A report from the House of Commons Transport Select Committee in 2011, found that undetected fraudulent claims cost the insurance industry £2.1 billion per year. It is therefore not surprising that over the last few years insurance companies have taken a tighter grip on fraudulent and exaggerated claims.
The government has also seen addressed the insurers concerns by introducing several changes to how personal injury claims are made to reduce the amount of fraudulent claims.
Whilst some changes have enable the Claimants solicitors to undertake their own investigations into serial litigants and therefore potentially shut down fraudsters it is increasingly difficult to spot an exaggerated claims and the changes have not eliminated all fraudulent and exaggerated claims.
Those claims that end up at trial and are found to be ‘fundamentally dishonest’ are coming under increasingly stricter punishments accordingly as can be seen in the recent case of Sayeera Hassan v (1) Sandra Cooper (2) Accident Claims Consultants Ltd (2015).
Mrs Hassan was involved in a genuine road traffic accident involving the Defendant Mrs Cooper. Mrs Hassan made a claim for her personal injuries and repairs to her vehicle.
Mrs Hassan’s claims management company, Accident Claims Consultants Ltd (ACC), by including a claim for credit hire in the sum of £42,045.12 and storage and recovery charges amounting to £5,808.00. It transpired that although Mrs Hassan was unaware of the fraudulent claim for hire, storage and recovery charges at the start she then supported the claims.
The matter proceeded to trial where the Defendant made an application to plead fraud against the claimant, the judge allowed the application and allowed a part 20 claim against the Claimant for exemplary damages:
"Exemplary damages are essentially different from ordinary damages. The object of damages in the usual sense of the term is to compensate. The object of exemplary damages is to punish and deter...Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay.
The Defendant intended to pursue Mrs Hassan for damages for the exaggerated claim.
At trial it became apparent that the documentation were forgeries and the repair invoice was also forged after the Defendant obtained a statement from the garage to confirm that they had not repaired the vehicle and ACC had made the repair invoice.
Mrs Hassan’s claim collapsed and the Defendant obtained summary judgment and obtained a judgement for the tort of deceit and her claim was struck out in its entirety. It was found Mrs Hassan had falsified the credit hire by signing a credit hire agreement for a car which was different to the one utilised, it was also found she had verified the false repair invoice, finally she was found to have exaggerated her personal injury claim by a few months.
Mrs Hassan was found to be 10% responsible for the continuation for the fraudulent claims. ACC had already gone into liquidation before the damages hearing.
Whilst not all cases will incur such consequences, this shows that insurance companies will attempt to recoup the money they have invested into fraudulent and exaggerated claims. Although it should be noted that in order to claim exemplary damages it must be specifically pleaded in line with CPR r16.4.
Claimants should be warned against bringing a claim for fraudulent and exaggerated claims as the consequences can be dire including the chance of being ordered to pay exemplary damages.
Claimants take warning!
If you do have a genuine claim and need help contact our personal injury team today. They have over 30 years’ experience and are always happy to help.