EU collective action plans could fuel more false claims, warns Insurance Europe

Plans to help European consumers collectively claim against and sue companies have been slammed.

The European Commission announced the proposals on Wednesday to “bring more fairness to consumers, not more business for law firms” but Insurance Europe has stated it fears increased abuse of the system against insurance companies.

It said that the plans were at risk from third parties mounting collective actions on behalf of those without a legitimate claim and called for the commissions own 2013 recommendations on safeguards around collective actions to be adhered to.

“In the latest proposals, good principles that the Commission promoted to safeguard against the potential abuse of collective mechanisms — such as that the loser pays the costs of litigation and that consumers should actively choose to participate in collective actions — are compromised,” said William Vidonja, head of business at Insurance Europe.

And Vidonja added: “Insurance Europe is not yet persuaded of the need for such a wide-ranging proposal. This is because many member states have only recently introduced, or are in the process of introducing collective redress mechanisms. More time is, therefore, necessary to see how these mechanisms function in different legal systems and how effective the safeguards against possible abuse are.”

The ABI was contacted for comment and stated they concurred with the assessment of Insurance Europe.