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Yes, but which are the fraudsters?

County View

County View
John Healy

If he ever decides to change careers, then Pearse Doherty can look forward to a bright future as an investigative journalist. The Sinn Féin TD provided a masterclass in incisive questioning when he exposed some of the insurance industry’s more threadbare explanations for the soaring cost of premiums at the Oireachtas Committee on Finance.
It was akin to watching a surgical operation being carried out without an anaesthetic as the hapless spokespeople for the biggest insurers sought to explain why the cost of insurance has gone askew. And the more they struggled to justify their position, the more they withered under Doherty’s relentless scrutiny.
It had all started when the Oireachtas committee set out to join the dots between the massive profits of the insurance industry and the rise in premiums, which have effectively closed businesses and forced young drivers off the roads.
FBD, which turned in a profit of €50 million in 2017, and AXA, which did even better with a surplus of €89 million, made the point that the viability of the industry cannot be measured by one year’s profits alone. But if that answer was plausible enough, it was the insurers’ justification for the soaring premiums that really walked the spokespeople into the Doherty ambush.
The high cost of insurance, they explained, was due to the prevailing culture of fraudulent claims. If there were less dodgy claims, there would be a reduction in premiums, and the ordinary, law-abiding customer would reap the rewards. It isn’t as though the insurance companies is fleecing the customers, the pleading went, it is simply that the fraudsters are costing them millions, which can only be recouped by higher premiums on everyone else.
In fact, said the industry men in the suits, warming to the theme, fraudulent claims were running at 20 percent of all claims lodged.
But then came the Doherty questions, incisive and accurate. Fraudulent insurance claims are a criminal offence, he pointed out, so how many of the 20 percent did the insurance companies actually report to the Garda authorities? His own research had shown that a mere 19 cases were referred to the Gardaí by the entire industry in the six-month period to March of this year, a long way short of 20 percent. Is it possible that the industry is exaggerating the level of fraud, given that a company like FBD alone receives 60,000 claims a year ?
Under questioning, it quickly became apparent that there exists a yawning gap between what the insurance companies say is the level of fraud and the number of cases that they report to the Garda. The man from Allianz admitted that the number reported was 48 out of a total of 5,000 claims, or less than 1 percent. AXA referred an average of ten cases a year, out of a total of 5,000 claims.
Doherty’s questioning confirmed the old reality that, if something is repeated often enough, and is allowed to go unchallenged, it becomes accepted fact.
And so a convenient, but false, excuse for hyping up insurance costs was taken at face value.
It had been a bad week for the insurance industry, and it was not to get any better. Within two days, a report from the Courts Service disclosed that personal injuries awards had dropped in the High Court, contradicting the insurance sector’s claim that litigation and fraud are driving up premiums.
And, in a sign that perhaps the runaway insurance horse might be finally reined in, Justice Minister, Charlie Flanagan, opined that the industry would need to do more to justify ‘the extraordinary increase in insurance premiums’.