Legal cost on package holiday sickness claims fixed by the government to fight “compensation culture” 

Pay-outs on the legal costs in package holiday sickness claims are to be fixed in a bid to fight fraudsters.

Ministers announced the move today in a bid to close a loophole the travel industry says has fueled a rising number of claims.

Some have estimated the rise to be as high as 500% in recent years.

Up to now, legal costs in overseas package travel claims have not been controlled, which has meant costs for tour operators can spiral out of all proportion to the damages claimed. This has led many operators to settle holiday sickness claims out of court, rather than challenge them.

A government statement said this measure was part of a commitment to continue tackling the country’s compensation culture, following the recently introduced Civil Liability Bill to cut false whiplash claims.

Justice Minister, Rory Stewart said: “Claiming compensation for being sick on holiday, when you haven’t been, is fraud. This damages the travel industry and risks driving up costs for holidaymakers.

“This behaviour also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice.”

While uncontrolled costs have discouraged tour operators from challenging claims, they have also emboldened claims management companies to encourage tourists to pursue holiday sickness compensation, with touts reportedly operating in European resorts.

To help tackle this, ministers asked the Civil Procedure Rule Committee, which is responsible for setting rules on legal costs, to look at bringing package holiday claims within the fixed recoverable costs regime. This would mean tour operators would pay prescribed costs depending on the value of the claim and length of proceedings, making defence costs predictable and assisting tour operators to challenge bogus claims.

The rules will come into effect in the coming weeks.