Legal Firms Being Investigated For Handling Fraudulent Compensation Claims

Solicitors firms are being advised to check the validity of compensation claims before taking them on, to ensure that they are not fraudulent. Many solicitors firms handle claims that they receive from claims management companies, and rely on them to check if the claims are legitimate.

This however is a risky strategy as solicitors can get in serious trouble for handling fraudulent claims, and therefore should complete checks themselves to ensure everything is above board. The Insurance Fraud Bureau (IFB) is the main body which investigates fraudulent insurance claims, and they are currently investigating a number of solicitor’s firms as well as claims management companies for handling fraudulent compensation claims.

The problem of insurance fraud costs millions. The IBF estimate that over £40 million pounds has been paid out to claims management companies for fake claims. Solicitors are completing all the work for accidents that never even happened and some individuals are making big profits from this scam. Making a fraudulent compensation claim can be easy. Things such as claiming that there are more people in a car that is involved in a crash than there actually were, or claiming for loss of personal possessions when they never even existed are some ways of making fraudulent claims. In order to avoid detection, insurance fraudsters often move around a lot and change their identity making it harder for them to be caught.

The IFB wants lawyers and solicitors firms to be vigilant and log any patterns of information that they notice regarding claims, to help identify potential fraud. They also need to ensure that they collect the necessary data to complete identity checks. Claims management companies should not be relied on to verify what the claimants are saying. The legal profession need to enforce strict rules and ensure that they obtain proof of identification and address for all those making a claim.

In addition law firms need to be careful about encouraging fraudulent claims. Many legal practices will offer incentives to claims management firms in order to win their work. While this is perfectly legal it may encourage fraudulent claims to be made by unscrupulous claims companies. Although the law firms may not be aware that the claims are fake, if they work with them they become guilty of handling fraudulent claims. The crunch comes on pay day when the legal firm is paid by the claims management company, for completing the work, as this could mean they have had a part in facilitating that fraud.

It is often the insurance companies who stick their hand up and say they think the claims are fake, and that more evidence should be acquired to determine if this is the case. The insurance companies have a vested interested in keeping compensation payouts to a minimum as it affects their profits, so they are keen to ensure that all claims for compensation are genuine. However it needs a united approach form all parties involved to ensure that this practice is stopped and compensation is only paid to those who truly deserve it.

Danielle is an author of several articles pertaining to No Win No Fee, Compensation Claims, Personal Injury Claims and other legal articles.