Firstly, let’s get things into perspective. Fraud and exaggerated claims tend to be few and far between. The ABI estimated the percentage of fraud in motor claims at around 7per cent - our experience tells us it may be lower, and the Transport Select Committee has found that there is no reliable evidence on the level of fraudulent claims. Regardless, a single figure percentage is still too high.
Most people have a good sense of right and wrong and do not generally lie, particularly in a formal transaction such as dealing with a lawyer. Indeed, research we commissioned showed that people were more likely to underplay their symptoms than exaggerate if put in front of a doctor. However, individuals respond to the environment (in particular the media) and cultures can shift over time. To read the press you may feel that everybody is doing it, and that there is a more relaxed attitude to fraud. A small reality has been converted to a big perception. Exaggeration may feel more like ‘trying it on’ than committing a criminal offence. Ironically, if the media sensationalises fraud it becomes more socially acceptable.
We believe that only those who are genuinely injured deserve to be compensated – paying damages to someone who has not been injured is wasted money and pushes up the cost for all of us through insurance premiums.
And it’s not just the media that creates an environment where fraud may grow and prosper. Insurance companies cut corners in claims in a misguided attempt to save money. An important test in any claim is to put an individual in front of a doctor in order that the doctor may assess the extent of the injury, whether the injury will heal fully, and the likely time to recovery. But a medical examination costs money, money that insurers opt out of spending in about a third of all claims. Without this robust test, a fraudulent or exaggerated claim can slip through the net. Damages are paid out where they should not have been.
It’s not just in the lower value claims where offers are made without a medical. It can be in very serious cases worth five or six figures. Insurance companies are willing in some cases to make offers of, say, £50,000 without even asking the injured person to see a doctor. This will often save them far more money than the fee for the examination – our research shows it often leads to them under settling a claim. But it still creates an environment where someone could exaggerate their claim. Saving money in such circumstances costs you dear.
It is easy to improve levels of honesty. We propose that all claimants are asked to sign a statement of truth, a breach of which may amount to fraud and may make the claimant liable to prosecution. It is proven that a moral reminder at the start of the claim does wonders for the honesty of the claimant. They should then be asked to sign at the end to say that the facts are true. We think that no claim should be settled without a medical – if insurers pay out on fraudulent claims, they encourage more fraudulent claims. If they only pay out on justified claims, they remove the incentive to ‘try it on’.
The Government is currently consulting on whether doctors and medics should improve their standard of reporting in injury claims, and whether doctors should, for example, be accredited. We would obviously support constant improvement of the quality and credibility of medical reports. However good the system becomes, if insurers don’t use it and continue making offers to settle personal injury claims without medical evidence – what’s the point? Fraudsters will still silently slip through the net, newspapers will still debate the level of fraud, attitudes towards fraud will soften, and nothing, absolutely nothing, will change.