There was a story recently about how certain British insurance firms were rewarding people who had "shopped" their neighbours who had bragged about fiddling an insurance claim in order to collect a higher benefit.
Given that Irish insurers estimate that fraudulent and spurious claims cost them £30 million last year, it isn't too surprising to hear that insurance companies have begun paying bounties on information that leads them to detect dishonest claimants.
Because insurance fraud is, by its nature, a clandestine activity, there is no way of quantifying the actual extent of the problem in Ireland. However, a recent study by the umbrella group representing European insurance companies estimated that 2 per cent of a company's total annual premium was lost through insurance fraud each year. In the case of the Irish insurance industry, that amounted to £29 million in 1997. The total recorded offences of fraud last year amounted to 3,758 (many of them driving-related).
The Irish Insurance Federation has gone some way in trying to detect fraud - it has a computer program, Insurance Link, in place which cross-references all multiple insurance claims, automatically triggering checks of people whose names come up frequently. "While matches do not necessarily imply that fraud has taken place, they will alert the insurer to take a closer look at the claim. All claims involving personal injury in motor accidents, employer's and public liability insurance, as well as written-off vehicles, household, personal accident and travel insurance are run through the Insurance Link system," says the IIF.
The most common form of insurance fraud includes making false declarations or failing to disclose information in order to get insurance cover; taking out a number of policies to cover the same risk in order to make multiple claims; inflating the value of items or getting cover for items that do not exist; staging accidents in order to make a claim and inflating a claim following a genuine accident. The first example - making false declarations or failing to disclose information - is commonplace among people who are afraid to reveal they have, or have had, a medical condition for which they may be refused cover or have their premium "loaded". Even asthma sufferers - whose condition is mild and fully under control with medication - will find their life insurance premiums increased by at least 50 per cent. Someone with a more serious condition or history may find their premium trebled or more for a period of years. Sometimes, such people, desperate to ensure that their dependants are covered, even in case they should die accidentally, will lie about their condition.
The IIF wants false or exaggerated claims in particular to be treated as a specific criminal offence for both claimants and anyone who colludes with them and more custodial sentences imposed. The falsification of claims forms should be equated with perjury, it says, and in the case of exaggerated claims, the claim should be disallowed in its entirety. Last year, 10 per cent of all claims, worth a total of £126 million, were attributed to crime - burglaries, vehicle crime and fraud, and Irish insurance companies want more resources devoted to anti-crime measures and especially to the Garda Bureau of Fraud Investigation. A telling statistic, says the IIF, is that just £3.4 million worth of the £56 million property stolen as a result of burglaries was recovered in 1996 (the last date for such statistics). And while car thefts were down in 1996, out of the £6.7 million worth of vehicles stolen, only 57, worth £272,000, were actually recovered.
