The Government and the insurance industry have today retreated from their claims about the level of motor insurance fraud in a response to a Transport Select Committee report.
The Government had parroted figures released from industry body, the Association of British Insurers (ABI), which stated that there were as many as 59,900 ‘dishonest’ motor claims in 2013 with a value of £811million. The ABI had also claimed that fraud adds on average an extra £50 to every household’s annual insurance bill.
In July, the Transport Select Committee challenged the validity of the ABI statistics, and called on the Government to ensure that the data being used to support key policy decisions that favoured insurers at the expense of injured claimants were based on solid foundations.
In their responses to the Transport Select Committee’s report published today, the Government and ABI have back-tracked from their original unqualified assertions about the level of fraud in the industry.
Having previously categorically stated the data was ‘proof’ of fraud the Government and insurance industry have now admitted their figures do not provide “anything more than an indication” of the level of fraud.
Thompsons Solicitors, the largest law firm acting only for claimants in the UK, has long campaigned for greater transparency from the insurance industry. In January, the firm submitted a report to the Transport Select Committee as part of their inquiry into motor insurance, in which they pointed out that while insurers claimed to be victims of a ‘compensation culture’ and widespread fraud, they in fact benefited from what one major motor insurer described as an ‘excellent claims environment’ and the major motor insurers had made billions of pounds in profit.
Thompsons head of policy Tom Jones, said:
“This is a full scale retreat by the Government and their friends in the insurance industry on their claims about the level of fraud.
“In the face of a notably robust challenge from the Transport Committee, we would have expected a robust response from the Government and the insurance industry in defence of their claims – especially given that the figures have been used to justify policy. In fact, though they have sought to obscure it, they are now climbing down which only serves to confirm our suspicions that their figures were indeed baseless or grossly exaggerated.
“We challenge the industry to explain exactly what they mean when they say their data is only an ‘indication’ of the level of fraud. How exactly did the figure for 59,900 ‘dishonest’ claims come about? How have they calculated that fraud adds an extra £50 to every household’s annual insurance bill? What is the basis for their claim that fraud costs the industry £811m if in fact, as we now know, their data is only an ‘indication’?”