On 24 July 2018, Queensland Parliament announced it would introduce legislation to address the growing problem of claim farming in Queensland. The proposed amendment Bill (Motor Accident Insurance and Other Legislation Amendment Bill 2019), was tabled in Parliament by the Honourable Jackie Trad MP on 14 June 2019 and proposed various amendments to the Motor Accident Insurance Act 1994 (Qld) in order to address the issue of claim farming. The Bill was passed on 26 November 2019 and the amendments came into effect on 5 December 2019.
These amendments were achieved after extensive communication with the Queensland Law Society, which campaigned for amendments to be made. The Society consistently raised concerns about the practice and was heavily consulted about the draft legislation, made submissions to the Parliamentary Committee Inquiry and appeared at the public hearing.
The policy objective of the amendments is to stop claim farming (a term used to describe the process of anonymous cold calls to members of the public to find out whether they, or a family member, have been involved in a recent motor vehicle accident). Once various personal details have been drawn from the recipient of the call, the claim farmer then on sells the ‘claim’ to law firms or other claims management service providers. These claims are then dealt with directly under the Compulsory Third Party (CTP) scheme.
Claim farmers often hide behind the guise of the Motor Accident Insurance Commission, an insurer, the CTP Regulator or other government agencies. They use aggressive tactics and deceptive behaviour to harass people to elicit their personal information, often promising quick and easy compensation. Research collected by the Commission indicates that over 1.5 million Queenslanders have been targeted by claim farmers.
The Commission has responded to over 1000 complaints of claim farming incidents. Although only a small minority of legal professionals are suspected of being engaged in such activity, they play a crucial role in enabling continuation of claim farming. As such, the new legislation endeavours to cease all claim farming activity in Queensland by making it illegal.
New Obligations for Legal Practitioners
The new legislation serves to achieve its policy objective by, firstly, outlawing the activity of claim farming and imposing penalties on those who engage with claim farmers. Secondly, the Act introduces new processes of certification at various stages of a claim for legal practitioners as well as claimants.
Practitioners will be required to complete a law practice certificate at the commencement of a claim or at settlement certifying that the claim was sourced legally and identifying the practitioners handling the claim.
The various forms required throughout a claim have also been updated. The updated Notice of Claim forms allow CTP insurers to gather more information at the start of a claim in order to better identify referral relationships. The new forms can be found on the Commission's website.
The amendments have made it an offence not only to engage in the act of claim farming, but also to buy claims from claim farmers, with strict penalties applying. The requirement to provide a law practice certificate at various stages of a claim assists in the verification and certification of claims. Finally, the updated forms allow CTP insurers to gather more information to assist in verification of claims. Overall, the new legislation ensures a consistent and firm industry response to claim farming activity.
Luke Murphy – Partner, MurphySchmidt Solicitors
Imann-Janna Potgieter - Research Cadet, MurphySchmidt Solicitors< Back