Travel industry campaigning against the growing problem of bogus holiday illness claims today triggered a “decisive” government crack down.
Abta, Jet2holidays and Tui all welcomed the Ministry of Justice’s action to fix the legal costs that can be claimed in package holiday sickness claims which have cost the sector millions of pounds.
The action will close a legal loophole which helped fuel a soaring number of false claims highlighted by Abta’s Stop Sickness Scams campaign as well as Travel Weekly’s Fight Fake Claims campaign.
The curbs will come into force in the coming weeks, ahead of the peak summer season.
Until now, legal costs in overseas package travel claims have not been controlled. This has meant costs for operators can spiral out of all proportion to the damages claimed.
Many travel companies have had to settle holiday sickness claims out of court as a result, rather than challenge them.
This has been a major factor in a rise in claims which has sparked concerns that the UK’s reputation overseas is being damaged and that British tourists will face higher package holiday prices.
Today’s move comes against industry estimates of a massive leap in claims, which Abta estimated to have soared by as much as 500% from 5,000 in 2013 to 35,000 in 2016.
Four couples have been either sentenced or ordered to pay significant legal costs by courts since last October after making false package holiday sickness claims. The cases were private prosecutions brought by Thomas Cook, Tui and Red Sea Holidays.
Justice minister Rory Stewart said: “Claiming compensation for being sick on holiday, when you haven’t been, is fraud.
“This damages the travel industry and risks driving up costs for holidaymakers.
“This behaviour also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice.”
Abta chief executive Mark Tanzer said: “We are pleased that the Ministry of Justice has responded to the concerns and evidence raised by Abta and our members, by taking firm action on this issue.
“Closing the legal loophole before the summer should lead to a reduction in the number of false claims.
“We encourage the government to keep this matter under review and continue to pursue a ban on cold calling by claims management companies in relation to sickness claims.”
Jet2.com and Jet2holidays chief executive Steve Heapy said: “British holidaymakers have every right to enjoy their well-deserved holidays without the risk of being duped into bringing fraudulent sickness claims by unscrupulous businesses.
“This is why Jet2holidays has campaigned on this issue and has been working hard to protect our customers against the risks of making false claims, even deploying private investigators to catch touts in resorts.
“We welcome the news that the Ministry of Justice has taken decisive action to close the current legal loophole by introducing the fixed costs regime ahead of the busy summer season, in response to the concerns and evidence provided by Jet2holidays.
“In some quarters Britain has been referred to as the ‘fake sick man of Europe’, and a cure for this sickness has now been found.”
He added: “We urge the government to follow up this welcome news by banning the practice of cold calling in relation to sickness claims, as we know that some unscrupulous claims management companies are attempting to mislead customers through this dishonest activity.
“We have fought hard to ensure that European resorts continue to offer the best value all-inclusive packages for British travellers, and we are delighted to hear that the Government is on the side of holidaymakers too.”
Andrew Flintham, managing director of Tui UK & Ireland, said: “We welcome the government’s move to close the loophole on fixed costs when it comes to holiday sickness claims. We’ve seen a dramatic rise in fraudulent and exaggerated claims over the past few years which without continued intervention represents a real threat to the travel industry and honest holidaymakers.
“This is a great step in the right direction, however, it’s definitely not the end of the story and there’s still more work to be done with help from Government and partners across the travel industry.”
While uncontrolled costs have discouraged operators from challenging claims, they have also emboldened claims management companies to encourage tourists to pursue holiday sickness compensation, with touts reportedly operating in European resorts, according to the Ministry of Justice.
Ministers asked the Civil Procedure Rule Committee, which is responsible for setting rules on legal costs, to help tackle this by looking at bringing package holiday claims within the fixed recoverable costs regime.
This would mean operators would pay prescribed costs depending on the value of the claim and length of proceedings, making defence costs predictable and assisting travel firms to challenge bogus claims.
The committee has now agreed to change with rules to be updated on Monday, and will come into effect shortly.
More detail will also be published on the government’s approach, alongside its response to a recent call for evidence.
The action comes as part of efforts to tackle the country’s compensation culture, including a recently introduced Civil Liability Bill which includes measures to reduce the unacceptably high number of whiplash claims and allow insurers to cut premiums.
Other reforms include a forthcoming ban on cold calling and tougher regulation of claims management companies.
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