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Delay in whiplash reforms means industry has to cooperate to address fraud

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The delay to proposed whiplash reforms means insurers have time to assess different approaches to addressing fraud, a Parliamentary committee heard.

It is now within the insurance industry's power to address personal injury claims as the Ministry of Justice is yet to make a move, lawyers said at the All-Party Parliamentary Group committee meeting today.

If whiplash reforms are to be stalled, said Matthew Maxwell Scott, solicitor at Slater and Gordon, it is up do the industry to crackdown on spurious personal injury claims.

"There is a need to repair the dysfunctional claims sector and we can do that by working together and changing the claims framework," said Scott.

"This pause in whiplash reforms give the industry an opportunity to get rid of fraud. By making changes to the claims notification period, we can cut out spurious claims."

Martin Coyne, solicitor at Access to Justice, said that the delay offered an opportunity for insurers to change the way they handle claims by discontinuing pre-medical offers for claims.

"You simply cannot offer a person a sum of money for their claim without it being proved first," said Coyne.

"If insurers continue to handout pre-medical offers for whiplash claims then they are adding to the fraud that they say they are against."

The committee also highlighted the need to ‘starve' claims management companies of money in order to rid the industry of fraud and impose a 12-month limit for which a claim can be made.

"We can work together to starve these CMCs of money by taking these claims out of the industry all together, we can do that by imposing a 12-month limit that means no one can make a claim outside of 12 months after the accident occurred," said Coyne.

James Dalton, director of general insurance policy at the Association of British Insurers, agreed that taking away the potential for monetary gain from CMCs was crucial in eradicating insurance fraud.

"We need to first of all stop these claims from entering the system by taking away any financial incentive from these CMCS," said Dalton.

"By making sure that CMCs, and the solicitors who represent these claims, have nothing to gain financially, there will be a decrease in fraud. Ultimately it will be the customer who will reap the benefits of this as motor premiums will therefor decrease."

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