Insurance industry accused of ‘not giving a damn’ about fraud

The insurance industry has been accused of “completely exaggerating” the number of fraudulent claims it receives or not giving “a damn” about them after claiming one in five are suspicious despite only reporting a handful to the Garda.

The Oireachtas is currently examining the cost of insurance premiums and other difficulties facing the sector, such as disproportionately high awards in the courts for pain and suffering caused by minor injuries.

FBD Insurance chief executive Fiona Muldoon, Allianz Ireland chief executive Sean McGrath, and Axa Ireland chief executive Phil Bradley were before the Oireachtas finance committee on Wednesday to discuss the matter.

All three insurers pledged that if the cost of claims and awards falls, insurance premiums would also fall.

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However, none of the three would commit to the reduction being “euro for euro”, pointing to the Competition and Consumer Protection Commission’s restrictions on price signalling in the market.

The two main issues highlighted by the insurers were the level of injury awards for claims, and the extent of fraudulent claims being made. Ms Muldoon said cheap insurance was “an economic impossibility in this environment”.

All thee insurers claimed that up to 20 per cent of claims they deal with arouse suspicion in relation to fraud and require further investigation by their specialist units.

FBD chief claims officer Jackie McMahon said: “Exaggeration and how our system is feeding that exaggeration is much more significant than pure fraud. We hardly see a soft tissue injury nowadays that doesn’t involve psychological trauma attached to it.

“There is a lot more use of pain management consultants to find pain and manage it, as well as use of MRI scans.”

Mr McMahon said the emergence of “cost of care” claims for “very minor soft tissue injuries” was a new phenomenon for the company. This involved “people requiring assistance to do their gardening and domestic chores,” he said.

‘Completely exaggerated’

Sinn Féin finance spokesman Pearse Doherty queried the figures, pointing out that if FBD receives 65,000 claims per year, at least 10,000 would have to be suspicious or fraudulent to tally with the figure of 20 per cent.

However, he said just 19 cases of potential fraud were reported to the Garda between October and March.

Mr McGrath said Allianz reported 48 cases of suspected fraud to the Garda since June 2018, and that the insurer deals with 5,000 claims per year. “So, that’s about 1 per cent,” said Mr Doherty.

In Axa’s case, Mr Bradley said it also deals with 5,000 claims per year, and that it had referred 55 cases to the Garda since 2013, of which 13 brought about successful prosecutions. “That’s a fraction of a per cent,” Mr Doherty said.

“It doesn’t add up. Or if does add up, you don’t give a damn about it because you’re not reporting them to gardaí. The industry here is completely exaggerating fraudulent claims to try and justify the levels of premiums that are being charged.”

Mr McGrath said the burden of proof required to bring about a successful prosecution was “beyond reasonable doubt” and that the company did not want to waste Garda time unless there was sufficient evidence to support its claims.

Ms Muldoon echoed his remarks, and said the Garda “would not thank us if we brought every one of those claims to them without investigating further”.

Addressing the three companies, Mr Doherty said it was not up to them to make a judgment on the strength of available evidence but to “report suspected crime to the gardaí”.

Mr Bradley said he accepted the point.