There appears to be a concerted effort on behalf of the insurance industry to create the impression that we in Ireland have a ‘compo culture’. However, this debate is not a new debate, nor, is it peculiar to Ireland. I previously practiced in the UK and the insurance industry there also attempted to create the impression that there was a ‘compo culture’ in the UK. However, recent debate has been more pernicious. In addition to creating the impression that we have a compensation culture, it has also very successfully created the impression that we are awash with exaggerated/fraudulent claims and that the amount of compensation paid in this jurisdiction, is considerably higher than paid out in other jurisdictions. Is there any justification behind the insurance industry’s claims or is it simply a foil for justifying the extortionate increase in insurance cover and is it an attempt to drive down compensation claims in order to bolster their profits?
As a Solicitor who represents people who have been injured by avoidable accidents, you the reader may determine that I have a particular bias. However, I would urge you to look at the evidence. Much has been written about the size of the awards in this jurisdiction in comparison to the UK, in particular, whiplash injuries and it would be easy to be swayed by the figures. However, one cannot simply look at what is awarded in the UK and compare them baldly with the awards here, as it is like comparing apples and oranges. For example, in the UK, their health care system, the National Health Service (NHS”) provides free health care to everyone, irrespective of means, from the cradle to the grave. Therefore, if a person in the UK has a whiplash injury, then all the associated costs of treatment to include GP, hospital, physiotherapy and medication are free. Therefore, it is easy to see why the award for whiplash in the UK is smaller than here.
A ‘compo culture’ is a nebulous concept to analyse as it is, a perception. Although it is difficult to examine a nebulous concept, the perception is fuelled by claims by the insurance industry of exaggeration/fraudulent claims. Therefore, one would imagine that the issue of exaggerated or fraudulent claims is not so nebulous and there must be statistics to substantiate that assertion. Therefore, I looked to see what statistics were available to substantiate the insurance industry’s claim that we as a society had a particular problem with fraud. Of note, in response to the rise in insurance premiums, the Government was under pressure from businesses and the public to grapple with the soaring costs of insurance and the insurance industry’s contention of spurious claims and seemingly ludicrously high compensation awards. As a response, the Government set up the Cost of Insurance Working Group and the Personal Injuries Commission (“PIC”) in an attempt to get some clarity to the competing arguments.
The Cost of Insurance Working Group published a report in January 2017. In relation to fraudulent/exaggerated claims, the report stated as follows:-
“The vast majority of claims are genuine with only a small minority of people making fraudulent and exaggerated claims…
…The insurance industry estimates that it has spent between €14 and €17 million in each of the years since 2011 in tackling insurance fraud. Insurance fraud is estimated by the insurance industry to cost €200 million a year which they claim adds an approximate €50 to each policy”.
However, when you go behind the figures, it becomes apparent that the figure of €200 million was based on an estimation by Insurance Europe. In the report, Insurance Ireland stated as follows:-
“Insurance Ireland arrived at the figure of €200 million using international industry standards. They have stated that it was calculated based on the estimation by Insurance Europe that fraud represents up to 10% of all claims expenditure in Europe. Total gross incurred claims in Ireland are in excess of €2 billion each year with motor gross incurred claims costing an average €1billion each year over the past five years and almost €1.2 billion in motor claims paid. If fraud represents 10% of all claims expenditure, it can be estimated that insurance fraud costs €200 million in Ireland each year with motor insurance fraud costing €100 million.” [Bold is my emphasis]
Therefore, it will be apparent from the above that the fraudulent claims figures is based on a European estimate.
The PIC published a final report in July 2018, in relation to exaggerated and fraudulent claims. The report simply stated as follows:-
“The PIC recognises that exaggerated and fraudulent claims have an adverse impact on overall claims costs which in turn impact insurance premium costs.”
There is no statistical basis to substantiate that Irish society has a particular problem. Of note, the Cost of Insurance Working Group established that although fraud is a cost factor, it was not the main reason for the increase in insurance prices. It also made recommendations on how to tackle fraud to include further co-operation between the insurance industry and the Gardai, the setting up of an insurance fraud department, paid for by the industry and the setting up an insurance fraud database.
I hope that the reader can infer from the above that although insurance fraud creates headlines, it is not statistically established that Irish society has a particular problem. I am not suggesting that fraud does not exist, but I would ask the reader to be vigilant and open minded in this debate. Week after week, we represent victims of accidents and help them secure compensation for their injuries. It is not until one, or one’s loved one, experiences an injury does the importance of having a justice system that allows that person to be compensated adequately, becomes a reality. To suggest that they are exaggerating their injuries is frankly, a further insult to a person who has been injured through no fault of their own.
Contact us at Cantillons Solicitors at +353 (0)21 -4275673 or [email protected] if you would like more information.
* In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.