Supreme Court Boosts Insurance Industry’s Anti-Fraud Campaign
In a decision which will be welcomed by the insurance industry as a major boost to its fight to root out fraud, the Supreme Court has ruled that an insurance company that agreed to settle a personal injury claim for almost £135,000 was entitled to tear up the deal after the full extent of the claimant’s deceit became apparent.
The company provided indemnity cover to an employer, one of whose workers was injured in a workplace accident. Liability was swiftly admitted before suspicions were raised and the man’s deliberate exaggeration of his injuries was exposed by covert surveillance. A £134,973 settlement of the case was subsequently agreed.
However, the company later gathered further evidence which showed that the man had fully recovered from his injuries a full year before the settlement. In those circumstances, a judge allowed the company’s application to set aside the settlement and awarded the man a much reduced payout of £14,720.
That decision was, however, later overturned by the Court of Appeal on the basis that the company was aware of the man’s fraud at the time of the settlement and was thus bound by its terms. In allowing the company’s appeal against that ruling, the Supreme Court found that the settlement was induced by the man’s fraudulent misrepresentation. The company was at the time unaware of the full extent to which he had exaggerated the consequences of the accident.