Raab: Protecting holiday-makers from being ripped off
The Ministry of Justice has today issued a call for evidence that it said would give ministers “a greater insight into the reported rise” in fraudulent holiday sickness claims, but displayed caution in the use of the oft-cited figure of a 500% increase in cases.
The call for evidence comes in the wake of an ITV Tonight programme last night that highlighted the issue.
The MoJ said the problem was “damaging Britain’s reputation overseas and… could drive up holiday costs for hard-working families”.
The 500% figure was used without qualification at the start of the ITV programme, but the MoJ said the rise “could be as high as 500% since 2013”.
The Association of British Travel Agents (ABTA) has put the figure at the forefront of the debate, but speaking at last month’s PI Futures conference, Susan Deer, senior solicitor at ABTA, admitted that the data came from only “a proportion” of its members.
She said it had asked members for figures and said 500% represented the increase only for those that replied, and related to the period 2013 to 2016. She pointed out that, unlike insurers, tour operators had not been set up to monitor fraudulent claims, as they were not hitherto a problem.
The MoJ has also for the first time put ABTA’s concrete figures in the public domain. It said ABTA had reported “a 500% increase from around 5,000 claims in 2013 to around 35,000 claims in 2016” – this would actually be a 600% increase.
“This is despite the fact that travel industry data on the global trend for reported incidence of illness in resorts has actually declined in recent years,” the MoJ added.
It said ABTA has also found that, while the average value of a gastric illness claim is about £2,100, the average cost of defending a claim is almost £3,800.
The projected total cost of claims to the industry in 2016 (including damages paid) was estimated by ABTA to be over £240m.
“We will look into these figures as part of the call for evidence,” the MoJ said.
The ministry has already announced that it intends to close the “loophole” in the fixed recoverable costs regime that means holiday claims are exempt because the incident takes place abroad.
It said: “Tour operators often settle holiday sickness claims out of court, rather than challenge them because – due to the fact these spurious claims are arising abroad – legal costs are not controlled, so costs for tour operators can be out of all proportion to the damages claimed.”
The MoJ made no reference to court control of costs.
It said the Civil Procedure Rule Committee was working on the change and should be brought into force early next year.
Justice minister Dominic Raab said: “Bogus claims against tour operators risk driving up the price of summer holidays abroad for hard-working families who have earned a break. We’re taking action to deter these claims, and protect holiday-makers from being ripped off.”
Law Society deputy vice-president Christina Blacklaws commented: “Fraudulent claims should be stamped out, cold calling should be banned and claims companies which seek to profit from bogus or exaggerated claims must be brought to task.
“Insurers also play a crucial role. They should not pay out on claims which are either fraudulent or which lack legal merit. If tour operators or hotels have a concern a claim is fraudulent or exaggerated, it is essential the claim is investigated.
“Sometimes claims are settled when they are fraudulent and defendable. We are concerned that this may actually encourage more fraudulent claims and will increase the cost of holidays.”
Well-known claimant solicitor Andrew Twambley, a spokesman for the Access to Justice group, featured on ITV Tonight to explain how he had followed a cold call through to the solicitors who received the case.
He argued that if solicitors stopped paying for such leads – which are against Solicitors Regulation Authority rules in any case – then the trade in claims would stop.
Where have we heard all this before? Deja Vu