Wednesday 16 October 2019

'Easy money tempts best of people' - Minister hits out at exaggerated insurance claims

Dozens of exaggerated insurance claims as people see opportunity to cash in, says D’Arcy

Michael D’Arcy: He said a ‘brother /sister test’ should be applied. Photo: Damien Eagers/INM
Michael D’Arcy: He said a ‘brother /sister test’ should be applied. Photo: Damien Eagers/INM
Kevin Doyle

Kevin Doyle

Compensation is seen as “easy money” that tempts even the “best of people” into making unwarranted claims, the minister responsible for reforming the sector admits.

Michael D’Arcy said there are now “dozens and dozens of exaggerated claims” for every fraudulent one because people see an opportunity to cash in.

He warned that many respectable people would never dream of taking a case against a family member, but businesses are seen as a legitimate target.

The stark admission from the minister demonstrates the scale of compensation culture that has been allowed to develop in Ireland.

Insurance claims have become a huge issue for the Government – not least because of the controversy surrounding TDs taking claims.

Fine Gael’s Maria Bailey recently withdrew her claim against the Dean Hotel, Dublin, after suing for injuries following a fall from a swing.

Her colleague Alan Farrell has also had to defend his actions, insisting he took a legitimate personal injuries claim after suffering whiplash in a collision.

Legislation to allow a judicial panel to set reasonable pay-out levels for minor injuries is set to be finally published this week. But Mr D’Arcy says there will also have to be a change in mindset if insurance costs for businesses are to fall.

“We have a compensation culture in our State. We have to change culture,” he told the Irish Independent.

Mr D'Arcy declined to comment on the case of his Fine Gael colleague Maria Bailey, saying he has never talked about any individual case.

But he said in the broader context, people needed to apply "the brother/sister test".

"If some of these incidents, I don't even use the term accident anymore, happened in our brother's house, or sister's house, would we take a claim? Most of the people who are taking claims would not.

"Equally just because it's a business premise, and that business premises is likely to have insurance, that doesn't mean the business is liable, that they have done anything wrong," he said.

Asked what the Government was doing to stop exaggerated claims, Mr D'Arcy said they were "really difficult" to prosecute. There isn't a known example of somebody being prosecuted for 'over claiming' in a personal injuries case.

"Who's to say they are exaggerating? And how to pursue that to a criminal level which applies where a sanction can be 10 years in jail or a €100,000 fine or both?" the minister responded.

He said the best way to tackle the issue was the planned establishment of insurance fraud sections within each Garda division.

He added that insurance companies had a responsibility too. "On one side you have companies who pay 'go-away money'. They settle two-thirds of their claims before there's even significant paperwork done," he said.

"Then you have another company who drags people who have been damaged through negligence to the steps of the courts. The problem there is people say 'to hell with that, I'm going to burst them when I get a chance'.

"So both settlement channels are incorrect. The better balance is somewhere in between."

The long-awaited Judicial Council Bill is expected to be brought back to the Oireachtas in the coming days with a view to getting it passed before the Dáil breaks for summer.

The bill allows for the establishment of a committee of judges who will recalibrate the level of payouts for injuries such as whiplash.

A report by the Personal Injuries Commission (PIC) last year showed that compensation awards in Irish courts are four to five times higher than in England and Wales.

Mr D'Arcy said he hoped the new committee would complete its work on a book of quantum by the end of this year. He is calling on Opposition parties to help fast-track it into law.

"I have a concern that if we don't get it through before the summer, we won't get it through until the end of year. Then everything gets delayed way, way too much," he said.

The minister argues that if compensation levels are lowering, the temptation for ordinary people to pursue a fraudulent or exaggerated action will be greatly reduced.

The PIC report said the average Irish soft-tissue award was €17,338, 4.4 times the UK average.

Asked what level he believed payouts here should be reduced to, Mr D'Arcy said: "I don't have a figure but I know what it's not. It isn't a little bit off the top. It isn't 10pc or 15pc."

He said it would be up to the judicial committee to decide but he predicted a significant fall in payments.

Mr D'Arcy said the aim of the new legislation was to build a "stable sector".

"It's volatile. The awards are too high. The consistency is irregular. The period in which claims are settled is too long. That manifests itself by underwriters not participating and companies exiting," he said, adding that ultimately competition in the market is the way to reduce premiums for businesses.

He rejected criticism that a sluggish Government response to the insurance crisis had left businesses facing an uncertain future.

Irish Independent

Editor's Choice

Also in Irish News