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Insurers “emboldened” to fight fraud after Supreme Court victory

3rd Aug 2016

Insurers have vowed to seek to overturn personal injury settlements if they believe fraud has taken place, following a landmark Supreme Court decision.

Ruling in Hayward v Zurich, the court ordered a claimant to repay around £120,000 after his claim against an insurer was proved to be false.

The claimant, named as Mr Hayward, had settled for £134,973 after apparently suffering back injuries following an accident at work. Overturning a Court of Appeal judgment from last August, the Supreme Court set aside that agreement after Hayward’s neighbours disclosed evidence that he had fully recovered. Hayward ended up with £14,720 in damages.

Insurers told the Gazette that they will not actively seek out dishonesty in past settlements, but will be emboldened to fight claims if new evidence comes to light.

While similar cases might not be imminent, experts say Hayward is of great significance for the future of personal injury law.

“This decision confirms that fraud does unravel all,” Catherine Burt, spokesperson for the Forum of Insurance Lawyers and head of counter-fraud at national firm DAC Beachcroft said. “Insurance companies will be free to revisit settlements made before hard evidence of fraud comes to light and will be able to pursue those who thought they had got away with it.”

Zurich went to the highest court after the Court of Appeal ruled Hayward’s settlement should stand, saying the insurer went in with its “eyes open” and citing the “wider principle” of finality of settlements.

But five Supreme Court justices unanimously overruled that judgment.

Lord Clarke said it could not be fairly said that Zurich had full knowledge of the facts, and that in some cases the insurer could suspect a representation is false but nevertheless be held to rely upon it as a matter of fact.