Insurance Fraud Taskforce - The Final Report
21 January, 2016
The Insurance Fraud Taskforce has published its much anticipated final report. The extensive report represents the culmination of the Taskforce's year-long review into insurance fraud.
The report contains a number of targeted recommendations aimed at tackling fraud. The most notable recommendations are set out below.
- The insurance industry as a whole should take a more robust approach when defending claims and should defend court proceedings where they believe the claim is fraudulent.
- The government should review how late claims can be discouraged through changes to the court, costs and evidence rules including:
- claims older than 6 months being dealt with in the small claims track,
- reducing recoverable costs by 50% if a minor personal injury claim is notified 6 months after the accident,
- introducing a system of predictable damages for soft tissue injuries, and
- introducing a rebuttable evidential presumption that no injury was suffered where claims are lodged after a specified period of time since the alleged accident.
- The data available in fraud databases and data sharing schemes should be improved and steps ought to be taken to ensure that data is shared appropriately.
- Steps should be taken to toughen action against dishonest solicitors with the SRA being encouraged to take a tougher stance. It has been suggested that firms should be mandated to disclose their referral source on the Portal 'Claim Notification Form'. This would allow insurers to identify those from 'claims farmers' and other questionable sources.
- The Government should be more proactive in legislating to prevent nuisance calls designed to encourage personal injury claims in partnership with ICO, Ofcom, IFB, CMR, ABI and SRA.
- The government should provide a stronger regime for CMC regulation, in particular it is advised that the referral fee ban ought to be policed, and the use of 'phoenix' companies prohibited.
- The government should consider introducing a fixed recoverable costs regime to tackle fraudulent claims for noise induced hearing loss.
In addition, whilst avoiding direct recommendations about the legal system, the Taskforce confirmed its support for the government's proposals set out in the Autumn Statement to increase the small claims track for PI claims from £1000 to £5000.
The report also discusses the possibility of reducing the limitation period from 3 to 2 or even 1 year for certain minor personal injuries. Although the report does recognise that there can be valid reasons for making claims late.
In its concluding comments, the Taskforce calls on the government to establish a "legacy vehicle" to oversee the implementation of its recommendations and to review progress on a yearly basis.
The report shares the government's determination to deal with the perception that insurance fraud is "fair game". Whilst the Taskforce has focused on whiplash and low value personal injury claims fraud, many of the recommendations would apply equally to the casualty sector which we welcome. The recommendations as a whole are bold and should have a significant impact on insurance fraud if implemented by the government.
One of the Taskforce members, Ben Fletcher (IFB Director) was the guest speaker at the Forbes annual insurance seminar in November last year, and has echoed the views of the wider insurance community by his endorsement of the report content. In particular, it is his view that data is one of the key tools to defeat insurance fraud.
A full copy of the report can be found here
For further information please contact Chris Booth on 0161 918 0002 or email Chris Booth