We know they are out there. We have all heard about the fake accidents and extra passengers.
If a claimant is found to be fraudulent then he/she is in big trouble. First of course, there are the legal costs. If you make up a claim and are found out, any After the Event Insurance policy you have won't be valid so you will be facing many thousands of pounds in defendant's costs and disbursements. In addition, most Conditional Fee Agreements state that, in the event of a finding of fraud, you will also have to pay your own solicitor's charges.
Ok - so what? Are fraudulent claimants likely to pay up? Well no. They often disappear - after all it is common for them to use a fake address.
Worse for the fraudster however is the fact that they have committed a criminal offence. If they are caught, the police (if they can be bothered that is) could arrest them for fraud and deception.
So how are the defendant insurers reacting? Well they are being their usual crafty selves. First, they are (quite rightly) setting up fraud teams to investigate these criminals. Often the fraudsters aren't just doing this once but are serial offenders and so, if the defendants can stop them, they are going to save many thousands of pounds.
The problem is, the defendant insurers are now going too far. We have evidence which suggests that it is now common place for fraud to alleged in defences pleaded by defendant insurer solicitors. Virtually standard phrases are being used and defendant solicitors are telling claimant solicitors that they must (a) tell their clients of the consequences of being found to be fraudulent and (b) tell the client's After the Event Insurer.
What is the effect of this? Well, some claimants get scared. They don't want to be left facing a massive bill and so, even if they are innocent, they cease claiming. The problem is, we understand some After the Event Insurers are then taking this action to be evidence of a fraud and so won't pay out for any costs. We also believe that ATE Insurers are checking defences very carefully and, if a claimant loses, they point to any allegation of fraud and tell the claimant that, in view of the allegation and the fact that they lost their claim, they won't pay out. Now this is not where there has been a finding of fraud, just where a case has been lost on the facts.
So you see, the defendant insurer tactics are backfiring somewhat. By alleging fraud across most defences, they are giving ATE insurers ammunition to refuse claims. If a claim is refused of course, the defendant insurer doesn't get paid costs. So they are shooting themselves in the foot here.
What do our underwriters do? Well they ignore these shenanigans. Any allegation of fraud is seen as bravado. The underwriters we use wait to see what the Judge decides. If the Judge makes a finding of fraud on the facts then they don't pay out. If there is no finding of fraud then they do pay. Life is so much simpler when you don't play games.
Box Legal Limited: After the Event Insurance Providers
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