Aviva and other insurers fightback against ‘dishonest’ claims sees a 10% drop in claims
Aviva has won a significant victory in the fight against dishonest whiplash claims, which saw a low speed whiplash claim not only rejected, but ruled by the court as “fundamentally dishonest”. This is one of the first cases where the claimant has been ordered to pay costs for defending the case since new costs rules that ordinarily protect honest claimants when they lose were introduced in April 2013.
In the case of Andrew Fish v Patrick Hillman, the Judge dismissed the claim after finding the claimant to be an “inconsistent and dishonest witness” and agreed that the exception to the usual costs rule would be applied and an order against the claimant to the full extent of Aviva’s costs was made. This was Aviva’s 216th trial win this year defending exaggerated low speed whiplash claims, and brings the total savings from fighting these claims to nearly £50m since 2005.
Howard Grand, Head of Legal, Aviva UK&I General Insurance, welcomed the decision, saying, “This important case serves as a clear warning to those considering submitting exaggerated and fraudulent whiplash claims: Aviva will support its customers in challenging these claims, and is increasingly successful in doing so. As this case highlights, claimants quite rightly risk having to pay the costs associated with bringing fundamentally dishonest claims.
“Aviva has upped its fight against low speed whiplash claims on behalf of its customers where little, if any, damage has been caused or even suffered by the third party. Our customers look to us to help them challenge exaggerated and dishonest claims; if we don’t fight these claims, our customers risk losing their No Claims Discount.
Mr Grand continued: “We are winning around three out of four of the cases we challenge on our customers’ behalf, and we are grateful for their support in contesting these claims. We believe – as do our customers – that more can and should be done to deter these claims from being brought in the first instance.
“Whiplash claims cost £2bn a year, or around £90 on every motorist’s premium, and these low-speed, short-term injury claims account for around half of all whiplash claims. Aviva believes these claims – where they are legitimate – are best treated with rehabilitation, not cash compensation. This will help the genuine injured party return to health while cutting the cost of motor insurance by at least £32 for everyone.”
During 2013 a number of reforms to the sector to tackle the rising claim culture in the UK, including the ban on referral fees and a 60% fee reduction for lawyers handling small claims which have all helped in tackling the problem.
These changes are ready having an affect. According to The Institute and Faculty of Actuaries latest figures state that claims fell by 10% in 2013, with the cost of claims falling 33% from £354m to £238m. The number of claimants per claim dropped 4% from 1.6 to 1.5, with the average cost per claimant down from £5,000 to £4,750. The average third-party motor insurance premium also fell by 19% during the period.
David Brown, co-author of the IFoA report said: “Legal changes in 2013, most significantly the Legal Aid, Sentencing and Punishment Offenders Act– known as LASPO – appear to have had a significant impact on motor insurance injury claims.
Brown continued: “It was ‘clear that the motor insurance industry anticipated the impact of legal changes and has already passed on the reduction in costs to consumers.”
Research by Aviva found that over three-quarters (77%) of motorists support a clampdown on people exaggerating claims in order to receive compensation. Customer feedback on Aviva’s legal support for its customers has been very positive. One customer said, “I am exceedingly happy to see that these types of claims are now being fought and won.”
Another customer said the support offered by Aviva to fight her claims “has definitely given me a bit more faith in insurance companies. I’ve been praising Aviva and their persistence and willingness to fight to everyone.”
Aviva has been working with Horwich Farrelly Solicitors since 2005 to challenge spurious, low speed whiplash claims. Jared Mallinson, Partner at Horwich Farrelly, said, “Over recent years it has been very pleasing to see the judiciary taking such a tough stance against opportunistic claims arising from minor bumps. This case in particular is highly encouraging as the judiciary has shown it is prepared to find “fundamental dishonesty”, which allows for the recovery of costs from such claimants, in appropriate cases. This is a significant deterrent in the motor insurance industry’s fight against fraud and exaggerated whiplash claims.
“This should be a stark warning to would-be claimants who have not truly been injured, as Aviva firmly believes that there is no threshold or value below which dishonesty is tolerable, and cost orders made against such dishonest claimants will be enforced to the fullest extent possible.”