horwich farrelly

Horwich Farrelly urges cruise operators to adopt a zero tolerance approach to fraudulent holiday illness claims

August, 9, 2018

Horwich Farrelly is urging cruise operators to adopt a zero tolerance approach to fraudulent holiday illness claims, as claims management companies (CMCs) shy away from claims arising from all-inclusive package holidays.

With bogus holiday sickness claims reported to be costing the travel sector £50 million per year, leading insurance fraud law firm, Horwich Farrelly, is warning cruise operators that they are not exempt from this type of claim. Crucially, the cruise market could be an increasing target for fraudsters, as new rules close the door on fraudulent holiday illness claims made under the Package Tour Regulations (PTR).

Cruise ship in port

Earlier this year, ABTA reported that the number of holiday sickness claims had increased by 500% since 2013, with the same report also disclosing that 1 in 5 adults had been approached whilst on holiday to make a compensation claim for holiday sickness. The claims management companies involved were encouraged to ‘farm’ claims because of the high legal costs that could be recovered in successful cases. Following lobbying by the industry the Government introduced new rules in May for gastric illness claims made under the PTR, with a lower, fixed-recoverable-legal costs regime applying. This has removed a significant incentive for claims management companies, many of whom have exited this particular market.

Significantly, however, the new rules only apply to gastric illness claims. They do not apply to other injury or illness claims brought under the terms of the Athens Convention applying to cruise holidays.

Mark Hudson, Head of Counter Fraud at Horwich Farrelly comments: “In the past, when placed under pressure in one area unscrupulous claims companies have turned their attention to others, encouraging the public to pursue claims with promises of ‘easy money’ to be had. Horwich Farrelly is therefore urging cruise operators to follow the air package holiday industry’s lead by adopting a zero tolerance approach to tackling bogus or dishonest claims.”

Horwich Farrelly believes it’s proven zero tolerance approach to fraud – which it has already been applying to cases for air package holiday companies – could work well for cruise operators too.

For the last 18 months, the firm has been working with the travel industry to investigate potentially fraudulent claims, as well as provide a robust defence for any cases taken to court. As a result, it has successfully defended more than 2,700 claims as well as tackling professional ‘enablers’, including doctors, solicitors and Claims Management Companies (CMCs) that are reported to be behind the increase in claims volumes.

“Unscrupulous claims companies fool travellers into thinking they can win back the cost of their holiday, and often more than that, by making bogus claims for holiday sickness. However, make no mistake, these companies are in fact helping British tourists commit fraud. The extension of fixed recoverable costs to package holiday sickness claims will undoubtedly play a very important part in combatting fraud in this area. However, the cruise market remains at risk of rising claims if fraudsters start to look for a new avenue.

“These types of claims, if successful, typically cost several thousand pounds; the savings for cruise companies could therefore be substantial. We are delighted with the results we have already achieved working alongside the travel industry and are keen to ensure the cruise sector can also reap the benefits by ensuring that any holidaymaker or professional enabler making a dishonest claim will pay the price.”

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