sought to maximise recoverable fees and that the Government should be prepared to establish panels for psychological injury as well as physical.
Data sharing between insurers and claimant solicitors regarding potentially fraudulent claims has been slow. The Committee argues that it should be compulsory, lest only the most reputable firms be involved in claims.