Insurance fraud has made many of the headlines in the past few months. Some of us had not realised just how much money was dishonestly claimed through insurance claims and yet we complain about increases in premiums. It seems obvious that the more money is paid out by the companies through fraud then the cost has to come from somewhere so the companies pass it on to us.
In July this year a BBC report was published stating that the Association of British Insurers (ABI) had announced that insurance fraud has actually risen to over £1 billion a year for the first time. This shocking claim comes in the wake of the latest attempt to combat this which was a change in the law regarding personal injury claims.
Earlier this year there was a drastic change in the law concerning personal injury claims. The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) was introduced in April 2013 and now represents a big change in aspects of Legal Aid. The new act changes the automatic qualification a claimant had to receive Legal Aid. The government is continuing to discuss plans to cut the Legal Aid bill in England and Wales. They have announced that Legal Aid costs taxpayers about £2 bn each year (criminal defence makes up more than half of that). They state that the situation is unsustainable however it has to be stated that this plan has to be executed carefully or the justice system would be denied to the poorest in society.
Regarding personal injury, the act puts a ban on a solicitor’s ability when handling a case which he previously had to reclaim all costs involved in making a claim directly from the other party. Before this act the claimant was able to receive the full amount of his or her compensation at no personal cost – after this act the client has to pay all of any additional fees out of the amount of compensation claim they have been awarded.
It is good to see that personal injury claims are now being checked investigated when deemed necessary to a fuller extent and some of the bigger fraudulent claims are highlighted in the media to try and discourage others. E.g. In June 2013 the BBC reported on a man jailed for falsely claiming £1 million with a personal injury claim.
Whilst all these new efforts are being made to combat fraud it has to be emphasised that the majority of personal injury claimants may be genuinely in need of adequate compensation. Unfortunately the new act means that someone who is living poorly and has little money anyway may be unable to claim for perhaps a smaller injury, as the cost of their court fees and expenses may be more than the amount of compensation awarded. It is these people who now need to be protected and it has to be said that the importance of getting the correct legal advice right at the beginning, from a specialist personal injury solicitor, is very important for these cases.