Relationships between claims management companies (CMCs) and solicitors over holiday sickness claims are under investigation, the Claims Management Regulator revealed yesterday.
It comes in the wake of the Association of British Travel Agents (ABTA) claiming that CMCs have moved onto holiday sickness cases as more lucrative sources of work than whiplash.
In its quarterly enforcement update, the claims regulator said it was “investigating the conduct of regulated CMCs and unauthorised entities in relation to a surge in holiday sickness claims”.
It continued: “We are working with ABTA, tour operators and their representatives to review evidence of CMC practices and with the Solicitors Regulation Authority on the relationships between CMCs and solicitors operating in this area.”
ABTA chief executive Mark Tanzer said: “Last year, members informed ABTA that they were seeing dramatic increases in the number of gastric illness claims. The level of claims far exceeded the reported sickness levels in resort.
“Spanish hoteliers have also reported significant increases in sickness claims made by British holidaymakers but not by their German or French counterparts, leading them to suspect that some claims are fraudulent, particularly where the customers involved have not reported any illness or sought medical attention whilst in destination. This trend is a serious concern for our members, for the industry as a whole and for consumers with genuine claims.”
He said the increases appeared to coincide with the 2013 LASPO reforms which limited legal costs in other sectors, such as whiplash claims, “and led claims firms to identify holiday sickness claims as an alternative potentially profitable area of business”.
ABTA said that CMCs have been conducting “significant advertising and marketing campaigns” targeting all-inclusive package holidaymakers who have travelled within the past three years.
“The campaigns advise holidaymakers that they are able to make claims for gastric illness even when they have not sought medical help in resort or reported their illness to the UK tour operator during the course of the holiday.”
As a result, ABTA has backed the government’s proposal to increase the small claims track limit for personal injury claims from £1,000 to £5,000, and this week submitted a response to Lord Justice Jackson’s review of fixed recoverable costs calling for overseas holiday claims up to £25,000 to be brought under the same fixed costs regime that currently applies to other personal injury claims.
The association is also developing an ADR scheme for personal injury to allow customers to process their complaints through ABTA.
More broadly, the claims regulator said that, in the last quarter of 2016, it issued 16 warnings to personal injury CMCs, executed a warrant and commenced an investigation into a CMC, resulting in a voluntary surrender of its authorisation, and conducted 285 visits of previously authorised businesses to ensure that they were not undertaking unauthorised activities.
Meanwhile, justice minister Sir Oliver Heald appeared lukewarm at the idea of banning personal injury CMCs making cold-calls, as claimant lawyer groups have been calling for.
Answering a writte parliamentary question from Labour justice spokeswoman Christina Rees, he said: “CMCs are already banned from introducing claims, or details of potential claims to solicitors if these have been obtained by an unsolicited approach by telephone or in person.
“The majority of unsolicited calls for personal injury claims are made by illegal unregulated businesses. regulators are working together to tackle illegal activity where identified.”