The Insurance Fraud Taskforce has called for the Government to direct older claims to the small claims process and for recoverable costs in late notification injury claims to be reduced by 50% in a bid to discourage fraud.
It said that the Government should take action to reduce recoverable costs if a claim is brought six months after an accident for a minor injury.
The taskforce, set up a year ago by the Government, has made the recommendations as part of its final report on insurance fraud in the UK.
Following 12 months of “intensive investigation and discussions” among the many different stakeholders involved in the insurance sector, the taskforce has also advised Ministers to introduce a damages award range for soft tissue injuries, and to force the Solicitor’s’ Regulation Authority (SRA) to work with the Claims Management Companies’ (CMC) regulator to properly and strongly enforce referral fee bans.
It also said that the Government should develop and deliver a coherent regulatory strategy to clamp down nuisance calls and texts to reduce the number of honest customers being coerced into making spurious claims.
Economic Secretary to the Treasury Harriett Baldwin and Minster of State for Justice Lord Faulks welcomed the recommendations, which were announced at a British Insurance Brokers Association’s (BIBA) Parliamentary Reception.
Baldwin said: “A key part of our long term plan is to make sure that the insurance industry works for consumers. That’s why we launched the Insurance Fraud Taskforce in January 2015 to tackle insurance fraud.
“After a year of valuable research and groundbreaking dialogue, I welcome the recommendations that have been published today. These recommendations will galvanise our collective efforts to tackle insurance fraud, and will ultimately reduce costs for consumers.”
The taskforce also noted that insurance fraud is not always recognised as criminal activity. It said that it was therefore vital that the insurance sector took steps “to curb a culture of distrust trust towards the industry and a lack of popular understanding of how insurance works”. To help do this, it said that insurers should make application and claims forms easier to understand and launch new anti-fraud campaigns.
Speaking at the launch of the recommendations, Graeme Trudgill, executive director at BIBA, said that the incidence and cost of insurance fraud had been increasing, with the impact being felt by honest customers.
“We are pleased that the separate recommendations of the independent review of claims management regulation undertaken by Carol Brady [non-executive board member of the Claims Management Regulator], have been referenced in the taskforce recommendations as we believe stronger regulation and enforcement is key to helping reduce fraud.
“It is clear that the ban on referral fees has not been properly policed and in our Manifesto BIBA has also called for a level playing in terms of the regulation of CMCs and for more supervision of these companies. To see this in the Taskforce recommendations is great news for the insurance industry and its customers.”
Chaired by former Law Commissioner David Hertzell, the taskforce was made up of representatives from the Association of British Insurers, BIBA, the Insurance Fraud Bureau, the Financial Services Consumer Panel, Citizens Advice and the Financial Ombudsman Service.