Opening Speech for Minister of State Insurance Ireland Fraud Conference Convention Centre

23rd November 2018

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I would like to thank Insurance Ireland for inviting me here this morning to open today’s conference on ‘Insurance Fraud in a Digital Age’.

The digital age will provide all types of new challenges for insurers and other business. I will focus on the difficulties insurers currently face with more standard forms of fraudulent and exaggerated claims.

It is important to bear in mind that the vast majority of claims, whether they be personal injury or otherwise, are genuine.

I believe it is necessary to clearly acknowledge this, because there is a concern that, with such a focus on fraud, we run the risk of stigmatising legitimate claimants.

This in my view would be very unfair because if a person pays a premium to protect themselves from an economic loss, or suffers an injury as a result of another person’s negligence, then they deserve to be appropriately compensated. That is the business of insurance!

That said, it cannot be denied that fraud, whether directly or indirectly, affects us all.

This is very much borne out in my extensive engagement with stakeholders as part of the Cost of Insurance Working Group process. Small businesses – whether hotels, pubs or supermarkets – see themselves as being very vulnerable to fraudulent claims and in some instances feel powerless to address this problem.

These stakeholders believe that there are not sufficient disincentives in place to discourage such activity. They are deeply frustrated with, for instance, the Courts not consistently following the ‘costs follow the event’ principle, as where a claim is dismissed, the insurer has to meet its own costs, which will ultimately be reflected in an increase in the premium of policyholder, even though the claim has been found to have no basis.

They have also expressed concern about insurers sometimes settling dubious claims too easily. Unfortunately, the fear of an exaggerated or fraudulent claim landing at the door of small high footfall businesses is a daily one and adds considerably to the strain of running a business, as ultimately a large claim can threaten its future viability.

What is clear to me from my experience of the last 18 months or so as Chair of the Cost of Insurance Working Group is that tackling insurance fraud does not fall to one actor alone to solve, but must be addressed through efforts by the Government, insurers, An Garda Síochána and the legal profession all working together.

It is encouraging to see the varied speakers on the agenda here today in recognition of the roles we all have to play in addressing this multifaceted issue.

As Minister of State with responsibility for Financial Services and Insurance Policy, I would like to take this opportunity to update you on the progress being made in tackling insurance fraud from the Government’s perspective.

This mainly arises from the Cost of Insurance Working Group and the various paths this group has followed in implementing the recommendations from our two Reports on Motor and Employer and Public Liability Insurance.

Tackling the problem of insurance fraud has been a key objective of the Working Group and a number of relevant recommendations were developed to achieve this aim in both Reports.

For instance, the Motor Report contained measures related to establishing a fully functioning integrated insurance fraud database.

A dedicated working group under the aegis of the Department of Justice has been examining a number of relevant matters in order to progress this project and is currently considering the Data Protection Impact Assessment which was submitted by Insurance Ireland last month.

This is a complex project which involves ensuring we strike the right balance between a person’s right to maintain their good name, with the need for insurers to be able to share information in order to be able to identify patterns of fraud at any stage in the policy life-cycle.

Furthermore, it is essential that any collation, review or dissemination of such information is proportional to its effect on reducing insurance fraud.

The outcome I see from this project is an insurance fraud database which would be managed by an independent not-for-profit body, but funded by industry. It would be accessible to all insurers participating in the Irish market for fraud detection purposes.

I acknowledge that that this recommendation is progressing more slowly than anticipated; however, it is necessary that we get the foundations right and ensure that whatever database emerges is in conformity with data protection laws.

The Motor Report also recommended the exploration of further co-operation between the insurance sector and An Garda Síochána for industry to detect patterns of fraud.

One measure which the Working Group considered as part of the Report was the establishment of a dedicated team within An Garda Síochána to tackle insurance fraud based on the UK model which is funded by the insurance industry.

