The full report is available here.

The report has been published at a time when fraud is back on the political agenda, with both Claimant and Defendant lobby groups doing all they can to publicise their primary concerns.

Major insurers have been meeting with the government seeking to reassure that if Osborne's proposed reforms go ahead, the savings will be passed on to the public.  Other insurers have been quick to publicise fraudulent claims to support their calls for reform.

The Claimant lobby is concerned about access to justice for those vulnerable claimants who may not be able to adequately represent themselves.  They are also concerned that increasing the small claims track limit will lead to a further proliferation of Claims Management Companies. They also disagree that fraud is as prevalent as the insurers claim.

It is against this background that the report is published. 

The report highlights particular concern about the preponderance and cost of fraud in low value personal injury claims.  Whilst steps have been introduced to tackle this field (amendment to funding, reduced costs and improved, more robust medical evidence process) there is much work to do

Fraud is not a victimless crime.  High costs in the system has encouraged Claims Management Companies to play a role in encouraging fraudulent claims, causing a social nuisance through their reliance on cold calls, and pressurising otherwise honest people to exaggerate or make up claims.

Insurers now share data, recognising the importance of collaboration, but there is still room for improvement.  There is a public perception that insurance is 'fair game' for fraud, because of the low levels of trust in the insurance sector.  Claims Forms are complex, leading to genuine mistakes being labelled as fraud.  This is exacerbated by the public not understanding the insurance industry, poor customer service and the frustration caused by the failure by insurers to offer the cheapest renewal prices to existing customers..

Recommendations:-

  • Insurers should improve consumer understanding of insurance products through better communication, as well as clearer application and claims forms.
  • The ABI, IFB and IFED should develop a long-term cross-industry public communications strategy.
  • Insurers should improve cross-industry co-ordination and the data available in fraud databases and data sharing schemes, through increased membership of existing anti-fraud schemes and databases such as MyLicence and CUE.
  • The ICO should provide clear guidance on data-sharing practices in relation to insurance fraud
  • Insurers should take a more robust approach to defending claims: i.e stop making pre-medical offers and defend those cases they believe to be fraudulent.
  • The Taskforce considers that further work needs to be undertaken to ensure that any late, exaggerated or fraudulent claims not addressed by whiplash reform are discouraged.  Options suggested are that claims brought within 6 months of the accident proceed as normal, but cases older than 6 months are dealt with in the small claims track or have costs reduced by 50% as a deterrent.
  • Insurers should provide the SRA with evidence regarding claimant law firms suspected of insurance fraud and the SRA should investigate and acting robustly, largely through fines or naming and shaming those firms.
  • There should be a stronger regime for Claims Management Company regulation, clamping down on nuisance callers that can encourage fraudulent claims and ensuring that the referral fee ban is enforced.
  • Tackle fraudulent claims for noise induced hearing loss (NIHL) by introducing a fixed cost regime for such claims.
  • Aggregators should be able to detect fraud at the point of quote by using fraud databases and data sharing schemes.

Conclusion

These recommendations don't bring anything radically new to the tableThe recommendations seem to be an extension of those steps already being taken by the Government, Insurance Industry and Claimant Groups alike.  What is refreshing is the emphasis on co-operation going forward and the importance for all those involved in the industry to work together to combat fraud.  The Report calls on the government to establish a legacy vehicle to provide oversight for the implementation of its recommendations, as well as to ensure that dialogue between different sectors, regarding insurance fraud, continues.