Government pledges to overhaul injury claims system

Judges and the legal profession are to be asked to explain the high costs of compensation claims as TDs attempt to uncover reasons behind costly insurance premiums faced by consumers.

Government pledges to overhaul injury claims system

Judges and the legal profession are to be asked to explain the high costs of compensation claims as TDs attempt to uncover reasons behind costly insurance premiums faced by consumers.

Insurance companies today told the Oireachtas Finance Committee that fraudulent claims made up some 20% of their total case load.

But the size of pay outs for claims as well as the legal fees around are pushing up the price of insurance cover, TDs heard.

The government has pledged to overhaul the injury claims system by getting judges to use new guidelines for awards. Legislation for this is passing through the Dáil and Seanad.

Committee chairman John McGuinness said judges and lawyers would be written to and asked to come in and explain the high level of injury awards and related costs.

“If they want to respond, they can give their side to it,” said Mr McGuinness.

Three insurance firms appeared before the committee and gave details about costs, fraudulent claims, profits and ways to help reduce premiums for consumers.

FBD and Allianz both said they estimated that fraudulent and exaggerated claims made up 20% of cases that came before them. Axa Insurance said fraud made up 4% of its claims.

However, Sinn Fein's Pearse Doherty took issue with the claim and revealed to the committee that just 19 cases of insurance fraud were reported to gardai between October and March last. He said he wanted to get the real facts instead of “spin” from the industry.

“It doesn't add up,” he told the firms.

The industry was “completely exaggerating fraudulent claims” to justify premiums and increases, he argued. He told executives from the three firms that they were either over-estimating the levels of fraud or failing to report them to gardai.

The firms told TDs that the high level of compensation awards granted in the courts and legal costs associated were the main reasons why insurance cover was so costly in Ireland.

High costs in particular with soft tissue injuries were a problem, said FBD CEO Fiona Muldoon. And the high levels of awards provided “an incentive for people to have a go” at claims, TDs were told.

Ireland could change this or remain the “most expensive player in Europe,” she added, as cheap insurance cover was currently “impossible in this environment”.

All three firms pledged to the committee that if the current high costs of awards were to be reduced, the savings would be passed on to consumers.

FBD gave examples of recent injury claims paid out. These included €60,000 for work-related stress where the separate legal fees amounted to €73,410, €13,500 for a slip in a car park with €16,220 in costs and €81,313 for an equine-related employment case where legal costs amounted to €108,918.

Axa insurance CEO Philip Bradley said the insurer was currently facing 60 claims in excess of half a million each.

FBD also said it made huge losses from insuring marts, but that it was the only firm providing cover for them.

It was a “heavily loss-making” sector where the firm pays out €1.60 for every euro collected.

Fine Gael's Kieran O'Donnell questioned why premiums were not coming down further, especially if the firms were exceeding their targetted profits.

“You can't just blame legal fees and fraud,” he told the three firms.

Fianna Fáil's Gerry Horkan said the high cost of insurance for playgrounds, pubs and restaurants was changing how people lived their lives.

He also was critical of firms not reporting more fraudulent cases to gardaí.

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