Opinion: Ireland’s Insurance Fraud Party Will End With a Miserable Hangover

Straight talking from the Editor:

Nobody likes paying insurance. There, I said it, plain as a pikestaff, and just like proposing free beer on Fridays as part of my General Election campaign for the Let’s-Have-a-Party Party, that statement is guaranteed to win popular support.

But the thing about insurance is that it actually prevents all kinds of vigilante debt collection, businesses going bust, people losing all their possessions, and sometimes even their lives – all without a single penny of compensation. Basically a brutal society, where the strong take advantage of the weak. Insurance heals broken lives, it acts as a vital backstop in catastrophe events and it works as a civilising glue that underpins much of our consumer society.

That’s why the rocketing cost of insurance in Ireland, matched with a rise in fraud, is such a desperate parable of our times. About ten companies have left the Irish insurance market in 2019, and unless there is radical reform soon, all but one or two – probably backed by the Irish government themselves – will be left to insure every life, car, motorcycle, bicycle, school sports day, pub karoake night or freight lorry leaving for Holyhead.

TIME TO END THE COMPO CULTURE

The Alliance for Insurance Reform have been doing some great work in raising awareness recently, but once again the Dail has kicked the can down the road when it comes to clamping down on spurious PI and other claims settlements. The latest delaying tactic is to ask for an enquiry into PI settlements, new injury payment guidelines for judges, and then maybe a Referendum. Astonishing. Why on earth would you need a Referendum on capping whiplash claims?

Let’s be blunt, personal injury claims are a gravy train in Ireland. With some chunky chips and peas on the side. The average payout for whiplash in Ireland is 17,000 euros. In the UK it is more like £3700, and in many countrties you actually receive nothing – zero – for a stiff neck after a minor fender-bender crash. Some 350 million euros is spent by insurance companies on settling legal fees bills every year, out of a 2285 million euros worth of premium income.

Here are some recent compo cases I found when googling insurance claims Ireland;

The same address used six times in crash-for-cash claims. Woman failed to show up in court for a 60K payday, rather than answer awkard questions from Zurich’s lawyers. Case thrown out.

A multiple compo claim worth 360,000 euros, made by six people who all claimed they suffered whiplash in the same incident, was thrown out of court after a challenge from Allianz. Most of the claimants didn’t even live in Ireland.

Three generations of the same family were arrested over multiple insurance frauds. Mostly these were slip n trip cases, and fake names were used, so that in total over 60 claims could be made.

I could go on listing cases, but frankly it is bad SEO to have too many oubound links in one article, so you get the idea. For decades in Ireland, it has been the case that attempting to get a compo payout for your new car, or fund your next family holiday, is seen as fair game for a significant percentage of the population.

The insurance industry estimates that one in five claims has an element of exaggeration, or is potentially fraudulent, although Irish politicians are quick to argue that there was no hard proof for this assertion. Some even fell off a swing in shock apparently!

This isn’t exclusively an Ireland thing of course, the UK also has communitities where the same mindset holds sway; it’s free money, why not claim it?

But the difference in the UK when it comes to dealing with organised insurance fraud is that more resources within the industry, the Police, CPS and court system are deployed to fight it. In short, there is a greater willingness to pursue the fraudsters, and to use the latest technology such as data analytics software, smartphone GPS locations, social media posts, voice and behavioural analytics and so on.

Companies like LexisNexis have brilliant software packages that can spot things like repeated attempts to alter occupations or postcodes, to lower a car insurance premium. The IFED are doing excellent work in tracking down fraudsters and bringing them to trial. It was good news in October when BAE Systems announced that it was working with RSA in Ireland, who are utilising their NetReveal software to spot potential fraud.

But as Irish pubs close their doors for good, sports events are cancelled for lack of cover, childcare centres close down, and Ireland’s motorists find they have a renewal notice in excess of 1000 euros for a modest hatchback, we are reaching a tipping point in Ireland’s social cohesion. An entire way of life is changing, all for a lack of affordable insurance. That situation will lead to people risking doing business, or driving, with no cover, or fake documents, with all the consequences that naturally follow when things go wrong.

The politicians can argue endlessly about the profits that insurance companies are making in Ireland, but the harsh truth is that fewer than ten insurers effectively underwrite about 90 percent of the motor car/motorcycle market, or the entire leisure/tourism sector. If it really is that lucrative in Ireland then why aren’t fifty insurers all there battling to grab a slice of the easy pie?

People in Ireland need to be informed, by our industry, that the constant delaying and blame-game being played by politicians is leading to an inevitable conclusion, where only a handful of companies will bother offering insurance – at any price. Reform MUST happen, and soon. Those who delay such common sense reforms as caps on payouts, prosecutions for making false statements and seizure of assets after fake claims are discovered, are going to cause misery, and poverty, for those hit by uninsured drivers, or injured by businesses that have given up trying to obtain cover.