Fraud taskforce wants ‘tougher approach’ from SRA to rogue solicitors

Topics: Personal injury & clinical negligence,Insurance,Government & politics,Industrial injury

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A major review of the factors behind insurance fraud has laid out a series of recommendations to be adopted in the legal sector.

The Insurance Fraud Taskforce, which has spent more than a year analysing the subject, said more can be done by insurers, solicitors and regulators to bring down fraudulent claims.

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Key conclusions include:

  • Proposed reform of the PI sector will ‘substantially reduce’ insurance fraud;
  • More should be done by the Solicitors Regulation Authority and claims management regulator to detect and prevent fraud;
  • Many noise-induced hearing loss claims are fraudulent or exaggerated;
  • Insurers should be more willing to defend claims and should reduce the inappropriate use of pre-medical offers;
  • If PI claims come in six months after an accident, recoverable costs should be reduced.

The report identified particular concern about the preponderance and costs of fraud in low-value personal injury claims.

The report was clear that the SRA should take a ‘tougher approach’ to combatting fraud, taking more evidence from insurers about claimant firms suspected of abuses.

The government should also consider reviewing the fining powers of the SRA and introduce a mandatory requirement for referral sources to be included on claims notification forms.

If an insurer believes legal representatives are acting without instruction, a standard letter should be made available, agreed by representative bodies on all sides, to be sent to the claimant themselves.

The report acknowledges that reforms to 'no win, no fee' agreements have reduced the costs of cases, but said more can be done and the recommendations ‘reflect and support’ government plans for the personal injury sector.

Changes since the 1990s have created a ‘lucrative market’ for claimant representatives, as the number of new entrants demonstrates.

‘Although most claims are honest it is equally true that fraud "follows the money",’ the report adds.

‘Costs within the system attract a small number of professional enablers, such as solicitors and medical professionals.

‘They can play a key role, consciously or unconsciously, using their professional standing, expertise or qualifications, to give the appearance of legitimacy to claims allowing fraudsters to succeed.’

The report says measures such as raising the small claims limit to £5,000 and scrapping compensation for whiplash are likely to reduce incentives for both claimants and their representatives and ‘substantially reduce’ insurance fraud.

Where the government has intervened to reduce income from personal injury work, this led to a large increase in the number of notified noise-induced hearing loss claims.

But with insurers reporting that 85% of these claims are rejected, the report suggested that ‘many’ are fraudulent or exaggerated, bringing with them ‘substantial’ costs.

The taskforce also reported that pre-medical offers from insurers have contributed to the perception that claims for whiplash represent ‘easy money’.

‘Some insurer behaviours and practices may fuel a perception that insurance fraud is relatively low risk,’ it adds. ‘Many insurers settle PI claims before they ever reach court and without seeing supporting medical evidence.’

The report said the Association of British Insurers should ‘discourage’ the inappropriate use of pre-medical offers, with the insurance industry as a whole establishing good practice in defending court proceedings where they suspect fraud.

The government welcomed the report and said the recommendations will ‘galvanise’ efforts to tackle fraud.

The ABI said it will do ‘whatever it takes’ to clamp down on the dishonest minority. The Motor Accidents Solicitors Society said the IFT missed an opportunity to have a genuine cross-industry debate, with that ‘bias’ reflected in the report.

Readers' comments (16)

  • Anti-Claimant crap! The fact that neither APIL or MASS were allowed to join the taskforce proves this was a stitch-up from the start.

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  • So Gove wants to liberalise the legal services market, Osborne wants to cripple it and the ABI wants to wipe it out all together.

    There is a vacuum in the debate concerning future legal services, which is not even being co-occupied by the Law Society.

    So in recent weeks we have had a blizzard of solicitor bashing.

    Who will rise up to provide leadership before we fade into history, as a group of individuals who once provided ethics based legal services?

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  • 'Many noise-induced hearing loss claims are fraudulent or exaggerated;'

    Ok loose lips lets have some evidence please....

    If PI claims come in six months after an accident, recoverable costs should be reduced.

    Proposed reform of the PI sector will ‘substantially reduce’ insurance fraud;

    AGAIN lets be having some evidence in relation to your FACTUAL statement

    Ok sherlock

    But what if the claimant had been left incapacity for longer than that specified duration of time where unfortunately not through any fault of their own they were hindered from making their claim, what then huh???

    Im so sick of all this baseless spouting off!!

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  • Another day , another attack on Claimants and their lawyers .... YAWN .

    I thought insurance was bought to pay injured parties for damage or losses you cause them . If you cannot claim for one of the main elements of risk , then what's the point ?

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  • 6.19pm - Thanks for that suggestion. I am on a government taskforce for reducing the number of complaints against lawyers.

    I predict that the new government scheme to shoot all lawyers will substantially reduce complaints made against lawyers.

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  • "The report says measures such as raising the small claims limit to £5,000 and scrapping compensation for whiplash are likely to reduce incentives for both claimants and their representatives and ‘substantially reduce’ insurance fraud."

    Nice balance. Denying justice to thousands of innocent victims of accidents so that the small percentage of those claims that are not genuine cannot be pursued.

    Talk about throwing the baby out with the bath water. The level of bias in this report is beyond parody.

    Where was the 'key finding' that the government reforms would lead to a genuinely injured claimants being told it is tough that they are suffering and not getting paid due to absence from work, as a result of someone else's negligence?

    Where does it mention seriously injured victims of accidents (£5K general damages can be pretty nasty) on low income will suffer the most (eg part time etc who will find it much harder to get to the £10K limit based loss of earnings).

    £5K general damages can have someone with pre existing injuries out of work for a long time.

    Whiplash is a very unpleasant experience.

    Without representation insurers just need to deny liability and hope claimant gives up because it is too hard for them to deal with legal arguments, navigate the CPR and go to court without resentation where someone will probably suggest exaggeration and therefore fundamental dishonesty.

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  • The report is worth reading and can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492980/PU1817_Insurance_Fraud_Taskforce.pdf

    Interesting that the recommendation in respect of whiplash claims was that the government should consider introducing 'a system of predictable damages.' I wonder if they realised that zero is a predictable number too?

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  • Why don't Insurers keep a central register of people they consider to have made fraudulent claims and then either refuse to insure them in the future or hike their premiums to such an extent that they do not see fraud as a profitable activity?

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  • I'll bet they already do that, Terrence. They are very proactive in the defence of their own interests. And some breach of the policy terms leads to a complete denial of liability.

    On that note I handled a claim recently in France where property damage had been caused by a water pipe burst in winter because the house owner had not turned off the supply. Her insurers accepted the claim, but abated it by 30% for this reason. This is frequently a condition of French insurance policies. Securing the house properly, or rather failure to do so, is similarly dealt with. This seems preferable to our 'all or nothing' system.

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  • ''Government Appointed team of Pro-Conservative Reforms produces report in support of PI Reform''.

    Don't get fooled again.

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