The term “claim farming” may sound like a light hearted phrase, but the consequences for those claimants involved in a Compulsory Third Party (‘CTP’) claim farming scheme can be costly, from both a legal and personal perspective.
What is claim farming?
Claim farming is when a member of the public who has previously been involved in a car accident, receives a cold-call or email from a “claim farmer”, enquiring about whether that person has submitted a claim under the CTP scheme of the relevant State. If not, the claim farmer offers to assist them in preparing and submitting a CTP claim on their behalf. This happens regardless of whether an injury occurred as a result of the accident.
The claim farmer often entices possible claimants to submit claims by guaranteeing or advising the claimant of a set figure that they would be entitled to.
Once a person has confirmed their details and agrees to submit a claim, the claim farmer provides their personal details to a third party, typically a lawyer or law firm, who then allegedly pays the claim farmer a set fee for providing the referral.
What is wrong with claim farming?
Whilst this may sound like a simple referral based system to provide potential claimants with legal representation, it often has the unfortunate effect of opening innocent claimants up to fraudulent claims being made on their behalf, with no certainty or guarantee that they will obtain the settlement sum first promised to them in the initial cold call.
It is important for claimants to be aware that simply submitting a claim to the CTP insurer does not automatically entitle to you to compensation under the CTP scheme. There must be a proven and well documented injury sustained from any collision and a genuine loss, such as financial, or pain and suffering, must be established.
Furthermore, the changes to the South Australian CTP scheme in 2013 has seen thresholds introduced which cap the type of damages (compensation) injured claimants can claim. These thresholds are predominately dictated by a claimants whole person impairment assessment and Injury Scale Value (“ISV”).
As these new thresholds in South Australia are now higher than in most other jurisdictions, this has meant many injured claimants are now receiving little to no compensation at the end of their claim. As such, any promise of a claimant automatically receiving a set figure often turns out to be a false promise.
Additionally, these new thresholds can also impact on the claimants entitlement to any legal costs, which has seen a reduction in the number of claimants being able to afford legal representation during the course of their claim.
Ultimately, the outcome for some victims of claim farming can be nothing more than a very large legal bill, particularly given that lawyers accepting these types of claims sometimes seek to ‘recoup’ their initial purchase fee for the claim from the claimant’s settlement sum or from the claimant directly.
How do claim farmers know that you have been in an accident and get your personal details?
At this stage, it is still unclear how claim farmers obtain the personal details of people who have been involved in a collision.
The practice appears to have originated in the United Kingdom several years ago and has since spread globally, including to Australia.
Research has shown that claim farmers use a number of methods to generate call lists. These include:
- targeting phone numbers at random;
- using various mediums to determine if you have been in a car accident, such as social media; and
- obtaining information illegally from crash repairers, insurance companies or even car rental companies.
How to tell if it’s a potential claim farmer and not someone from the insurance company?
In South Australia, there are now four main insurers that handle CTP claims – Allianz, AAMI, QBE and SGIC.
If you are contacted by someone after a collision, and they are not from any of the above insurers, and they ask questions about:
a) your personal details;
b) your type of injury; and
c) whether a claim has been lodged
It is likely that they could be a claim farmer. You will know for sure if they begin making promises about your potential entitlements (in dollar terms) or if they become quite forceful on the phone, trying to get your personal details and persuade you to lodge a claim that can be passed on to one of their “lawyers”.
What should you do if you are contacted by a claim farmer?
If you are contacted by a claim farmer, you should make detailed records of where they are calling from (if they disclose that information) and their contact number, before ending the call as soon as possible. At no point should you give out your personal details to the caller.
You should then contact the CTP Insurance Regulator (website here) or the Law Society of SA (website here) who can help you to determine the validity of the call. It is also recommended that you obtain legal advice on the call from an experienced lawyer practicing in the area of personal injury law as they will be able to tell the difference between a call from a genuine insurer who is trying to progress your claim and a claim farmer.
If you suspect that you have been contacted by a claim farmer and are unsure of what to do next, please contact a member of our personal injury team on 8414 3400 for advice.