Moral victory for Zurich in fraud claim

Zurich won a moral victory in its fight against fraud at the Supreme Court this morning.

Despite seeing its appeal in the third-party liability case of Fairclough Homes against former employee Shaun Summers dismissed on the grounds that it would not be “proportionate or just” to strike the claim out, the insurer took heart from Lord Clarke’s judgment that the court unanimously held that it had the power to strike out a claim for “abuse of process”.

Current case law requires insurers to pay the genuine parts of liability claims even if fraud is proven.

But this latest ruling leaves the door open for insurers to go one step further in the pursuit of fraudsters by getting courts to strike out the rest of the claim too.

The case centred around an injury that Summers suffered in an accident at work in May 2003. Summers filed a claim against his employers Fairclough Homes in May 2006 alleging breach of duty and a year later the county court ruled in his favour on the grounds of liability.

In December 2008 he claimed damages of £838,616, but soon after Fairclough Homes submitted undercover surveillance evidence that revealed the claim to be grossly exaggerated in terms of the effect of his injuries and his incapacity to work and launched a new defence seeking to strike out the claim in its entirety.

Summers submitted two further claims revaluing his losses at about £250,000.

The trial on damages was held in January 2010, the judge ruling that the evidence submitted showed beyond reasonable doubt that Summers had fraudulently mis-stated the extent of his injuries and had deliberately lied to medical experts and the Department of Work and Pensions.

But the judge also found that Summers had been unable to work prior to the end of June 2007 and awarded him damages for loss of earnings totalling £88,716.76.

Despite Fairclough Homes seeking the court to strike out the entire claim, both the judge and Court of Appeal were bound by previous rulings to refuse the application on the grounds they had no power to do so in such circumstances.

While the case sets no new precedents it will hopefully send out a clear warning to potential fraudsters that they could be in danger of losing the whole of their claim should they try to defraud their insurance company with inflated claims.

Thiam is new ABI chairman

In other news, the ABI today announces that Tidjane Thiam, the Prudential chief executive, is the new ABI chairman.

It’s a good appointment. Thiam has Prime Minister David Cameron running over hot coals over Solvency II after his threat to redomicile because of the onerous European legislation.

This is a man who packs a punch. He’s charismatic, young, highly intelligent, and added to the fact that he fled war-torn Ivory Coast to settle in the UK and become the first black person to lead a FTSE 100 company, he has captured the imagination of the press.

However, there will be concerns in some quarters that yet another life insurance man is holding the reins at the ABI.

Thiam will do well to remember that the insurance is life and general insurance, and speak up for both industries. Doing that would go along way to dis-spelling the feeling among some that general insurance is the poor relation of life insurance in the eyes of the ABI.