i-law

Lloyd's Maritime and Commercial Law Quarterly

Unpicking the fraudulent claims jurisdiction in insurance contract law: sympathy for the devil?

“If one examined a sample of insurance claims on household contents, I doubt if one would find many which stated the loss with absolute truth.”

James Davey *

The response of most policymakers, including the judiciary, to fraudulent insurance claims has been to insist on clear, Draconian rules to deter prospective fraudsters. However, whilst the recent spate of appellate decisions, led chiefly by (now) Lord Mance, has supported this view, there is evidence of dissent. The contrary view is inspired, at least in part, by the lack of a corresponding rule to control insurer conduct during the settlement of claims. If such negotiations are to remain adversarial in nature, then the regulation of bad faith must be evenhanded. This has led to moves away from a Draconian rule, in other jurisdictions (such as Australia) and in other forms of dispute settlement, including the Financial Ombudsman’s Service. This article considers the tensions between these two positions, and the likely effect on future insurance practice.

I. INTRODUCTION

The prevalence of fraudulent claims against insurers has long troubled policymakers, including the English courts.1 In 2004, the insurance industry put the level of reported insurance fraud at £200 million,2 and estimated the total cost at £1 billion.3 In recent cases, the public policy of deterring such offences has been reiterated by judges involved in criminal prosecutions for insurance fraud,4 and in civil cases by and against insurers themselves.5 This is part of a wider campaign to deter fraudulent insurance claims. Recent developments have included greater co-ordination between insurers and law enforcement

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.