Eddie Hobbs: Here's how Helen McEntee can tackle bogus insurance claims

In this open letter to the new Justice Minister, Eddie Hobbs, sets out 10 things he feels Helen McEntee should do in office to deal with the scourge of bogus and exaggerated personal injury claims.
Eddie Hobbs: Here's how Helen McEntee can tackle bogus insurance claims

Each year, there are over thirty thousand personal injury claims but only 21% are settled by PIAB. 5% go fully through the courts but 74% are settled by insurers or get dropped. Photo: iStock

Dear Helen,

Did you know that the cost of living in Ireland is back near the summit of the EU and we are now 25% more expensive than Germany and 34% more expensive than the EU average?

Not part of your watch in Justice, some might think.

But consider this: hotels, restaurants, pubs and fast-food outlets and many more businesses are forced to hand over up to 10% of revenues to a powerful ecosystem.

An excessive chunk of the tax they collect from consumers ends up with the three amigos in Dodge City; dodgy claimants, lawyers and insurance executives. By dodgy I mean everything from over-stated and bogus claims to criminal fraud.

The same tax is also added to motor insurance premiums. This isn’t the stuff of Hollywood-style collusion, it is simply how the ecosystem itself is incentivised.

Billions are at stake. About €2.3bn, enough to build another Children’s Hospital is paid yearly in liability and motor insurance, 25% of it for liability cover and 75% for motor insurance, but only about one Euro in eight gets paid back in claims in the Courts or the Personal Injuries Assessment Board (PIAB).

Much of the missing loot goes through the revolving door into direct settlements by insurers terrified of tangling with the Irish legal system and the rest goes to operational costs and profits.

Each year, there are over thirty thousand personal injury claims but only 21% are settled by PIAB. 5% go fully through the courts but 74% are settled by insurers or get dropped. 

For six years after the Personal Injuries Assessment Board (PIAB) got going in 2003 motor insurance premiums fell by 46%.

It looked like the game had changed but it hadn’t. Premiums skyrocketed thereafter and are back to old levels in real terms.

Photo: Gareth Chaney/ Collins
Photo: Gareth Chaney/ Collins

Roll forward to today and motor claim cases bypassing PIAB through lawyers to go fully through the courts take up to four years longer to settle, but broadly get the same outcomes as PIAB with one key difference - legal fees that are equivalent to 63% of injury awards make their way to lawyers bank accounts for awards under €100k in litigated cases.

Overarching the ecosystem is the size of awards given by the Irish judiciary.

Minor soft tissue awards are averaging €17k in Ireland, 15 times more than in Germany.

You can get up to €21k for a sprained thumb, more if your lawyer can make a song and dance about how it has had a devastating effect on your violin lessons, your golf swing, or putting on high heels.

It’s a blight on society and the economy, it adds huge costs to business, closes many, restricts children’s play, adds negatively to childhood obesity and consumers pay for it all at the till as retailers pass through the costs.

We thought that the Civil Liability & Courts Act 2004 would sort out fraudulent claims. It didn’t.

There’s been just one prosecution, which ended in a suspended sentence. 

Lawyers briefing dodgy claimants can rely on a toothless risk, there’s no chance of consequences, because Gardai show no interest in chasing down cases that have collapsed in flames at Court.

Top Ten Things You Can Do 

  • Bypass mainstream Gardai and set up a special unit to target this specific white-collar crime sector and attach it to CAB, with all its powers. Go after the fraudsters and convict them. It would take very little resource to do so by an expert unit.
  • Fastrack the new bill sitting on the floor of the Seanad that makes perjury in our courts a criminal offence, the Perjury & Related Offences Act. But pass enforcement to the new unit dealing with this Irish white-collar crime. Society will pivot the day the first conviction against a wealthy businessman for swearing falsely in court makes the headlines
  • Have plaintiffs sign a Statutory Declaration that they understand the risks in bypassing PIAB, the possibility to have costs awarded against them and the risks from prosecution for perjury.
  • Where costs cannot be collected in the instances where a case is exposed in court as bogus or fraudulent, make the plaintiffs’ lawyer a mark for some of them.
  • Disallow costs for Personal Injury claims unless a High Court finding is at least 30% more than PIABs book of quantum.
  • Introduce science, put the PIAB book of quantum for awards on a legal footing, and not just act as a shadow for court awards.
  • Help to accelerate the twin anti-competitive investigations underway of the insurance sector, one at EU level and the other local 
  • Force the Central Bank to return to publishing data on insurance company operations so profit margins and operating costs can be openly examined.
  • Register a public list of repeat offenders and the awards claimed so that the public can see the likely scammers.
  • After these reforms, instigate a Covid-scale public awareness programme aimed squarely at highlighting jail time for perjury and the register of repeat claimants.

It’s time to finally clean up Dodge - deal with the scourge of bogus and exaggerated personal injury claims and deliver for consumers. 

You will receive fulsome public support, especially from the beleaguered Irish SME sector and you can measure your first success by the invitation you don’t get to the next legal and insurance gala dinner.

Put it down to social distancing.

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