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Claims falsely recorded against customers in insurance blunder

TENS of thousands of customers have had claims falsely registered against them on an internal insurance industry database, leading to fears of overcharging across the industry.

However, members of the public will not be notified if they are one of those affected.

The data protection commissioner Billy Hawkes made the findings in a report into the 'Insurance Link' system which was published yesterday.

Concerns have now been raised that customers have had their insurance policies incorrectly loaded and that legitimate claims have not been paid out due to a flaw in the system.

Last night a spokesman for the Irish Insurance Federation (IIF) said that the issue had to be "resolved" but could not give any further details of what changes, if any, will be made.

However, he played down the possibility that a large number of customers could be affected.

"I don't think there would be very many of those cases," he said, refusing to be drawn any further on any investigations they will be making into the matter.

The Insurance Link system is a database which insurance companies use to share the claim history of their customers and is used as a fraud prevention mechanism. For example, if someone makes multiple personal injuries claims this will be noted on the system.

Deputy data protection commissioner Gary Davis yesterday raised concerns that false information on the database was leading to more expensive insurance premiums.

He said that queries about claims were logged on Insurance Link as if a full claim had been made and that the system had no way to tell the difference between a query and a claim.

"The sector was unable to tell the difference between an actual claim and a situation whereby a person just contacted their insurance company to make an inquiry," Mr Davis said.

"If you came along and quite innocently sought a quote from a company for insurance, they might check it, note that say, Gary Davis claimed, and potentially load the policy," he added.

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The commission concluded that uploading such "pre-claims" data on to Insurance Link was a breach of the fair processing requirement of the Data Protection Acts.

In total there were 2,441,838 claims records on the system in November 2010. In one company, 30,000 "pre-claims" were loaded on to the system without a valid basis. On discovering this, the company immediately removed the records.

The reported noted that FBD Insurance's systems could not distinguish between actual claims and pre-claims data.

"Physical examination of files in several separate audits of insurance companies and detailed interviews with claims assessors as part of the Insurance Link investigation confirmed that this practice was widespread," the report noted.

A spokesman for FBD refused to comment.

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