Define 'fraud' before raising small claims limit, lawyers tell government
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Shadow justice minister condemns insurers and claims management companies
The government should define what ‘fraud’ is before any increase to the small claims limit, the shadow justice minister and personal injury lawyers have said.
Speaking at the Motor Association Solicitors Society’s (MASS) conference, Christina Rees MP, pictured, told delegates that insurers needed to define ‘what fraud is’ and indicate the scale of the problem before using it as a ‘battering ram’.
‘Insurers need to define what the pandemic is,’ she said. ‘If there’s really a crisis, the Labour party will oppose any increase in small claims limit until the insurance industry is open with the consumers they sell the product to.’
Rees’ intervention comes ahead of the Ministry of Justice’s expected consultation on reforms to personal injury claims, which could see the limit of small claims raised to £5,000 as it looks to yield on former chancellor George Osbornes’s curbing of a supposed whiplash culture.
The Neath MP was supported by new MASS chairman, Simon Stanfield, a partner at Simpson Millar, who said: ‘We all agree that fraud has blighted the sector for too long and must be tackled with all our energies. Action to target fraud must not, however, affect how an accident victim is treated. It must not affect their basic right to seek recompense for injuries sustained through no fault of their own.
Stanfield then addressed the potential impact of an increase to the small claims limit. ‘We won’t know for sure what the government is proposing until it is published. But if they intend to abolish the right to damages caused by someone else’s negligence to save costs for the insurance sector, this would run contrary to any meaningful definition of justice.
‘To effectively outlaw the majority of claims, however legitimate, is nothing short of judicial vandalism that rides roughshod over hundreds of years of legal tradition.’
In a later panel discussion, Matt Currie, a partner at Irwin Mitchell, said that while his firm saw ‘very little fraud’ it still needs to be defined and the bigger problem may lie in claimants exaggerating their injuries.
‘A possible problem is the unconscious exaggeration,’ he said. ‘There is a culture that if people put in an insurance claim, they need to state their case at its absolute highest in the expectation that the response will be to settle. There is an issue there and lawyers and insurers must work together to improve the trust index. Then we can start to deal with unconscious exaggeration.’
David Williams, technical director, AXA Insurance UK, said there was a problem with fraud. ‘There are too many whiplash claims. Since 2000, PI claims have risen by 89 per cent. Regardless of what we say it is clear that MPs and the man in the street has got fed up by being called by whiplash callers. The reality is there’s too many whiplash claims.’
Rees had earlier called for a ban on claims management companies: ‘In my view, it’s simple, just ban it. They can advertise but no they can’t cold call or text. And if they do, the regulators should have the powers to strike them off. Sadly, if they don’t then solicitors get it in the neck.’
When asked whether CMCs were driving fraud, Currie said that both regulated and unregulated CMCs were responsible and called for more information on their activities and tighter regulation.
Matthew Rogers is a reporter at Solicitors Journal