Feel, an emergency stop has to be just that - an emergency. Slamming on your brakes for a plastic bag (even if you thought it was something else) would mean you were at least partially at fault for an accident. There are established principles from settled RTA cases already litigated that have established that you can carry out an emergency stop to avoid hitting another car, a person, even a dog. Cat - no. Badger - no. Plastic bag - no. I think the Highway Code also covers the circumstances that are acceptable for an emergency stop so the knowledge/information is freely available for us all to know what's ok and what isn't.
In your case, if someone had hit you when you stopped suddenly, you would likely have been deemed partly at fault. It could be argued that you were not sufficiently aware of your surroundings to ensure you were stopping for the right reasons. In some instances, the expected standard of driving in a particular set of circumstances that is deemed 'safe' bares little relation to what most people would do i.e. if you have to crawl along a particularly hazardous road at 2 mph to avoid having any kind of accident then anything above that speed means you'd likely be at least partly at fault because we all should adapt our driving to the conditions of the road or a particular set of circumstances.
I've dealt with cases where the fraudulent driver has been driving erratically, speeding up, swerving, stopping suddenly etc. and PH's see this yet instead of slowing down/pulling in to avoid any incidents we'll get people who try to get past that erratic driver & they get suckered into an induced accident. They are still wrong to try doing that, and it's usually when people lose patience that it'll happen, but a good statement that describes the lead up to an incident detailing that sort of thing is a good base for insurers to investigate from and can result in the 'inducer' being caught out.
It is very difficult to prove fraud. It often comes down to the quality of evidence that we can gather, and even then when the case goes to court it's still never a given that you'll win. My point is, having a dash cam might not give you the evidence you would think would prove fraud but it can give you other details/ info that can be really vital in proving a case against a fraudster. So while you might not have sight of what was on the road ahead of the OP's BIL to prove the badger claim is bogus, you might have footage of him driving in an erratic manor, trying the sudden stop a few times until it actually worked. He would likely have been checking his mirrors/rear view frequently, much more frequently than any normal driver. There could be a passenger continually checking behind leading up to the collision.
If the OP did report this & the claim went to the fraud dept to investigate then at least they'd have a chance to gather the evidence that might get the claim thrown out. No report means that unless the 'tailgater' has had concerns at the time then it'll likely slip through the net.