Last week brought about a wave of announcements taking forward various measures aimed at fighting fraud. This included the Government’s response to its latest whiplash consultation on 2 December. Having attended the Association of British Insurers’ (ABI) conference, where a number of announcements were made, Stratos Gatzouris reviews the developments.
A register of accredited experts
Aimed at ensuring that medical experts considering whiplash claims are independent and sufficiently well trained, a new portal – Medco - through which experts will be instructed, will go live from 1 April 2015. Medco itself will have an independent chairperson sitting with eight directors from across the industry. The user will still have a choice of which expert they instruct, but the system aims to exclude any experts with a direct financial link to those commissioning them. Litigants in person will also have to use the portal.
Initially, experts will be able to sign up to Medco without being accredited. However, by the end of 2015, they will have to become accredited or face being removed from the system. The accreditation process itself is yet to be confirmed, with details expected to be published on the Medco website in due course.
Industry-driven data sharing to shine a light on previous claims history
Fraudulent claims will be tackled ‘at source’ via a system of claimant representatives carrying out CUEPI searches on all potential whiplash claimants. This is intended to serve a dual purpose as it is expected also to assist the medical experts in reaching a prognosis, although why they cannot be expected to rely on the claimant’s account to do so seems odd.
In terms of penalty, we understand that if a claimant fails to submit to a previous claims check they will be given a second chance to do so. If they still fail to do so they will face a costs sanction in the event that their claim is successful.
A fraud task force
Lord Chancellor Chris Grayling took his opportunity at the ABI conference to announce the formation of a dramatic sounding ‘fraud task force’ under the leadership of Law Commissioner David Hertzell. The task force will extend the focus on fraud beyond whiplash and motor claims widening current initiatives out to consider other types of insurance claims fraud. The Lord Chancellor indicated that there were three particular areas which need to be addressed: (i) the perception that insurance fraud is fair game; (ii) practices which fail to deter fraudulent claims; and (iii) whether there are aspects of the legal framework that can be strengthened to deter fraud. The task force is expected to produce interim findings by the end of March 2015 and will look in particular at whether there is any further legislation needed, or voluntary measures which could be put in place, to combat fraud.
On the issue of the Competition and Markets Authority (CMA) findings on credit hire, Chris Grayling remarked that some of the hire charges claimed following motor accidents were not acceptable and this needed to be addressed by the insurance industry. Earlier in the day, Conservative MP Heather Wheeler had hinted at the possibility of a second CMA review into the motor insurance sector indicating that the last CMA review could have gone further, albeit some good had come out of its findings. It seems therefore that the issue of credit hire will not be consigned to the long grass.
What do we think?
As ever, we welcome the instigation of further measures aimed at tackling insurance fraud and we are glad to see that some tangible progress has been made towards making the proposed Medco portal a reality. However, there is still much work to do ironing out how the accreditation process will work and ensuring that it really is effective in what it does. We are disappointed to see that the claimant will still be able to choose their expert, and it remains to be seen whether the system will work effectively to ensure that experts are truly independent of those commissioning them.
In terms of the checks into previous accident history, we consider that these could have been taken a step further to require solicitors to perform know your client checks similar to those required by money laundering regulations. The fraud task force is a promising move and we only hope that any good work it does will be capable of being taken forward by any new government in place following next year’s general election. These are promising steps, but it remains very much a question of watch and wait to see whether any of the measures taken will achieve their ultimate aim of tackling claims fraud.