Expert View: Don't allow fraudsters to be the real winners of latest whiplash reforms

Will the whiplash reforms prove to be a Pyrrhic victory for the insurance sector in its fight against fraud? Judging from the views expressed at the most recent Fraud Charter group, there are many that fear the price of victory will be high.

When a representative of the Insurance Fraud Bureau (IFB), the industry’s hub for sharing insurance fraud data and intelligence, says they fear the new frictionless Litigants in Person (LiP) portal will mean fewer checks and more fraud, it is probably worth our while sitting up and taking notice.

Insurers should not be blinded by the potential cost savings of squeezing out lawyers from the process. For those on the frontline of fighting fraud, there were grave reservations of how things might be once the reforms are ‘done’.

Will the LIP Portal merely be a gateway for bad CMCs and McKenzie Friends, ID fraud and ghost claims, facilitated by the very procedures that the government hopes will make the process quick and easy for litigants? A lot of faith is being placed in the FCA to sort out the likely mess.

The overwhelming consensus is that the largest CMCs will be brought to heel, but there are concerns about the rest. With an increased level of fraudulent marketing already seen from rogue CMCs advertising as ABI, AXA Claims and such, the future landscape already looks challenging.

The FCA has lofty ambitions that it can police the CMC users of the new portal, working with the IFB and the Solicitors Regulation Authority. It believes it can corral those seeking to avoid the costs and more onerous regulatory requirements into compliance, but others see no real solution to rogue CMCs who will have their hand upon virtually all claims from LiPs.

Like the fox and the chicken coop, it will be difficult to control them once we have let them inside. Then there is the issue of the missing elements of the reform. Many around the table expressed dismay that credit hire, repair and medical agencies will not be covered by the FCA regulatory regime and that credit hire and repair will not be incorporated into the portal.

The government continues to promise movement in these areas but we have heard that before, and the countdown to April 2020 continues at a pace. Will the price of victory be worth paying? The unintended consequences have long been known. There remains a great deal to be done to try and ensure fraudsters aren’t the real winners in these reforms.