Personal Injury Fraud

Angela Crawley Excerpts

Wednesday 18th November 2015 Westminster Hall

[Angela Crawley (Lanark and Hamilton East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Wilson. I congratulate the hon. Member for Lincoln (Karl MᶜCartney) not only on securing this important debate but on his continued pursuit of the issue of insurance fraud during his time in the House. That included a parliamentary question in April last year to the Secretary of State for Justice regarding a judgment in the Supreme Court in a work-related injury case.

I recognise that, as hon. Gentleman said, the UK has the highest rate of fraudulent claims in Europe, which means that 11% of car insurance premiums are attributed to whiplash. I also recognise the role that nuisance calls play in inciting and inviting fraudulent claims. That is not to mention the cost to the NHS, which we across these islands want to protect and maintain.

I welcome the remarks by the hon. Member for Croydon South (Chris Philp), with whom I have not had the pleasure of debating before. He spoke of his harrowing experience and of being invited to claim, which was probably not at the forefront of his mind at the time. I also welcome the comments of the hon. Member for Strangford (Jim Shannon), who recognised that hard-working people pay the most as a result of the effect on premiums.

The Summers v. Fairclough Homes case in 2012 created the precedent that exaggerated or fabricated personal injury claims might be struck out in exceptional cases. The Government then proposed measures in 2014, which they said would mean that people would no longer be able to profit from exaggerated or fraudulent compensation claims, while victims with genuine cases could still get the help they deserved. However, as we have heard today, those measures have not gone far enough. Personal injury fraud remains an issue for our constituents.

We can define personal injury fraud broadly as any act intended to cause an insurance company to compensate for an injury that is non-existent, exaggerated or unrelated to an accident claimed for under a policy. More than 3 million people are injured in accidents each year—that experience is harrowing enough—be it in their home, in their car, at work or outdoors. In many cases, someone else is at fault, and the victims have the right to claim compensation.

As has been highlighted in the debate, however, there are many examples of injuries being overstated so that people can make a more lucrative claim, and we must clamp down on such actions. Statistics from the Association of British Insurers estimate that 59,900 out of 775,000 personal injury insurance claims related to road traffic accidents in 2013 were dishonest. If those figures are correct, it means that about 8% of claims were fraudulent.

Filing a fraudulent personal injury claim can have serious repercussions. Insurance companies can deny claims or drop coverage. Claimants can be liable to insurance companies for any money paid and for the costs involved in investigating the fraud. Criminal charges can, of course, also be brought against fraudulent claimants. Perhaps, however, that is not really tackling all the problems.

The effects of fraud are felt not just by those committing it on the off-chance they are caught out. The Association of Chief Police Officers estimates that fraud represents a £20 billion annual loss to the UK—the equivalent of £330 for every person in the country.

[Julian Knight (Solihull) (Con)]

I thank the hon. Lady for giving way. She is making a sound case and an interesting argument. I also congratulate my hon. Friend the Member for Lincoln (Karl MᶜCartney) on securing the debate.

Perhaps the hon. Lady would be interested in the example of Sweden, which has found that the cost of whiplash injuries to insurers, and therefore the public, can be limited by restricting—time-barring, effectively—the time within which a claim can be put in to three to four days after the accident. Perhaps a week or two weeks would be a better proposal for time-barring people in the UK.

[Angela Crawley]

I welcome the hon. Gentleman’s comments. I recognise what he says about a limit on the length of time for making claims, but not every person might be able to claim within two weeks of experiencing an accident. We must consider such issues, but I do welcome the point that other European countries have imposed all manner of limits, sanctions and bans that have resulted in fewer claims.

As I was saying, the cost of fraud is equivalent to £330 for every person in the country, which is an astronomical figure that we should not impose on our constituents. However, in taking action against fraudulent claims, we must make sure we tread carefully.

Between 2008 and 2011, 1.9 million motor injury claims were made in England. In the same period, 75,000 claims were made in Scotland. That amounts to 25 times more claims being made in England than in Scotland. Given my legal experience, I acknowledge that protections must exist for individuals who have experienced accidents, and they should have the right to seek damages.

The current law does allow for some effective sanctions. Harsh judgments against those found to have claimed fraudulently act as a deterrent to others. Lower damages can be awarded for the non-fraudulent part of the claim, an action routinely imposed for punitive and deterrent reasons. Adverse costs orders can be applied in most cases, wiping out or even exceeding the value of any award. Contempt of court applications can be brought, leading to imprisonment. Criminal proceedings can be brought against those who bring fraudulent cases, leading to heavy fines or imprisonment. Those deterrents against personal injury fraud mean that our court systems already have the power to punish and deter fraudulent claims. We must make sure that any change to legislation does not impede fair settlements, access to justice or the efficient functioning of our courts.