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"Why the automatic assumption that what the insurance industry say is true?"

The increase in the number of these claims is real. There are a number of possible explanations for this increase, and one of them is a proliferation of fraudulent claims. It is important not to disregard this as a possibility, merely because the accusation is made by defendant.

Incidentally, the Guardian are running a story this afternoon about a couple from Liverpool who have just been potted for holiday sickness fraud.