Vertical Markets

Whiplash report

by Mark Rowe

Business models of firms in the area of motor insurance have, inadvertently, encouraged crime, say MPs. The Transport Select Committee in a report on whiplash insurance claims pointed to insurance firms’ willingness to pay compensation for whiplash claims which they suspect are fraudulent without requiring the claimant to undergo a medical examination. The committee says that it would like to see a ban on insurers offering to settle whiplash claims before the claimant has had a medical examination.

Also, the MPs said that progress in enabling insurers and claimant solicitors to share data about potentially fraudulent claims has been slow. When data sharing begins it should be compulsory, otherwise only the most reputable firms will be involved.

The report said: “We also recommend that the Government oversee funding arrangements for the police Insurance Fraud Enforcement Department, to make sure that this unit, currently funded by the insurance industry, has a long-term future. Finally, we also note evidence that new forms of potentially dishonest practice–such as ordering additional medical reports on psychological harm arising from road traffic accidents–are emerging. The Government should press the Solicitors Regulation Authority to stop some solicitors from playing the system to maximise their income.”

For the report in full visit – http://www.publications.parliament.uk/pa/cm201415/cmselect/cmtran/285/28502.htm

Commenting on the report

DCI Dave Wood, who heads the Insurance Fraud Enforcement Department (IFED), which is based out of the City of London Police, said: “I am delighted that the Transport Committee’s report recognises that IFED, as the police unit dedicated to tackling insurance fraud across England and Wales, is and will continue to be vital to tackling motor insurance fraud.

“Since the unit launched in January 2012, we have investigated millions of pounds worth of motor insurance fraud, made arrests and brought fraudsters to justice by securing police cautions and court convictions.

“Just last month (June 2014), detectives investigating a suspected ‘crash for cash’ gang arrested four people after they executed nine warrants at homes and a business premises in London, Middlesex, Buckinghamshire and Surrey.

“The team has also obtained court orders to the value of hundreds of thousands of pounds against fraudsters under the Proceeds of Crime Act 2002, and have more money under restraint pending the outcomes of criminal investigations.

“What is more, we have taken our fight to living rooms across the country through BBC series ‘Claimed and Shamed’, which introduced millions of viewers to the work we do and showed there are serious consequences to committing insurance fraud including motor fraud.

“And it’s not just politicians that have recognised our work, earlier this year (April 2014) the insurance industry demonstrated its continued commitment to tackling insurance fraud and confidence in IFED by extending and increasing its investment in the unit .

“The £11.7 million investment over three years, by the Association of British Insurers, will fund a further expansion in our work with more detectives joining the unit.

“Never has the message been clearer: insurance fraud is a crime and there are serious consequences for those who commit it.” ​​​

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