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20pc of insurance claims could be fake

Thursday, October 04 10:16:50

Insurance claims fraud is on the rise and could potentially reach up to 20pc of all insurance claims unless action is taken now, according to the Irish Brokers Association today.

They say that their member's experience of late suggests that this is an issue which the industry needs to tackle immediately before it gets out of hand.

The representative body say that claims databases as operated in the UK and other countries are effective tools in combating the fraud problem but that data protection laws in Ireland appear to be hindering the implementation of such data sharing initiatives to date.

"The UK is employing a variety of methods to combat insurance fraud such as online brokers screening applications, online fraud prevention databases and the Insurance Fraud Register. However, the Irish insurance sector lags far behind in this area and the consequences are apparent in the number of fraudulent claims. Although official numbers say that insurance claim fraud occurs in approx. 7pc of cases, our broker members have suggested that in reality this figure could potentially be closer to 20pc," said Brian McNelis, Director of General Services at the Irish Brokers Association.

He called on the Insurance Industry Federation to engage with the Data Protection Commissioners to endeavour to come to some arrangement whereby data sharing between insurance companies will be allowed to prevent fraud - possibly by way of a centralised claims register.

"We currently have a claims database operated by the insurance federation however the access to this is significantly restricted due to data protection laws. So in essence we are faced with a situation whereby insurance companies can only access this data when a claim occurs instead of when they are underwriting an insurance policy for a particular individual. In order for this to work effectively we would need to build an insurance fraud register which could tie in with the existing database and which would alert insurers to cases of fraud," Mr McNelis said.

The Irish Brokers Association say that insurance companies need to have to have the ability to check risk before underwriting. The insurance experts say that they have already proposed a solution to the Irish Insurance Federation which would be to include a question on a standard proposal form that asks the consumer "Can we (the insurer) access the national claims database?"

"Dishonesty when it comes to claims is effecting all aspects of the industry be it motor, or home the cost of which is ultimately paid for by compliant honest policyholders. The crux of the matter is that insurance fraudsters are driving up the cost of insurance premiums for everyone else".