All you need to know about whiplash fraud – in 90 minutes…

An hour and half of Parliamentary time on the afternoon of Wednesday 18 November was set aside to debate on personal injury fraud. As is the case when the topic arises, there was a good deal of hot air and disagreement over the detail of the statistics quoted in the market. That aside, greater consensus could be found around the need to tackle aggressive marketing tactics and cold calls and texts.

A possible increase in the small claims limit for whiplash claims to £5,000 and a reduction in the limitation period for these claims to a year were debated again and could well gain further currency and momentum with the imminent publication of the report of the Insurance Fraud Taskforce. These will be critical issues over the next few weeks and months.

The debate’s instigator, Conservative MP Karl McCartney, set out a range of measures on which he pressed the Ministry of Justice to respond:

  • better regulation of those who ‘farm’ data
  • removing all referral fees from the claims process
  • increasing the small claims limit to £5,000 for injury claims
  • reducing the limitation period for minor whiplash cases to one year, and
  • introducing predictable damages (modelled on European scales)

Labour spokesman Andy Slaughter supported the first two of these and on the third he conceded that “it is right to raise the limit proportionally by whatever the inflation rate has been during that time. It might mean taking the limit up to £2,000 or something of that order” but cautioned against an increase to £5,000. He did not support the last two measures and, having “seen an ABI agenda there”, argued it would be wrong for people not to have the benefit of legal advice.

Closing the short debate, Justice Minister Caroline Dineage reaffirmed the Government’s commitment to tackling fraud and set out the now-familiar list of  initiatives it has taken: from LASPO to MedCO, from fixing fees to banning referral fees, and from throwing out fundamentally dishonest claims to beefing up claims management regulation.

Looking forward, she said she understood that changing the limitation period and an increase in the small claims limit increase to £5,000 were matters that the Insurance Fraud Task Force was considering in its final report, which is due to be published in the next few weeks. While neither the Minister nor BLM has any firm indication that the Task Force will make clear recommendations matching the third and fourth of Mr McCartney’s points (above), it does now seem likely that these are rapidly rising up the political agenda. Ms Dineage said that “both those issues will be considered by the insurance fraud taskforce, which will be reporting shortly. We look forward to seeing its recommendations and will respond accordingly.”

We therefore expect further significant developments in the first and second quarters of 2016.

About the Author

akAlistair Kinley is BLM’s Director of Policy & Government Affairs.

Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.

He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).

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