The travel industry is campaigning against a rise in fraudulent holiday sickness claims. This will help deter customers from claiming and confront claims management companies (CMCs) acting unlawfully.
The Association of British Travel Agents (ABTA) is highly concerned about holiday sickness, which has become a new area of personal injury claims. Fraud is believed to be increasing in the travel insurance industry, where tens of thousands of UK tourists have put in for compensation in the past year for food poisoning claims despite sickness levels in resorts staying stable. According to ABTA the claims generally involve those on all-inclusive holidays.
According to the Compensation Recovery Unit, the numbers of personal injury claims recorded as “other” rose by 61.8% from 13,434 to 21,739 year-on-year in 2016–17, primarily due to the rising number of holiday sickness claims.
The rise has been driven by CMCs that are encouraging customers to claim when they get back from holiday. The industry has also seen evidence of touts waiting outside resorts to encourage customers to make claims.
Travel firm TUI (formerly Thompson) stated it experienced a 15-fold increase in claims for holiday sickness over the last year, with claims costing between £3,000 and £5,000 – more than the cost of the holidays themselves.
The rise in these types of claims has been caused by CMCs looking to encourage fraud in other areas, as the government is reforming the motor insurance market to make it harder to commit whiplash fraud. There is a cap on legal fees that can be charged by law firms at home, and so overseas cases are now being pursued.
In response to these concerns ABTA has launched a campaign called Stop Sickness Scams. The industry is calling for government help. It requests that the government closes the legal loophole allowing firms to profit from these claims, and asks for a limit to be placed on legal fees in line with other sectors.
A warning has also been given to holidaymakers regarding the consequences of making fraudulent claims, stating they could face up to three years in jail abroad if found guilty of fraud. Travel companies may take the issue into their own hands by no longer offering all-inclusive holidays to British tourists. The Foreign Office has also advised against tourists making fraudulent claims.
It is forecast that the issue will not last beyond 6 to 12 months as the rise is primarily due to non-compliant behavior among CMCs with regards to the referral fee ban. The way claims are generated is unlawful, and a clampdown will mean that the issue will be tackled swiftly.
By Danielle Cripps, General Insurance Analyst