False compensation claims by British holidaymakers is the burning issue this summer. Last year, the number of false claims which Majorcan hoteliers had to settle rose by 700 per cent and cost them a total of 50 million euros, never mind what they had to pay out for genuine claims. Hoteliers here in Majorca and across Spain have had enough and are taking action.
The matter was raised by a leading hotelier at the Bulletin’s Brexit breakfast with the British ambassador, Simon Manley, last week. He made it quite clear that the British government, or rather the Ministry for Justice is well aware of the problem and is taking action to address the problem. Manley underlined that making a false compensation claim is a crime in the United Kingdom and the matter is being dealt with.
But any new legislation in the UK will not come into force until the autumn and hoteliers are concerned about what is going to happen this summer, with a growing number of CMC, compensation management companies, encouraging false claims on a no-win no-fee basis. Their main targets are holidaymakers staying in all-inclusive hotels, a reason being that because guests tend only to eat in, hotel catering is easier to pinpoint as being the cause of alleged sickness.
Some of these compensation companies deploy people in key resorts soliciting business. This is one thing Inma Benito, the president of the Majorcan Hoteliers Federation, intends to eradicate this summer, and she has been given the power by the authorities to do so.
Madrid-based legal practice Rogers & Co, a law firm that acts on behalf of the insurance industry, has said that Spanish hotels may increase the price of these traditionally low-cost holidays for Britons or do away with all-inclusive packages for Britons, because that they are being "held hostage" by UK visitors.
Abta, the Association of British Travel Agents, is working with its members to fight the growing problem of fraudulent claims made in relation to British holidaymakers falling ill on package holidays. Data from Abta members show a 400% rise in the number of holiday sickness claims made since 2013, yet sickness levels reported in-resort have remained stable.
Abta has called on the Ministry of Justice to change the law to make it harder for law firms and claims management companies to profit from fraudulent or exaggerated holiday sickness claims. Under current UK law there is no set limit for lawyers’ fees regarding personal injuries that happen overseas. This means that it is often more expensive for a UK tour operator or foreign hotel to defend a fraudulent claim than it is to settle with the claimant. Abta has called for a rule to be introduced to limit the legal fees that solicitors can charge for overseas personal injury claims, for people claiming awards of up to £25,000. Abta has also asked legal regulators in the UK to take action against claims firms that are encouraging holidaymakers to make fraudulent or exaggerated claims. It has provided the regulators with evidence showing the growth and volume of claims to help them take action. The claims management regulator is now carrying out an official investigation into this issue.
In addition to calling for legal change, Abta is working to advise its members and hotels on how to minimise the potential for claims. The firms that are encouraging these fraudulent claims contact customers by phone or on social media, telling people that if they have fallen ill on a package holiday in the last three years they are entitled to compensation because the travel industry has set up a fund to pay customers. There is no such fund and many people do not realise that this will actually cost their tour operator and the hotel where they stayed thousands of pounds or euros. These costs will eventually be borne by future customers.
Mark Tanzer, the Abta chief executive says: "Spain is the biggest destination for the British travel industry and we are very worried about the damage fraudulent holiday sickness claims are causing to the reputation of all British holidaymakers, the vast majority of whom would never submit a false claim, as well as the cost to industry. We are employing a number of approaches to address this problem. These include calling for changes to the law, working with regulators to crack down on illegal practices and giving advice to hoteliers and tour operators on record-keeping in-resort. It is unacceptable that dishonest firms are able to profit from encouraging fraudulent claims."