By Robert Maskrey, Regional Director at Charles Taylor Adjusting. For Insurance Day, Viewpoint: Insurers must prepare for a surge in casualty claims this summer.

With photos of the queues at airports and ports, it is clear millions are making up for lost time and heading off on holiday after two years of interrupted travel.

However, with inflation soaring and murmurs of a recession coming, insurers and tour operators should prepare for a surge in spurious and fraudulent claims.

Over the past couple of years, the number of claims against tour operators have dropped to only a few a month, whereas previously we were receiving several hundred a year. With foreign travel now on the increase, claims should start to pick up again, although whether they get back to pre-pandemic levels may take some time as some people are reluctant to travel, some cannot afford a holiday due to the cost-of-living crisis and some people are restricted to certain countries if they have not been vaccinated.

However, historically, we see an increase in speculative and fraudulent claims during times when there is an economic downturn. We are confident there will not be a surge event on the scale of the fraudulent food poisoning claims of a few years ago, but those types of events are hard to predict. We do not anticipate any change because of Brexit, as this has not affected travel, at least where holidays are concerned.

One area where we anticipate there could be an impact is in claims arising from accidents abroad where the UK tour operator has potential liability by virtue of EU legislation, enacted in England and Wales as the Package Travel & Linked Travel Arrangements Regulations 2018.

Liability in these cases is determined by the standards applying in the country where the accident took place, even though the claim is made in England or Wales. This can be a source of dispute between the claimant and the insurer or tour operator, particularly where the laws and standards around health and safety differ between territories.

One case involved a woman who suffered serious injuries, including paralysis below the waist, after descending a water slide while on a package holiday supplied by a UK tour operator. Solicitors instructed by the claimant pursued a claim against the tour operator and relied on the Package Travel & Linked Travel Arrangements Regulations 2018.

Allegations against the hotel/water park operator included a failure to warn, inadequate instructions and a failure to properly train staff. This was a particularly sensitive claim given the injuries the woman had sustained and the impact on her. However, liability was to be determined on the basis of the standards applying in the country where the accident occurred.

The authority for applying local standards in cases of injuries sustained while on holiday, is the case of Wilson v Best Travel Ltd (1993) (1ER353), in which the court said: “There are bound to be differences in the safety standards applied in respect of the many hazards of modern life between one country and another, the duty of care of a tour operator is likely to extend to checking that local safety regulations are complied with. Provided that they are, I do not consider that the tour operator owes the duty to boycott a hotel because of the absence of some safety feature which would be found in an English hotel, unless the absence of such feature might lead a reasonable holiday­maker to decline to take the holiday at the hotel in question.”

Local standards

The decision in the Wilson v Best Travel Ltd case was reinforced in the Court of Appeal in the case of Lougheed v On The Beach Ltd (2014) EWCA Civ 1538 and held that the key test for liability in cases against tour operators remained the question of compliance with local standards.

In cases such as these, where the injuries are life-changing and vast sums are being claimed, it is wise to work with a specialist. Loss adjusters can investigate and advise on liability, to ensure that genuine claims are settled promptly, and spurious claims are challenged sensitively. In this case, the adjuster undertook detailed enquiries, including attendance at the accident scene, to obtain sufficient evidence to consider a defence.

In view of the claim’s potential and the issue of local standards, an expert report was obtained to support the defence of compliance with the standards operating in the country where the accident occurred. The result was the claim was successfully defended and the tour operator was not deemed liable for the woman’s injuries in this case.

This case is an extreme example of a casualty claim, where the costs claimed were in the hundreds of thousands of pounds. However, even small “slip and trip” claims can add up to similar amounts when claimed en masse. Insurers and tour operators need to prepare not just for an increase of claims, but also prepare for potentially more fraudulent and spurious claims as our economy comes under pressure.