Leading judges and personal injury lawyers have called on the government to look again at the practice of insurance firms offering to settle with claimants who have not seen a doctor.
The Civil Justice Council and Association of Personal Injury Lawyers (APIL) today responded to the insurance fraud taskforce, a group assembled by the last government to come up with ways of reducing fraud levels across the industry.
The CJC, made up of leading England and Wales judges, experts and academics, said the most ‘visible and publicised’ trend in insurance fraud was staged motor claims, although this has already been the focus of government reform.
While fraudulent and exaggerated PI claims remain a ‘serious issue’, the CJC said the taskforce must address defendant behaviours and business models. In particular, this should include the practice of offering claimants a sum without their injury being quantified or validated.
‘Medical examinations provide important checks and balances to the process, and ensure that the injury suffered by the claimant is valid,’ said the CJC response. ‘If money is offered in the absence of medical evidence, this has the potential to create an environment of easy money, encouraging opportunistic claims.’
In the personal injury sector, APIL said an urgent concern should be to ban insurance firms making offers before pre-medical offers or making direct contact with customers injured by one of their own policy-holders – a practice known as third-party capture.
APIL said it was ‘surprised and disappointed’ that David Hertzell, the chairman of the taskforce, did not link fraud with pre-medical offers in the group’s first report.
‘The banning of pre-medical offers and third-party capture would help to reduce fraudulent practices,’ APIL's response stated.
‘These practices have the potential to create an environment of "easy money", allowing fraudulent cases to be settled without the necessary checks and balances that medical examination provides.’
APIL argued that insurance firms making direct contact with policyholders after an accident was a ‘type of fraud on the claimant’ to minimise the amount of money the defendant insurer has to pay out.
The response added: ‘The offer is often made without evidence and without advising the injured person that they have the right to obtain legal advice – resulting in under-settlement and under-compensation.’
On pre-medical offers, the taskforce should attempt to make this practice as ‘unacceptable’, adding that it denies genuine claimants full and proper compensation.
APIL, which earlier this month uncovered figures showing falls in whiplash claims in recent years, said the insurance industry needs to clarify claims that it spends £200m a year tackling fraud and that insurance fraud costs £2.1bn per year. The organisation said insurers should not be allowed to use ‘inaccurate or misleading fraud statistics to create an environment of hostility’ towards genuine victims.
The claimant lobby had been unhappy with not being included on the taskforce itself, but APIL president Jonathan Wheeler (pictured) has now been invited to a dedicated personal injury group, although it has yet to meet.
The taskforce is expected to produce a list of recommendations for the government by the end of this year.