Insurance hotline catching fraudsters

Many of the Republic's leading insurers are hiring an increasing number of private detectives to investigate information on fraudulent claims supplied by members of the public using a new insurance fraud hotline.

The detectives have placed people under surveillance with a view to disproving claims made by individuals when they sought compensation for injury or damage to property.

Since its inception 12 months ago the new hotline has received more than 3,000 calls resulting in 1,500 new cases of alleged fraud coming to light. Almost one in four calls, 23 per cent, related to exaggeration of personal injuries and car repair costs.

A further 34 per cent related to accidents where no damage had been caused, while 29 per cent related to either staged or fictitious accidents. It is estimated that insurance fraud costs around €100 million annually.

The Irish Insurance Federation, which set up the hotline, said while private detectives had been used before the service was established, they are being used more often now. Mr Michael Kemp, IIF chief executive, said the level of calls proves the general public "have had enough of bogus insurance claimants.

"They realise that it is not just faceless institutions that are picking up the tab every time someone makes a fraudulent claim, but they themselves as honest policy holders through high insurance claims," he said.

"Calls are coming in from a wide range of sources including family members, neighbours, work colleagues, employers and employees."

AXA, one of the State's leading insurers, said it had saved money on a number of occasions in the last year as a direct result of information supplied via the hotline. A spokesman said one of its clients who worked as a hackney driver in Waterford was involved in a traffic accident and had claimed around €15,000 for whiplash, and a further €60,000 for loss of earnings.

While the €15,000 was paid, information supplied over the hotline suggested the claimant had not suffered loss of earnings. When this was mentioned in the course of legal negotiations the €60,000 claim was withdrawn. The information was supplied by a member of the public who had learned of it "during a conversation in a pub" with the bogus claimant, AXA said.

The IIF said the hotline was clearly acting as an effective tool to detect fraudulent claims and as a deterrent to those who may otherwise have lodged a false claim. However, it was vital that the Civil Liability and Courts Bill should be enacted so fraudulent claimants would face stiffer penalties.

The Minister for Justice, Mr McDowell, whose department is responsible for the legislation, has said the Bill is awaiting Senead committee stage. It was hoped it would be enacted before the summer, but this would depend on any opposition to it.

The Bill arose from the recommendations in the Motor Insurance Advisory Board report. The insurance industry estimates the enactment of the legislation could result in a reduction in insurance premiums of 8 to 10 per cent.