New legislation will also ban solicitors from incentivising claimants with cash and iPads
Courts will be required to throw out compensation applications in full if the claimant has been fundamentally dishonest, under new plans to tackle insurance fraud announced by justice secretary Chris Grayling.
The plans mean that claimants who grossly exaggerate their injuries will have their entire claim rejected. Previously claimants who exaggerated their claim could still receive compensation for the fair value of their loss.
The justice secretary plans to ban lawyers from offering incentives like cash or iPads to encourage people to bring claims.
Grayling plans to table legislation to enforce the rules before the general election next May.
The government also plans to introduce rules which will not require legislation that would restrict insurers from settling whiplash claims without confirmation of the claimant’s injury.
It also plans to reduce dubious whiplash claims by requiring medical assessments to be conducted by independent accredited professionals, working on fixed fees for medical reports.
The measures, announced on Saturday, are targeted at both motor claims and others such as “trips and slips” at work and in public places.
Grayling said: “Insurance premiums have fallen by record amounts over the past year as we have turned the tide on the compensation culture but there is more to do. We are continuing to go after the fraudsters who force up costs for honest drivers.”
ABI director general Otto Thoresen said: “These changes are a very positive development for the vast majority of honest insurance customers who end up paying for the fraud of the minority.”
Martin Milliner, claims director at LV= Car Insurance, said the new legislation “fundamentally changes the game” and would “put an end to this mentality whereby a claimant has nothing to lose by inflating a claim.”
“If a fraudster risks losing their entire pay-out due to exaggeration, this will level the playing field for insurers and claimants and speed up justice for those with genuine injuries,” he said.
LV= Case study
In 2005, a car went into the of back Minaxi Shah and left her with injuries that she claimed left her severely disabled, unable to work and in need of care for five to eight hours a day. The overall value of the claim was for in excess of £650,00 and her husband and daughter signed statements to the court confirming Shah’s allegations. LV= was later informed that Shah was not disabled, but that she was actually working. In 2011, she was found guilty of contempt of court and given a custodial sentence.
However, Shah was still awarded compensation for her genuine injuries despite the fact the claim was grossly exaggerated. Once the new legislation is implemented to require courts to dispose of compensation claims where the claimant has been fundamentally dishonest, fraudsters like Shah will see their entire claim thrown out.