The subject of increasing holiday sickness claims among UK holidaymakers has been headline news for some time now. Finally it seems that the UK government has woken up to a loophole which means that currently there are no limits to payouts by travel companies where the incident happened on foreign soil. The recent raft of changes to UK legislation will limit UK based payouts in the future but the government is looking to replicate this for personal injury claims which occur overseas.
Massive Increase In Claims
There are serious concerns amongst the travel industry that the ever rising number of personal injury claims relating to holiday sickness will push holiday prices higher. Many also believe this could lead to resorts effectively banning British holidaymakers as the risk of being sued for holiday sickness is too great.
The Association of British Travel Agents (Abta) has been very vocal in its concerns about increasing sickness complaints citing a 500% increase since 2013. This equates to a staggering 35,000 holiday sickness claims in 2016 with an average payout of around £2100. The compensation bill hit a staggering £240 million for the UK travel industry in 2016 and, with cost pressures already hitting home, eventually this will lead to an increase in the cost of holidays.
There are a number of areas of particular concern, none more so than the increase in claims amongst British holidaymakers which has not been replicated amongst any other nationality. A number of claims lodged also go back nearly 3 years with little or no evidence to suggest that any issues were raised with holiday companies or hotel management at the time. This is yet another major flag to potential fraudulent activity because there is a three-year limit during which time claims must be lodged.
Evidence To Ministry Of Justice
While critics might suggest that the holiday industry is simply “looking after itself” after revealing that evidence about potentially fraudulent claims has been submitted to the Ministry of Defence, this is an issue for all holidaymakers. We know from the raft of claims in recent times that the average payout is around £2100 but the average cost to defend a claim works out at £3800. It is therefore obvious that any businesses hit by holiday sickness claims would reluctantly choose to pay out rather than defend even fraudulent claims at an additional cost of £1700 per claim. The fact the overall amount paid out in 2016 totalled £240 million suggests there were a lot of claims in the pipeline!
Closing The Loophole
Observers fully expect the UK government to introduce new legislation which would limit the maximum payout for UK holiday companies where sickness claims and oversees personal injury claims are concerned. We will probably end up with a system similar to that for incidents which occur on UK soil with various payout limits introduced for different classes of injury. We know from customer feedback that many unscrupulous claims management companies are cold calling individuals and “encouraging” them to pursue holiday claims which may at best be borderline dubious and at worst fraudulent.
The Ministry of Justice is expected to have this new legislation in place for 2018 and many travel companies and oversees hotel groups will be hoping it comes in before the 2018 holiday season.
Everybody Pays The Price
While some people may see bogus holiday claims as “easy money”, in the long run there is a great deal of downside for UK holidaymakers. As we touched on above, if this trend continues unabated it will inevitably lead to an increase in the cost of overseas holidays for UK holidaymakers. When you bear in mind that the UK currency has fallen by 20% since the Brexit vote last year this could not have come at a worse time. Already the UK pound has seen its spending power slashed and a further increase in holiday costs would just add insult to injury. It is the honest hard-working families who will suffer in a repeat of the historical whiplash claims trend in the UK which saw all motorists paying the price.
There is already evidence that some hotel groups are banning UK travel companies and even individual UK holidaymakers. If you look at this from a pure business point of view, the risks far outweigh the potential rewards for hotel groups. What would you do in their shoes?
Fraudulent Claims Are Illegal
Let’s not forget it is a criminal offence to lodge a bogus claim. We very much doubt any dubious individuals or claims management companies who pursue borderline or bogus holiday sickness claimants will warn their customers of the risk of prison. They are more focused on their share of any compensation and potential reimbursement of costs simply because the new regulations do not currently cover personal injury claims which occurred on foreign soil.
Should Insurance Companies Stand Up And Be Counted?
As we touched on above, the average holiday sickness compensation claim works out at around £2100 while the cost of defending such a claim averages £3800. There are obviously significant cost benefits in paying out as soon as possible but maybe it is time for insurance companies to get together and stand up against this criminal activity?
They need to push for stricter guidelines on evidence, even pressure the authorities to reduce the time limit on lodging claims and potentially bar cases where the issue was not even discussed with the hotel management at the time. These are the claims which are more likely to be bogus, those where there was no interest in raising the issue with the hotel management or even on arrival back home. Those who have been coerced into making claims years after the “event” are unlikely to have any form of medical evidence to support their claim. It may be expensive in the short term but if this issue receives maximum exposure across the media then it may encourage people to think again.
One Step Behind The Scammers
Time and time again the fraudsters and the scammers seem to be one step ahead of the regulators and the courts. There must be thousands of potentially fraudulent holiday sickness claims lodged each year where the balance of evidence does not favour a payout. However, the unscrupulous personal injury claim management companies are well aware of the maths and the fact that any business would be foolish to take a moral approach.
Over the last few months we have seen court cases in the UK, indeed there were two former police officers found guilty just last week, where criminal gangs have been found guilty of illegally obtaining leads and charging monies for them. One major issue is the fact those tipping off the management companies can earn tens of thousands of pounds a year which, in the eyes of some people, is worth the risk of being jailed. Until the potential rewards are reduced and penalties, such as jail time, extended there will always be a constant flow of individuals willing to sell their souls.
