Call for insurance fraud to be specific offence

THE increasing cost of claims facing insurers is the primary cause of rising premiums, according to Irish Insurance Federation chief executive Michael Kemp.

“We conservatively estimate that one element of this cost, insurance fraud, amounted to 65m euro in 2001,” Mr Kemp said.

“As the financial burden of insurance fraud is ultimately carried by all insurance-policy holders, IIF is calling on the Government to legislate for a specific offence of ‘insurance fraud’ when the new Dáil resumes,” he said.

“A specific criminal offence of insurance fraud exists in other countries and arises if a claimant knowingly makes a false declaration to obtain or exaggerate compensation.”

Mr Kemp said because Ireland had no such law, authorities were often frustrated in attempts to prosecute for fraud or attempted fraud.

“IIF proposes that the falsification of insurance claims forms should be equated with perjury and made subject to the same penalties.

“In the case of exaggerated claims, the claim should be disallowed in its entirety if the court finds that it has been exaggerated.”

Mr Kemp said the most common forms of insurance fraud involved:

Inflating the value of items or getting cover for items that did not exist.

Inflating a claim following a genuine accident.

Staging accidents in order to make a claim.

Taking out several policies to cover the same risk in order to make multiple claims.

“While insurance companies cannot alone defeat the menace of fraud, the industry has taken a number of steps to combat insurance fraud. Principal among these has been the establishment of Insurance Link, a claims-matching computer database which helps insurers identify possibly fraudulent claims.”

All claims involving personal injury in motor accidents, employer’s and public liability insurance, household, personal accident and travel insurance, and written-off vehicles, are subject to the system. At the end of 2001, there were more than 300 cases under investigation as a result of Insurance Link scanning.

“IIF has put in place an effective system to identify fraudulent claims,” Mr Kemp said.

“What is now needed is the introduction of new laws and stiffer penalties to provide a more serious deterrent to those who would attempt to defraud insurance companies.”

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