Thursday 27 July 2017

Car insurance firms target scammers in cash-for-crash crackdown

Special units are probing thousands of suspect accident claims, says Personal Finance Editor Charlie Weston

Around €100m has had to be put aside by insurers into their reserves to cover what they regard as questionable claims (Stock photo)
Around €100m has had to be put aside by insurers into their reserves to cover what they regard as questionable claims (Stock photo)
Charlie Weston

Charlie Weston

Motor insurance companies are now clamping down hard with cash-for-crash stings.

They are investigating thousands of suspect accidents, reporting more fraudulent claims to gardaí and have scaled up special investigation units.

They have also uncovered dozens of insurance fraud rings, and are fighting more suspect cases in the courts in what is a major ramping up of the fight against the scourge of exaggerated and false claims.

A comprehensive survey carried out by the Irish Independent of the seven major motor insurers has revealed a new get-tough approach.

High awards made in the courts and the prevalence of so many suspicious claims has led some to dub this country "whiplash island".

Pay-outs here are a multiple of those in other countries, leading experts to conclude we have a huge "compo culture" problem.

The survey - the first time these figures have been revealed - found:

Some 6,000 suspicious motor injury claims are being investigated across seven insurers. This is roughly 12pc of claims settled by insurers each year;

Dozens of fraud rings have been uncovered by the seven insurers;

Around €100m has had to be put aside by insurers into their reserves to cover what they regard as questionable claims;

A renewed focus on investigating suspect claims and challenging them in the courts is delivering millions of euro in savings, the insurers stated;

Insurers have now scaled up investigation units, usually headed up by retired senior gardaí.

But the responses indicate that insurers feel their efforts are only scratching the surface of the multi-million euro dubious claims scams.

Insurers have upped their game in response to allegations they are too eager to pay out even when they suspect the claims are false or exaggerated.

Read More: People flying in to 'Whiplash Island' to take advantage of our generous claims system

And the Motor Insurance Bureau of Ireland, which compensates victims of accidents involving uninsured and unidentified drivers, said it was getting an average of 50 claims a week.

It said it had now hardened its investigation process, a move that has seen it fight more cases in front of a judge to ensure the evidence is tested.

The cost of motor premiums has shot up by 60pc since 2010, according to the Central Statistics Office.

The solicitors' body the Law Society has been vocal in its criticism of insurers, claiming they are using the excuse of false claims to cover up for their own financial mistakes.

However, Courts Service statistics show a rise of 34pc in the average personal injury award paid out in the circuit courts in the last two years.

In its response to the survey insurer AIG disputed the lawyers' views and questioned the generosity of judges.

"Too often we see judges siding with suspect plaintiffs," AIG said. It said it had seen a rise in people travelling from the UK to stage accidents here.

And RSA said: "We believe the current prevalence of very high levels of compensation awards is an incentive for individuals to pursue fraudulent claims."

RSA said it has 130 claims it suspects were due to staged accidents.

Aviva said it was investigating 1,400 suspect claims in the last year alone.

Liberty said it identified three organised fraud rings last year, and it has seen a 25pc rise in suspect claims.

All seven insurers surveyed said they had increased the number of suspect cases they reported to gardaí in the last year.

"There is an urgent need for greater involvement by An Garda Síochána in pursuing criminal prosecutions, particularly when a judge has dismissed a claim on fraudulent grounds," Aviva said.

Responses were received from AXA, RSA, FBD, AIG, Liberty, Allianz and Aviva. These insurers represent 87pc of the motor market.

Only Zurich refused to answer the series of questions.

Irish Independent

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