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opening the floodgates to fraudulent RTA claims - sue an unidentified party?

25 May 2017

Insurers of vehicles involved in accidents leading to compensation claims, find themselves in a difficult position as a result of the Court of Appeal decision Bianca Cameron v (1) Naveed Hussain (2) Liverpool Victoria Insurance Co Ltd. If they are unable to identify the driver, and as in this case discover that the vehicle owner is not their policyholder, and their policyholder did not exist, they may be faced with an order to pay damages even if the alleged driver is not named.

This follows the Court of Appeal decision to allow proceedings to be amended to bring proceedings against an unnamed driver, as an unknown party, whose vehicle was the cause of the hit and run incident leading to personal injury.

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 section 151 of the Road Traffic Act 1998 and the adequacy of the Motor Insurers Bureau (MIB) Untraced Drivers Agreement were all considered and resolved in favour of the claimant appellant. Until this decision compensation would have been through the well-established insurance industry funded MIB scheme. Under that scheme, the deserving claimant would be compensated but costs would be limited.

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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