Holiday sickness claims loophole to be closed

Travel companies have won their fight to persuade the Government to close a loophole which has led to a spike in false holiday sickness claims by UK holidaymakers.

The Ministry of Justice has confirmed today that new legislation will limit the legal costs that can be claimed in package holiday sickness claims, in the same way that costs were capped back in 2013 for personal injury claims.

This will close a loophole which the travel industry believes has helped fuel a five-fold rise in claims in recent years, costing the travel industry tens of millions of pounds.

The rules will come into force in the coming weeks in time for the next summer season.

Until now, legal costs in overseas package travel claims have not been controlled, which has meant costs for tour operators can soar out of all proportion to the damages claimed.

This has led many operators to settle claims out of court, rather than challenge them.

Uncontrolled costs have also emboldened claims management companies to encourage tourists to pursue claims, often false ones.

They have been accused of cold-calling holidaymakers and even targeting them in resort.

Justice Minister Rory Stewart said: "Claiming compensation for being sick on holiday, when you haven’t been, is fraud. This damages the travel industry and risks driving up costs for holidaymakers.

"This behaviour also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice."

Following pressure from the industry, the Civil Procedure Rule Committee has now agreed to bring package holiday claims within the fixed recoverable costs regime.

Due to be updated on Monday, the new rules will come into effect shortly.

More detail will also be published on the Government’s approach, alongside its response to a recent call for evidence.

Since October 2017, four couples have been either sentenced or ordered to pay significant legal costs by the court after making false package holiday sickness claims.

This was the result of private prosecutions brought by Thomas Cook, TUI and Red Sea Holidays.

The tougher stance has been backed up by an ABTA campaign, Stop Sickness Scams.

"Closing the legal loophole before the summer should lead to a reduction in the number of false claims," said ABTA chief executive Mark Tanzer.

"We encourage the Government to keep this matter under review and continue to pursue a ban on cold calling by claims management companies in relation to sickness claims."

TUI UK and Ireland managing director Andrew Flintham said it was a ‘great step in the right direction’ but said there was still more work to be done with help from Government and partners across the industry.