Justice Secretary Chris Grayling, speaking at the Association of British Insurers’ (ABI) conference, has announced new details of government plans to tackle whiplash fraud.
He expects insurers to use the MedCo system, a new accreditation website to be introduced on 1 April 2015. Experts who carry out medical checks are to be accredited by the Ministry of Justice through the scheme.
The MedCo scheme works by randomly allocating a whiplash expert to a new claim. The idea is that claims management companies and the medical experts who provide the evidence are not linked, due to fears that fraudulent medical reports were being used to claim against insurers.
Grayling has also said that he expects insurers using the site to end the practice of third-party capture, to prevent the settling of claims without a prior medical examination. The practice is particularly common in whiplash claims.
He also announced that the government would be administrating a taskforce to monitor the best ways of reducing fraud within the wider insurance industry. The taskforce aims to strengthen the current laws that deal with fraud, and identify unsuccessful methods of preventing fraud. It also aims to analyse the view among some consumers of insurance fraud as a ‘fair-game’ practice, and as a reasonable method of making money. The taskforce will compile a report of its findings for the Ministry of Justice.
Grayling also spoke about the sharing of information between insurers and claimant solicitors, wanting to encourage the passing on of information about potential fraudsters, but acknowledged that this could only be advised, and not enforced.
The ABI reported that fraudulent claims were worth £1.3 billion last year; they found 118,500 fraudulent or exaggerated claims, an 18 per cent rise from 2012. The average amount gained by the criminal across all types of insurance fraud was thought to be almost £11,000. Additionally, the cost of undetected fraud is thought to amount to billions.
Frank O’Connor, Director at Macks commented “The strong objections to the new system are from medical agencies and solicitors with in house agencies whose profits will be hit by the changes. In principle we have no objection to the proposed changes, provided the administration of the process works.”
Sources:
Law Gazette
Telegraph
