A recent county court decision on ‘fundamental dishonesty’ opens up a “new avenue for insurers”, leading defendant firm DAC Beachcroft has claimed.
According to counter fraud partner Anthony Carrington, the decision “rewrites the rulebook” for defending ‘bogus passenger’ claims.
The claim in Shahid v Puddick was made following a car accident in 2014. The defendant had indicated that only one of the three claimants was genuine, so insurers decided not to settle the genuine claimant’s claim as she had supported two bogus personal injury claims.
Mr Carrington recorded that the trial judge agreed, describing the entire action as dishonest. He concluded that two of the three claimants had not been present at the accident and then went on to dismiss the ‘genuine’ claimant’s claim, which was worth £2,000. The claimants were also ordered to pay the defendant’s costs.
Mr Carrington, said: “The decision is great news for the insurance industry and marks a significant shift in case law relating to ‘genuine’ claimants who support fraudulent claims. Before the introduction of the Criminal Justice and Courts Act 2015, insurers had little alternative but to settle ‘genuine’ claims.
“Insurers should take confidence from this outcome and not look to settle claims where the ‘genuine’ claimant is supporting bogus claims by individuals who were never involved in the accident.”
DAC Beachcroft said that in the last year, it has had more than 140 claims dismissed at trial or final hearing on grounds of fundamental dishonesty, saving insurers more than £1.4 million in damages and costs. Costs have been assessed in two-thirds of the cases, leading to costs orders totalling over £440,000 being awarded to insurers.
Mr Carrington could not say how many times the firm had claimed fundamental dishonesty and failed, but he said that as it only made the allegation at the end of a case when the facts were clear, they “generally succeed”.
An analysis of all the fundamental dishonesty findings obtained by the firm found that 43% involved fraudulent low velocity impact claims, while more complex frauds where accidents were induced or staged accounted for around 38%. Fewer than 10% of the fundamental dishonesty decisions related to bogus passenger claims.
“Now that the case law in defending this type of fraudulent claim has been so substantially altered, we expect insurers will be more willing to defend these cases in their entirety so bogus passenger claims will account for a greater proportion of fundamental dishonesty results in the future,” said Mr Carrington.
He added that checking a claimant’s social media activity was becoming increasingly important in tackling fraud.
“In a number of these fundamental dishonesty cases, our intelligence team’s investigations of the claimants’ own social media activity unearthed some gems of evidence, which contradicted what the claimants had alleged in their claims.
“In one case, the claimant alleged that his injuries came on within 24 hours of the accident and that he had been unable to go running but his social media showed that the claimant had, in fact, completed a 10km run the day after the accident, recording a personal best time. Following the cross examination at trial, the claimant discontinued and agreed to pay costs in excess of £10,000.”