Insurance fraudsters to be jailed for up to 10 years

‘Compo chasers’ will be jailed for up to 10 years for making false insurance claims, under new laws to be announced this morning.

The legislation will also provide for exaggerated claims for compensation to be thrown out of court with no payment at all.

The laws will force claimants to swear an affidavit at the start of their case and then if the claim is found to be false, the insurance fraudster will face prosecution. The offence of putting in a false claim will effectively be treated as perjury.

Under the law, anyone who colludes with a fraudster such as medical, financial or legal advisers will also be open to prosecution for perjury.

Minister for Justice Michael McDowell will publish details of a bill this morning, in which his officials radically reformed the law on personal injury claims.

The legislation to be passed later this year is part of the Government’s overall plan to tackle compensation culture and reduce insurance costs. Tánaiste Mary Harney has made this her top priority as Minister for Enterprise for the coming years.

The reform of the personal injury claims law will run in tandem with the setting up of the Personal Injuries Assessment Board (PIAB) - a system to award compensation without going to the courts, thus cutting down on legal costs.

The law establishing the PIAB will also be passed later this year.

According to the insurance industry, compensation fraud will cost policy holders an estimated €100 million this year.

The Irish Insurance Federation recently launched a campaign seeking the public’s help in tracking down fraudulent claimants. The hotline to report suspected fraudsters received 500 calls in its first three months.

The country’s three main insurance companies, Hibernian, Royal Sun Alliance and AXA say they have uncovered 15 fraudulent claims in the civil courts in the past year and 10 of these cases have been referred to the Director of Public Prosecutions.

But while there are a number of cases of alleged insurance fraud before the courts, there has been just one successful prosecution.

The Alliance for Insurance Reform says that at present people making fraudulent claims are highly unlikely to face prosecution as it is too difficult to secure a conviction.