New government crack down on fraudulent whiplash claims

Ministers plan a total block on compensation for accident victims found to be exaggerating their injuries – and honest motorists are set to benefit.

The government has stepped up its battle against the whiplash cheats which cost honest motorists millions of pounds a year in higher insurance premiums.

The Government is promising to withhold all compensation payments from anyone found to have exaggerated or invented a personal injury claim following a road accident.

Ongoing battle

This means that where proved, fraudulent Claimant’s will not recover a penny in damages even if they have suffered genuine injuries.

The proposal is the latest step in the ongoing battle against the rising cost of personal injury compensation.

Last year, the Association of British Insurers (ABI) reported that payouts for whiplash injuries had reached £2 billion a year in the UK.

The organisation went on to say that insurers detected almost 60,000 bogus or exaggerated motor insurance claims in 2013.

Victims ‘encouraged to overstate injuries’

In the past, the ABI has blamed lawyers and claims-management firms for encouraging accident victims to overstate the nature of their injuries in order to win more compensation.

However, the coalition has already clamped down on these practices with a series of measures, such as banning no-win, no-fee solicitors from recovering success fees should they win in court, and introducing tougher new regulations for claims-management companies.

But now the Ministry of Justice says it wants the Courts to throw out any claim for compensation where the Claimant is found to have been “fundamentally dishonest”.

Justice secretary Chris Grayling says: “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.

No more cash inducements

“We are continuing to go after the fraudsters who force up costs for honest drivers.”

The MoJ also wants to ban law firms from offering accident victims inducements such as cash and iPads.

ABI director general Otto Thoresen says: “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.

“We applaud the decision to ban the distasteful advertising which offers cash or other inducements for personal injury claims. This only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit.”

Fraudulent £650,000 claim

Insurer LV= said that the crackdown on exaggerated claims would have helped it avoid paying out any compensation to an accident victim who was subsequently jailed for lying about the extent of her injuries.

In 2005, accountant Minaxi Shah claimed more than £650,000 after being involved in an accident which she said left her unable to work and in need of care for up to eight hours a day.

However, investigators found Ms Shah and her family had lied about the seriousness of her injuries and she was jailed in 2011.

LV= claims director Martin Milliner says: “Ms Shah was still awarded compensation for her genuine injuries despite the fact the claim was grossly exaggerated.

Are the new laws necessary?

“Once the new legislation is implemented to require courts to dispose of compensation claims where the claimant has been fundamentally dishonest, fraudsters will see their entire claim thrown out.”

Milliner adds: “In the past there were no consequences for the fraudsters who exaggerated or invented injuries in order to claim compensation.

“This new legislation fundamentally changes the game and will help put an end to this mentality whereby a claimant had nothing to lose by inflating a claim.”

However, Claimant lawyers take the view that the new laws are unnecessary as there is sufficient protection already in place. Litigated claims are of course dealt with on a case-by-case basis by judges and they already reduce awards if there is an element of exaggeration.

Insurers also have the option of bringing contempt proceedings if considered necessary.

As a result, Claimant lawyers believe that any further intervention is only likely to feed the ‘all Claimants are frauds’ ethos.