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court ruling could open floodgates to fraudulent RTA claims

25 May 2017

Insurers could be responsible for meeting ‘unidentified driver’ claims following a recent Court of Appeal decision.

In Cameron v Hussain & LV Insurance, the claimant was the victim of a 'hit and run' incident in May 2013 which resulted in her suffering injury as well as damage to her vehicle. The driver failed to stop at the scene and remains unidentified. However investigations were able to identify the registration of the vehicle.

Although the vehicle was registered to Hussain, it was agreed that he was not the driver of the vehicle at the time. The vehicle was also insured by Liverpool Victoria but it became apparent that the insured turned out to be fictitious. After initially pursuing the registered owner, the claimant sought to amend her initial claim and sue the ‘unknown person’.

In a majority decision, the Court of Appeal overturned an earlier county court ruling deciding that under the Civil Procedural Rules there was no restriction on the claimant issuing proceedings and obtaining a court order against an unknown person as long as the insurer could be identified.

The tensions created by the interpretation of naming a defendant under CPR rule 7A PD4.1(3), the obligations on insurers to satisfy judgments under s 151 of the Road Traffic Act 1998 and the adequacy of the MIB (Motor Insurers Bureau) Untraced Drivers Agreement  were all considered and resolved in favour of the claimant. Until this decision compensation would have been through the well-established insurance industry funded MIB scheme. Under that scheme, the claimant would be compensated but costs would be limited.

Paul Wainwright, head of counter fraud at insurance law firm Browne Jacobson, said:

“It can be easily seen how dishonest claimants and defendants could conspire to exploit this decision. With the proliferation of ghost broking and identity theft, detecting insurance fraud has required significant resources and technical know- how. Following this decision, insurers will need to redouble their investigations, and where appropriate seek a declaration, in order to avoid being the victim of claims fraud, all of which will no doubt have an impact on innocent policyholders’ premiums.”

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