The Motor Insurance Bureau of Ireland, which last year paid out €50 million to cover accidents not covered by insurance, is to tackle bogus "phantom" claims.
Currently, people are able to lodge claims with the bureau three years after accidents and often do so without producing any paperwork to prove that one ever happened. "In some cases, people claim that they were hit by a car when the reality is that they fell into a ditch on the way home from the pub," according to one insurance industry figure.
Early this month, the MIBI, which is funded from insurance premiums, decided it would refuse claims unless the accident was reported to the Garda within 48 hours. The Minister for Transport, Mr Brennan, must ratify the decision before it can come into effect, although approval is expected to be given.
Last year, €17 million of the MIBI's total €50 million bill was accounted for by cases where the alleged offending vehicle could not be traced by the Garda.
Yesterday, the head of the MIBI, Mr Michael Halligan, said a significant percentage of the 1,100 claims dealt with last year were lodged up to two years after the alleged incident. "This makes it practically impossible to do any investigation into it. It is difficult enough to investigate these cases in the best of circumstances," Mr Halligan told The Irish Times.
The 48-hour reporting rule would not be applied in cases where people were injured and hospitalised: "Obviously, people in that situation could not meet such a deadline.
"Hopefully, this will make people reluctant to make fraudulent claims. If they do so, they will making a false claim to the Garda, not just to us," he said.
The number of outstanding claims against the MIBI is rapidly increasing. Last year, the potential liability stood at €350 million, up from €260 million the year before. "We have got to protect the fund. We are here to redistribute monies. It is in everyone's interests to see that it is protected," said Mr Halligan.
Under legislation currently being prepared, all insurance claimants will have to swear an affidavit. If they are subsequently found to have lied, they will be prosecuted for perjury.
Meanwhile, Fine Gael TD Mr Phil Hogan said insurance fraud is now costing millions annually: "The escalating tide of false claims must be stemmed at the earliest possible opportunity," he said and should be prosecuted under the criminal, rather than civil law. "False claims are ultimately passed on to ordinary policy holders," he noted.