Fraudulent and exaggerated claims cost NSW motorists as much as $400 million per year. This is estimated to add around $75 to the cost of each Green Slip.
Fraudulent claims can take a variety of forms including staged accidents involving multiple vehicles and people falsely claiming to be passengers in vehicles involved in an accident.
Exaggerated or embellished claims arise from genuine accidents but where the extent of injuries claimed far exceeds what would be expected in the circumstances.
There is also increasing evidence of people involved in road accidents being approached by people seeking to manage and inflate claims.
Of even greater concern, NSW has become the target of ‘claims farming’ involving unscrupulous groups who then try and sell a claim on to a law firm.
Three years ago, Olivia was involved in an accident. The traffic lights turned green and she was making a right turn when another vehicle ran the red light and crashed into the side of her car. Olivia had a cracked rib, whiplash and hurt her foot. As the other driver was at fault, their CTP insurer managed her claim.
“The insurer was great. They approved all my treatments, they took care of my medical expenses and I wasn’t out of pocket. And the claim was closed.”
Then Olivia started getting phone calls from a call centre in India.
“They said, we know you’ve been hurt in an accident. Do you know you can get more money? We can give you free advice and we can put you through to a law firm.”
Olivia asked where they got her details from but they wouldn’t tell her.
“They have been pestering me for two years after the car accident. They call me on my mobile phone, they call me at home.”
“I literally scream at them like a crazy woman to stop calling me. They stopped for a while. And then they started again, until my husband answered one day.”
“All insurance policies have become so expensive because people are milking the system. I was hurt, yes. My treatment was done and medical bills paid. I didn’t need to make any further claims.”
Note: Olivia’s name has been changed for privacy reasons.
How reforms will address fraud
Our current Green Slip scheme, which is largely based on common law to award lump sum payments of compensation, is vulnerable to fraudulent behaviours and the risk of exaggerated claims.
Under the reforms, a defined benefit scheme for minor injuries such as soft tissue and minor psychological injuries, will reduce the opportunity and incentives to abuse the system. This will directly reduce Green Slip costs for all vehicle owners.
We will also be given increased powers for fraud investigation and prosecution, with enhanced penalties for people lodging fraudulent and exaggerated claims.