UK holiday fraudsters could face jail

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UK holidaymakers who make bogus food poisoning claims could go to prison, warns travel trade organisation Abta.

A huge rise in false claims has left travel bosses “embarrassed” by a trend which they say is a “British problem”.

Abta chief executive Mark Tanzer said the fraud is “one of the biggest issues that has hit the travel industry for many years”.

He added that tourists chasing false or exaggerated claims “risk ending up in jail either in the UK or abroad”.

Tens of thousands of UK tourists have put in for compensation in the past year, even though sickness levels in resorts have remained stable.

Clampdown call

Abta says the cases usually involve holidaymakers who have been abroad on all-inclusive deals, who argue that because they only ate in their hotel, that must have been the source of their alleged food poisoning.

It has launched a campaign called Stop Sickness Scams, asking the government to clamp down on the issue.

It says laws designed to stop fraudulent claims for whiplash have instead pushed the problem of false insurance submissions on to overseas holidays instead.

This is because of a cap on the legal fees that can be charged by law firms pursuing personal injury cases at home.

Mr Tanzer added: “The government must urgently address this issue. The legal loophole that is allowing firms to unduly profit from these claims must be closed.

“This would allow people with genuine claims access to justice but make this area less attractive to claims firms.”

Travel firm Tui said it had experienced a 15-fold rise in holiday sickness claims in the past year, costing between £3,000 and £5,000 a time, which was often more than the value of the holiday itself.

Tui’s UK managing director Nick Longman and Thomas Cook UK’s managing director Chris Mottershead both warned that if the problem continued, it could spell the end of the all-inclusive holiday for UK travellers.

Mr Mottershead said: “It has the potential of putting hoteliers out of business. They will stop British customers coming into their hotels.”

‘Touts’

Joel Brandon-Bravo, managing director of Travelzoo UK, told BBC Radio 5 live’s Wake Up To Money that the upward trend was being driven by claims management companies.

“People are being called when they get back from holiday and encouraged to make claims and we’ve also seen evidence of them employing touts outside resorts encouraging people to make a claim and walking them through the process to make it easy for them,” he said.

Mr Brandon-Bravo added that he felt people who were trying to cheat the system were not aware of the consequences if they were caught.

“Generally it is not made clear that if a claim is found to be fraudulent the individual could have a criminal record.

“In fact, there is one case going through right now with a Greek hotel, who is counter-suing a couple who made a claim for sickness three years ago for £10,000 and the hotel is counter-suing them for £170,000.

“They tried to withdraw their claim but they are seriously worried they could lose their house.”

The Foreign Office has also advised tourists against making any fraudulent claims.

“If you make a false or fraudulent claim, you may face legal proceedings in the UK or Spain,” the FCO warns.

“There have been reports of an increase in holidaymakers being encouraged to submit a claim for personal injury if they have experienced gastric illness during their stay,” says the FCO website.

“You should only consider pursuing a complaint or claim if you have genuinely suffered from injury or illness.”

The Alliance of Claims Companies told the BBC it was hoping to establish industry best practice principles that would help drive out rogue companies.

It wants to work with the travel industry to ensure genuine claims are dealt with effectively.


Whiplash plans to ‘cut car insurance premiums by £40’

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Millions of motorists could see their car insurance premiums reduced as a result of plans to cut compensation for whiplash injuries.

Whiplash claims have risen by 50% over the last decade, costing insurance companies about £1bn a year. The government said insurers have pledged to pass on the savings, worth about £40 a year. Following a promise made last year, ministers are looking at scrapping the right to compensation or capping it. In its consultation, the Ministry of Justice suggests that such payments – which are separate from medical bills or loss of earnings – could be banned. Or they could be capped at a maximum level of £425. By contrast the current average pay-out is £1,850.

‘Better deals’

The government pointed out that while the number of road accidents in the UK has been falling, the number of whiplash claims has been increasing. “For too long some have exploited a rampant compensation culture and seen whiplash claims an easy payday, driving up costs for millions of law-abiding motorists,” said Justice Secretary Liz Truss. “These reforms will crack down on minor, exaggerated and fraudulent claims.”

Other proposed measures include:

  • Introducing a tariff system for compensation, payable for more significant injuries than whiplash
  •  Allowing small claims courts to handle all personal injury claims up to £5,000, rather than just £1,000, so reducing legal costs
  •  Requiring medical reports from an accredited expert, before any claims could be paid

 

The Association of British Insurers (ABI) welcomed the consultation. “These reforms are important. They will help to give honest motorists a better deal,” said an ABI spokesperson.

Nuisance calls

The insurance industry has been complaining about the issue of whiplash claims for at least eight years. And the government has tried to crack down on fraudulent injury claims before. Under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, so-called “no win, no fee” legal actions were curtailed, and referral fees were banned. Following that law, whiplash claims fell by 19%, but it remains to be seen how effective any further measures might be. Nevertheless, one of the UK’s largest insurance companies, Aviva, has promised to pass on 100% of any savings to motorists. The insurer said the measures might also help to discourage nuisance calls and texts from claims management companies. “This is welcome news for consumers who are rightly fed up with nuisance calls, fraud such as crash for cash, and the huge number of spurious whiplash claims they pay for in their premium,” said Rob Townend, claims director at Aviva. “These proposals bring us a step closer to saying good riddance to the ‘whip-cash’ merry-go-round that is the bedrock of the UK’s compensation culture.”

‘Broken system’

Amanda Blanc, the chief executive of insurance firm AXA UK, also called for the government to push ahead with the reforms. She said: “We have been here before and still not yet managed to beat the whiplash epidemic. “This is a golden opportunity for the government to tackle the compensation culture once and for all.” And the RAC motoring group’s director of insurance, Mark Godfrey, said the plan was “broadly welcome… The present system is now widely regarded as broken and in need of reform”. But he added: “It is crucial that motorists that have genuine claims are not disadvantaged, which is why we now look forward to seeing the finer detail of the government’s proposals.”

Any changes would require an act of parliament, so are likely to be many months away.

By Brian MilliganPersonal Finance reporter


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