Motor Claims and Fraud – The Current UK Market Position
Due to the number of lockdowns in the UK since the start of the Covid-19 pandemic there have been fewer drivers on the roads and much shorter distances travelled by motorists. There was a reported reduction of almost 19% in traffic in 2020 alone.
According to the Association of British Insurers there was a 19% reduction in claims in 2020. There was however a 13% increase in personal injury pay outs to £12,100. There are a number of possible explanations for this. Firstly there have been more pedestrians on the roads as well as an increase in cycling since the pandemic began. Due to the quieter road conditions motorists have been driving faster; a combination of these two factors can lead to more serious incidents taking place.
Another possible explanation is that the pandemic offered fraud rings an opportunity. Other criminal activities may not have been open to fraudsters so they may have turned to motor claims for opportunities to make money. The quieter roads would mean that staging accidents would not be as risky with fewer witnesses around. It’s more difficult to induce an accident with an innocent party however due to these low traffic numbers.
The Insurance Fraud Bureau estimated that around 170,000 of the 2.7 million motor insurance claims made between October 2019 – October 2020 could be linked to fraud and ‘cash for crash’ networks.
There is light at the end of the tunnel with the widely reported Civil Liability Act which came into force on 31 May 2021. One of the aims is to hit whiplash fraud by reducing compensation and making it more difficult for fraudsters to claim. The initial results of these changes will be reported over the coming months once claims data is in.
Our colleagues in Poland have advised on some new changes to the Polish Road Traffic Act which came into force on 1 June 2021.
The reforms which have an effect on both drivers and pedestrians include:
Poland is one of the last EU countries to bring in such safety measures.
Personal Injury Reform in Spain, the UK and Ireland: You Win Some You Lose Some
Recent developments across some key jurisdictions show the vast differences in the methodology around personal injury settlements and the way we deal with victims of road traffic accidents in particular. Click the link below for more information.
Brexit – Is There Any Clarity?
The short answer is no. Many months have passed since the end of the transition period and for both victims and responsible insurers there is still no clarity and what is going to happen with 4th Directive / Odenbreit claims. We know that there are no significant changes to Green Card claims.
Furthermore any 4th Directive/Odenbreit claims in which proceedings were issued prior to 31 December 2021 can continue as normal with the jurisdiction of the victim secured as well as local procedural rules. The difficulties arise for claims in which proceedings were not raised prior to this date.
The procedure now would be for Claimant solicitors to apply to the Court for Proceedings to be served outside of jurisdiction and sent to the responsible party to defend. Proceedings cannot be served on UK agents and they are not obliged to nominate solicitors. As we say above all is not clear because there are pending decisions and test cases which may change the way these claims proceed.
The UK has applied to join the Lugano Convention which will allow for recognition of Judgements across its member countries. We are awaiting a final decision on this in the coming months. The response to the application was lukewarm from the European Commission in its communication to the EU on May 4th.
The Supreme Court in England and Wales is due to publish its ruling on the Brownlie v FC Cairo case. If the result is positive for Claimants this could potentially allow jurisdictional gateways for victims and allow them to claim in their home country for an accident overseas. This is of course untested.
Another possible, yet untested, solution for victims in high value claims would be to apply to the High Court to ask that it allows jurisdiction since the majority of the Claimant’s losses will be incurred in their home country.
There is generally goodwill from insurers across Europe to deal with these claims sensibly and settle these claims on an amicable basis provided Claimant representatives understand the procedural rules specifically in relation to costs may well be different across different jurisdictions.
We will report back on this topic in our next newsletter.
UK Road Traffic Casualties
In June 2021 the Department for Transport released its provisional figures with respect to the reported road traffic casualties for 2020. Covid-19 played a significant role in the 2020 data.
The figures are likely to echo what was seen across Europe in 2020. As alternative transport such as e-scooters increase and more autonomy in vehicles arrives, we will see how these figures develop.
Motor Insurance Directive News
In June 2021 support was given by the European Council’s Permanent Representatives Committee to the agreement reached between the EC and the European Parliament negotiators with respect to an amendment to the Motor Insurance Directive which was initially voted on in February 2019.
The proposed amendment is aimed to further protect injured parties following a road traffic accident and improve their rights.
The changes to the text provide new definitions of the word ‘vehicle’ and ‘use of vehicle’. Full compensation for victims where a responsible insurer is insolvent is also being applied. A body in the member states would reimburse the victim and seek reimbursement from the body in the member state of the liable insurer.
There will also be the creation of a harmonised claims history document, the revised text also includes:
The changes to the Directive are expected to be adopted towards the end of 2021.
Source: The European Council
Manager, Senior Associate
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