Thursday 22 June 2017

'This is one for YouTube' - Supermacs founder Pat McDonagh on fraudulent claims and Ireland's compo-culture

Video shows the moment a customer fell in Supermacs and made insurance claim

Louise Kelly

Louise Kelly

If the fraudulent claims and ‘compo-culture’ in Ireland persists, more people will not be able to afford – or willing to get – insurance, according to Supermacs founder Pat McDonagh.

The self-made businessman admits that genuine claims, such as those he’s experienced first-hand in the fast-food industry are “a fact of life”, but “it’s the totally fraudulent and exaggerated claims that cause the problems”.

McDonagh appeared on the The Late Late Show last month to highlight this issue of phony personal injury claims here but believes a lot more needs to done.

In 2004, the Civil Liability and Courts Act came into force, containing a radical provision in Section 26 whereby a fraudulent claim could be dismissed outright.

Pat McDonagh of Supermac’s
Pat McDonagh of Supermac’s

Mc Donagh believes that this regulation is no longer fit for purpose

“[The Act] was intended to reduce the legal cost involved with a claim, gearing the parties involved in a genuine claim case towards settlement,” he told independent.ie.

“But then the legal professionals advised their clients that they could get more for them in court rather than settling so this was no longer effective.”

In terms of the costs, McDonagh believes that there are two main reasons that the award amounts have been driven up so high in the last few years.

“The courts have increased their award limits: in the district courts it has been raised from €6,300 to €15,000 and in the circuit courts it has been raised from €38,000 to €75,000,” he said.

“That was probably the biggest reason that award costs have sky rocketed. Judges think that because the awards are higher, they should be giving more.”

According to McDonagh, this has in turn raised legal costs and any other related  - and pushed more cases into the High Court because the award and the claim has become higher and more serious.

Another area that McDonagh outlines is that, since 2014, the Department of Social Protection has sought to recover welfare payments made out to claimant if they are injured and out of work. At the moment, a value of these payments can be claimed back through the insurer involved. 

“Because the costs have gone up so much in the courts, this has encouraged insurance companies to try and settle cases,” said McDonagh.

“Sometimes these firms try to settle cases without the permission of the client – or even advising them. They are settling too many cases without contesting them for fear of paying out a higher cost in court.”

McDonagh believes that this fear is partly down to relatively new judges appointed that have little or no commercial judges that will award higher than appropriate costs.

All of this has contributed to the ‘compo-culture’ in Ireland today, said McDonagh, where claimants are exaggerating their claims by as much as 50pc.

“What that leads to is people not willing to get or unable to afford insurance, especially on the motor insurance side of things.

“This kind of claim culture doesn’t happen to this extent in the UK or on the continent.”

McDonagh has faced a number of difficulties with conmen orchestrating falls in his stores; at one point, he faced 125 live cases claiming injury occurred on Supermacs premises.

“This was at a time when the number of outlets we had was not near the amount we have today,” he said.

“I was going in to work wondering what new claim would be on my desk when I went in – all my energy was focused on that rather than the actual business itself.”

Footage taken from a Supermacs store in Cork was provided to independent.ie to show an example of the type of claim McDonagh faced.

“In that instance, the man made a dramatic fall, an ambulance had to be called and the store had to be closed,” he said.

“When it went to court, the judge commented: ‘Did you ever look at YouTube? Well this is one for YouTube.’”

The case was then dismissed.

Last month, it was announced that a database of fraudulent insurance claims is to be set up in a bid to tackle the rising cost of motor policies.

“At the moment, there is absolutely no penalty for fraudulent claims; you have to ask yourself the question ‘who’s benefiting from this’?,’ said McDonagh. 

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