Insurance fraud figures released by the Association of British Insurers (ABI) in May paint a stark picture of the problem. The report identified nearly £1.3bn worth of insurance fraud claims in 2013 which marked an increase of nearly 18 per cent in one year.
These shocking figures can easily tempt people into lambasting the claims culture that has arisen in the UK, with excessive blame being placed at the feet of much maligned personal injury lawyers. This knee-jerk reaction has the potential to mask the reality of how the insurance industry operates and the more nuanced situation that actually exists.
It is important to note that the vast majority of claimants and insurance cases are brought legitimately and handled properly by insurance companies, personal injury lawyers and others. Those attempting to make a claim should not be put off by such eye-catching headlines; injuries such as whiplash can be genuinely painful and debilitating.
Personal Injury Lawyers Response to the ABI Figures
In the worst cases there are of course unscrupulous personal injury lawyers that seek to encourage claims, whether legitimate or not for their own commercial benefit. Although these activities are certainly the source of some of the fraudulent claims, it is misleading to think that highly motivated lawyers are the primary force behind the problem.
The Association of Personal Injury Lawyers (APIL) responded to the ABI’s release of the figures on fraud by pointing out that the insurance industry also has some responsibility for the claim culture. It drew attention particularly to a mentality of paying out without proper investigation to avoid the costs of claim disputes. This has left the door open for dishonest claimants and even organised criminal enterprises to take advantage of the system.
A Balanced View of Personal Injury and Insurance
Unscrupulous parties exist at every link in the insurance chain whether they are dishonest claimants falsifying claims, aggressive personal injury firms that fit the ‘ambulance chasing’ mould by encouraging every man and his dog to try their luck, or low quality insurance companies that seek to avoid legitimate payouts.
However, legislators and stakeholders have done a great deal to clean up the way the insurance industry operates in the UK. Referral fees have been banned for some time and inducements to incentivise the making of claims have recently been banned too.
In the real world, it should not be forgotten that this is a complex area of law where individuals have a right to make claims and insurance companies have a right to question the details before they make payouts. Exaggeration in the eyes of an insurer may be a legitimately held belief in the eyes of the individual claimant. Accusations of fraud should be properly tested in a legal forum.