Insurance fraudsters will face jail terms, McDowell warns

INSURANCE fraudsters will be jailed under tough laws to be introduced this year, Justice Minister Michael McDowell said yesterday.

Fraud in the industry will cost policy holders an estimated €100 million this year, according to insurers.

Mr McDowell is drafting legislation which will allow gardaí prosecute anyone who makes a false or exaggerated claim. People making fraudulent or exaggerated claims are currently unlikely to face prosecution, the Alliance for Insurance Reform (AIR) said.

"Anyone who is caught by the insurance companies making a fraudulent or exaggerated claim is generally not prosecuted because it is too difficult to secure a conviction under the current legislation," an AIR spokeswoman said.

The three main insurance companies, Hiberian, Royal Sun Alliance and AXA yesterday said they had uncovered 15 fraudulent claims in the civil courts in the past year. Ten of these have been referred to the DPP.

While there are a few cases of alleged insurance fraud before the courts, there has been just one successful prosecution to date.

The case was taken by AXA Insurance against three people who had lodged multiple claims. One of the claimants was jailed and there are charges pending against one other.

But Mr Michael McDowell is committed to bringing in laws to help insurance companies and gardaí catch more fraudsters, a spokesman said.

The laws will include:

Making a false insurance claim a criminal offence carrying the same penalties as perjury this includes jail.

Making anyone who colludes with the fraudster such as medical, financial or legal advisers open to prosecution for perjury.

Obliging anyone making an insurance claim to swear an affidavit outlining the details.

Directing that any exaggerated claim be thrown out by a court.

The Irish Insurance Federation, which is set to launch a campaign tomorrow demanding tougher laws to help crack down on fraudsters, welcomed the move.

"Insurance fraud places an unacceptable burden on policy holders because the cost is ultimately passed to them in higher premiums and we estimate that will be at least 100m this year," an IIF spokesman said.

Tánaiste Mary Harney will launch the IIF's publicity campaign, which will also seek the public's help in tracking down fraudsters.

This will include a hotline the public can ring if they suspect anyone has lodged a fraudulent claim. "The public's help will be absolutely vital to help us catch fraudsters," the IIF spokesman said.