Insurance Fraud and the Role of the Civil Law

Abstract

Two UK Supreme Court decisions have considered insurance fraud. The first, Versloot Dredging BV v HDI-Gerling Industries Versicherung (The DC Merwestone), concerned the use of a fraudulent device being harnessed to support a legitimate claim which, in the view of the majority, was an area of insurance law in need of re-evaluation. The second, Haywood v Zurich Insurance Co, concerned the use of fraud to increase the settlement paid by the insurer and whether an insurer, which suspects fraud but has nevertheless chosen to settle a claim, is entitled to set aside the settlement under the tort of deceit where it subsequently discovers proof that it was in fact fraudulent. This case note examines not only the legal implications of the decisions and their likely impact on industry practice, it also focuses on the broader issue of the proper province of the civil law and whether general deterrence can be justified as a proper objective where the criminal law is deficient in punishing fraud because of its higher standard of proof.