This article first appeared in Modern Insurance Magazine Issue 27, November 2017
Clearly a great deal has happened in the claims sector, and the wider political landscape, since the Insurance Fraud Taskforce published its twenty-six recommendations back in January 2016. Only the publication of the Part 1 consultation is mentioned in a hopelessly outdated 2016 update report on progress on implementing the IFT’s recommendations that for some reason has finally been published, in August 2017. The document does though, unintentionally, illustrate a couple of points worth highlighting.
First, some good progress has undoubtedly been made on many of the sensible recommendations from the IFT, although whether a reliance on a combination of self-regulation and “best practice” advice by the insurance sector is sufficiently tough enough is debatable in some areas. The Government may be proceeding with its planned changes to the whiplash claims process – the most contentious area of the IFT recommendations always disputed by claimant lawyers – but in other areas it has been painfully slow to act: the transfer of CMC regulation to the FCA; tougher regulatory action against CMCs; strengthened powers for the SRA; a ban on cold calling(?); and Part 2 of the Government’s proposals.
Second, it is clear how much the sector has changed since the landscape was surveyed by the IFT back in 2015. The number of whiplash claims has continued to fall as the post-LASPO and reformed MedCo/medical reporting regulatory environment kicks in. The number of CMCs and the revenue they make from encouraging personal injury claims has fallen, with many appearing to have moved on to fresh abuses in the area of holiday sickness claims. We are approaching near record high levels of motor premiums, fueled by successive increases in the IPT, higher repair costs and the changes in the discount rate. Fraudulent behaviour – arguably never at a level suggested by the headlines – appears to be on the wane as public awareness of the possible consequences of getting caught increases and cash-for-crash gangs are busted by the combined efforts of the various intelligence and investigative bodies.
All of this begs the question, what are the current proposed changes to the claims environment really for? In 2015 the purpose was at least clear. It was to tackle and change fraudulent behaviour. Since then, tackling fraud has all but dropped off the Governments stated justifications for the potentially disastrous changes to the whiplash process. To be clear, fraudulent behaviour does remain a problem, and it will only be tackled collaboratively by the whole industry across many fronts, but the programme proposed by the Government is not the solution. Like the recent IFT report, it is looking increasingly out of date.
Simon Stanfield, author of ‘Outdated changes’ is Chair of the Motor Accident Solicitors Society (MASS) and a Partner of Simpson Millar