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Emma Simon: Insurers hit back on inflated claims

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Have you been injured in an accident that wasn’t your fault? Then you could find yourself facing a jail sentence if you exaggerate any subsequent claim for compensation.

Somehow, I doubt this second part will make it into the advertisements used by “no win, no fee” personal injury lawyers. But surely it will now have to be part of the conversation they have with potential clients.

Insurers are finally getting tough with those who inflate personal injury claims, and the so-called “ambulance chasing” lawyers, that have caused this industry to mushroom in recent years.

In a recent court case, Haringey Council, backed by its insurer, AIG, took what has been described as “the nuclear option”. It pursued a contempt of court case against one woman who had had been found grossly exaggerating such a claim.

Haringey won this case and the woman now faces a three month prison sentence, pending an appeal.

Normally you might have expected a flurry of comments lambasting the heavy-handed actions of an insurer. After all, this is a 60-year old grandmother, who lost her compensation case and did not receive a penny as a result. Isn’t it a bit vindictive to then pursue further legal action?

But there has been no such response. I am guessing that public opinion has, for once, swung behind the insurers. Perhaps, there is a general acceptance that this “compensation culture” is getting out of hand. Whether it is the barrage of cold calls insisting you have been involved in a car accident or the spurious whiplash and paving stone claims that have pushed up insurance costs for everyone else.

Given the circumstances of this case, perhaps it was not surprising someone decided this would be an appropriate case on which to make a stand. Initially £7,500 compensation was offered after the claimant tripped on the ubiquitous paving stone. This was rejected and a claim for some £750,000 was lodged instead. When the case was thrown out of court, the judge stated the true cost of the injuries sustained was closer to £1,500. No award at all was made.

I am sure there have been equally outrageous personal injury claims which have not resulted in the claimant facing further legal action. But I do not think the purpose of this action was to act as a deterrent to other would-be claimants who are considering inflating a claim. I think it is to send a strong warning to the legal profession.

I am sure even the most spivvy of no-win, no-fee outfits warns potential claimants that to misrepresent the extent of their injuries in an offence. But until now, what is the worst that is likely to happen? There’s little financial penalty – most claimants are not in a position to pay the other side’s costs and will have insurance in place.

Those deemed to have exaggerated their claim, may get their compensation docked, or not paid at all. But clearly this is a risk some have been prepared to take, staking, say a legitimate claim of a couple of thousands pounds, to potentially get tens of thousands from councils, companies and insurers which do not want to purse lengthy and costly legal action.

This ruling shifts that balance. To borrow that rather gruesome phrase from the investment world, it ensures that claimants too have “skin in the game”. Lawyers now not only have to warn their clients that their liberty could be at stake, those that take their duty of care seriously should take reasonable steps to ensure the information being presented is correct. If not, then I would suggest that they too should face similarly serious consequences.

 Emma Simon is a freelance journalist

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