However, the Working Group has always recognised that the parameters of any future Garda Fraud Insurance Unit including its funding would always be a matter for the Garda Commissioner. I understand that, at this stage, the Commissioner has yet to form a view on the recommendation, and that no proposal or recommendation has yet been submitted to the Minister for Justice and Equality, Mr. Charlie Flanagan, T.D.

I am arranging a meeting with the Commissioner before Christmas and intend to avail of the opportunity to learn more about his views on the matter.

Aside from consideration of the feasibility of a fraud unit, there has been significant progress in enhancing the level of engagement and collaboration generally between An Garda Síochána and the insurance industry.

Part of this arose from the Fraud Roundtable, which was hosted by the Department of Finance and which involved wide stakeholder consultation. A key output from this process was the agreement of guidelines titled “Guidelines for the Reporting of Suspected Fraudulent Insurance Claims by Insurance Entities to An Garda Síochána”, which were published on 1st October.

Another important output of this engagement is the commitment for the Garda National Economic Crime Bureau and Insurance Ireland’s Anti-Fraud Forum to meet on a regular basis in order to discuss and act upon current and ongoing general issues which arise in the area of insurance fraud.

This enhanced co-operation, I believe, will be very important in tackling the issue of fraudulent claims.

Fraud also forms part of the recommendations within the Report on the Cost of Employer and Public Liability Insurance. Much emphasis was placed in the EL/PL Report on the need for the insurance industry to properly contest questionable or fraudulent claims. In respect of the majority of insurers, this is taking place and I understand that substantial resources are being invested in specialist fraud units within some insurance companies.

Indeed, accounts of a number of recent high-profile personal injury cases dismissed by the Courts following extensive investigatory work attest to what I have observed, that is, a greater determination generally to robustly defend dubious claims.

A further focus of the EL/PL Report was on the applicable legislation. The Working Group concluded that existing provisions, particularly Sections 14, 25 & 26 of the 2004 Civil Liability and Courts Act, are – bar some minor proposed amendments – fit for purpose, but have not been used sufficiently to date.

In relation to introducing stricter penalties for those found to be pursuing fraudulent insurance claims, the Working Group again believes that the issue ultimately is of greater enforcement of existing provisions – within the 2004 Act – rather than developing new penalties.

In particular, the Working Group focused on encouraging better utilisation of Sections 14 and 25 which create criminal offences when false or misleading affidavits (Section 14) or false or misleading evidence (Section 25) are knowingly provided in a personal injury case, with penalties of up to a €100,000 fine and imprisonment of 10 years.

The Working Group believes that a successful prosecution for these offences with the enforcement of the subsequent penalty would act as an effective deterrent.

I would note also the Private Member’s Bill introduced in the Seanad aimed at introducing a modernised definition of perjury.

While this has a much broader ambit than just personal injuries, I think this would be a constructive addition to the statute book. Government has not opposed this Private Member’s Bill and I will be monitoring the Bill as it progresses through the Houses of the Oireachtas.

I am aware that Justice Nicholas Kearns is speaking after me and therefore I would just like to take this opportunity to again express my appreciation and admiration for the excellent reports produced by him and the other Personal Injury Commission members.

I will ensure that the Commission gets any support the Department of Finance can provide to assist in the timely implementation of all of its recommendations.

With the continued implementation of the Cost of Insurance Working Group’s recommendations, I believe that we will continue to see a reduction in the cost of insurance.

The most recent CSO figures report a 22.9% reduction in the cost of motor insurance from its peak in July 2016. I appreciate that these figures represent a broad average, and that some people are still seeing increases; however, we have to recognise that these are the same figures which showed the large increases around the middle of the decade referenced by many commentators.

I think it has to be recognised that the overall trend currently is downward, which is to be welcomed.

I would like to conclude by saying that I appreciate the opportunity to address this event.

The fight against insurance fraud in all its guises requires a broad range of inputs from a wide range of parties, many of whom are here today.

I would like to assure everyone present that I, my Department, the Government as a whole, and the Cost of Insurance Working Group will not shirk from our responsibilities in contributing to this effort.

ENDS