‘Unintended consequences’ of whiplash reforms inevitable says MoJ

There could be unintended consequences arising from the implementation of part one of the whiplash reforms this May.

This is according to David Parkin, deputy director for civil justice and law policy at the Ministry of Justice (MoJ), who was speaking at Insurance Times’s first Fraud Charter roundtable of the year, held in March. 

Parkin said: “As we move towards implementation of the whiplash reform programme and the Official Injury Claim (OIC) system, what is true - hopefully - is that there will be a simple, smooth, workable system, but there will be unintended consequences in the changes of behaviour by a number of parties in the new system – that’s almost certain to happen.”

This could include new issues regarding fraud within the self-service portal. Donna Scully, director at law firm Carpenters Group and Fraud Charter co-chair, alluded to a few potential problems here, such as fundamental dishonesty cases being “expressly excluded” from the new portal.

For Scully, the issue with this is it will be more expensive – she questioned whether it would be easier for insurers just to pay the claims?

But, as these types of claims are generally more complex, it could be tricky to manage them via a self-service portal.

Missing information

Catherine Burt, DAC Beachcroft’s national head of counter fraud, said she was concerned about tackling certain claims within the OIC portal.

“At the moment, the concern about trying to fight them in the portal is the amount of evidence you are actually going to have at that stage,” she said.

”If you choose to keep it in the portal and, say, deny liability rather than allege fraud, then you don’t get all the information.

“Dealing with them in the portal, you are going to be quite constrained in what you can do – so the 30 days are going to be absolutely crucial.”

This refers to the time frame linked to claims within the OIC portal - a decision regarding the claim must be made within a 30-day time period, otherwise it will drop out of the portal process. This limit is 40 days if the Motor Insurers’ Bureau (MIB) is the compensator.

Burt highlighted that if the claim was removed from the portal, the fundamental dishonesty route could be explored further and costs could be redeemed if there is strong enough evidence.

“But for each type of fraud and how you best deal with it, it’s going to be a little bit of a workshop leading up to the implementation,” Burt added.

Not black and white

Keoghs partner Ruth Needham agreed with Burt, adding that decision-making around claims remains the same, but now there is a tighter timescale.

“It’s not black and white,” she said.

Furthermore, she deliberated whether it might be easier to admit that a claim is complex to take it out of the portal process. Needham explained: “Will we be able to categorically say it is fraud in 30 days? Those are the cases we have probably repudiated in 30 days.”

Needham stressed that 30 days is manageable if there is only one case to deal with, but for 500 cases, “it’s nothing”.

This is where Needham fears the industry “will be making decisions on very limited information” and, therefore, some claims may not be investigated.

Scully questioned whether the shorter, 30-day timeframe might mean that fraudsters become bolder - she added that she was worried about all the good work the industry has done around fraud being undone.

Financial decision making

Concerns were also raised about how expensive fraud claims might be to fight and whether it was cheaper not to do this.

Burt said: “On the claims when the policyholder has specifically said ‘this did not happen’ or ‘this person was not in the vehicle’ – I think most of our insurance clients would take the view that they are lying and they will defend those claims.”

She said that “every insurer is going to have to make a decision – at what point is it economically not worth doing”?

But Burt hopes that insurers will not just pay claims as an easy option or because they are not worth much as she believes this will only lead to an increase in claims.