More than half of suspicious insurance claims at Allianz are fraudulent, company says

More than half of insurance claims received by Allianz and deemed to be suspicious turn out to be of a fraudulent nature, the company said.

Speaking to The Irish Times, Allianz chief executive, Sean McGrath, said that although the numbers of claimants with criminal intent were in a minority, more often than not claim values that are suspiciously high relate to claimants with criminal intent. However, Mr McGrath conceded that "fraud is a difficult thing to prove".

Referring to the rising cost of insurance in the last number of years, Mr McGrath said the system of compensation in Ireland is "somewhat volatile" and called on politicians to introduce consistency so that the insurance system is as efficient as possible.

In particular he criticised the difference between awards for whiplash in Ireland and the UK saying that insurance costs will rise if Irish insurers continue having to pay four or five times more than UK insurers have to pay.

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In the most recent set of accounts available for Allianz Ireland in 2015 the company made a loss of €32 million on its motor insurance business. Gross premiums written in Ireland were worth €208 million while claims incurred cost the German headquartered group €194 million. Adding in operating expenses the total loss on motor insurance was €40 million before returns on investments were factored in.

The specific reasoning for the spike in insurance premiums in the last few years for consumers is being blamed on the rising cost of claims. Kevin Thompson, the chief executive of Insurance Ireland said: "rising court awards set the benchmark and increase expectations for all unsettled claims in the system."

Mr Thompson was referring to the Courts Service annual report published on Tuesday in which it was signalled that the average circuit court award had increased by 48 per cent to over €17,700 between 2013 and 2016.

“These rising costs must be tackled and Insurance Ireland believe there should be an acceleration of the proposed reforms to strengthen the powers of the Injuries Board to handle more claims and reduce the cost of expensive litigation,” Mr Thompson concluded.

A report last week from the Central Bank showed that insurance premiums rose by up to 19 per cent between 2014 and 2015. The report also showed that the cost of claims on comprehensive policies increased by 45 per cent between 2010 and 2015.

Another report issued last week from the Department of Finance showed that legal costs made up around 42 per cent of the compensation amount paid to claimants. So on an injury compensation payment of €100,000, insurers could end up paying as much as €142,400.