Bogus claims to cost insurance industry E100m by year end

BOGUS claims will cost the insurance industry over E100 million this year despite a concerted campaign to crack down on fraud.

The rate of fraud is 25% above the European average, according to a study by the Comité Européen des Assurances (CEA), the umbrella body for the insurance industry in Europe.

A spokesperson for the Irish Insurance Federation said yesterday that the final figure for fraudulent claims in 2003 was likely to be in the order of E110m, representing 2.5% of total premiums. This compares to a European average of 2% of claims.

His comments come in the wake of Monday’s High Court hearing in Dublin which involved a major alleged insurance fraud.

Two insurance companies are seeking the return of over E700,000 paid to a husband and wife who claimed she had breast cancer. According to an informant, the woman did not have breast cancer but her mother did.

The court was told that tissue from the mother, who lives in Egypt, was brought to Ireland and used to substantiate a false claim on behalf of her daughter. The informant alleged that a sample of the mother’s tissue may have been submitted for analysis to the Mater Private Hospital in Dublin.

Some E731,000 was paid to Emad and Gehan Massoud of Wood View, Brownstown, Rathoath, Co Meath, as a result of the claim.

Scottish Provident Ltd, which reported the matter to the gardaí, claims to have paid out E685,658 while New Ireland is looking for the return of E45,338 it says it paid the couple.

The informant who reported the alleged fraud is exactly the kind of person the insurance is targeting in its latest attempt to slash the number of bogus claims.

The service, Insurance Confidential, was set up in February and so far over 1,000 cases have been reported.

The majority, 63%, were motor claims with 22% non-motor personal injury (employer’s and public liability); 8% property and 7% other types.

“The Insurance Confidential telephone helpline has received reports of insurance frauds from people connected to the suspected fraudster in a number of ways, including relatives and friends, neighbours, customers, employers and ex-employers, employees and work colleagues,” said IIF chief executive Michael Kemp.

The level of public interest in the phone line had made it a resounding success, he said. There was a strong level of support for the federation’s anti-fraud campaign and a real public desire for action against fraudulent claimants.

The IIF spokesman said it was hoped that, in tandem with safer roads and a reduction in claims, reduced fraud would help in particular to bring down the cost of motor insurance.

However, the industry is anxious for the enactment of the Civil Liability and Courts Bill 2003, which is designed to radically reform the law on personal injury actions.

The Government approved the heads of the bill last July and a spokesperson for the Department of Justice said yesterday that it was hoped the bill would be signed into law early in the New Year.