One in five knows someone who exaggerated claim, says insurer

One in five people knows somebody who has exaggerated an insurance claim and 15 per cent are aware of someone who has falsified information, according to a new survey.

The vast majority in Ireland believe insurance scams feed directly into rising premium costs, the research, by insurer AIG, has found.

It shows that 78 per cent of respondents believe average whiplash awards of €15,000 are too much, with suggested alternatives averaging at just €3,631.

Aidan Connaughton, head of consumer insurance at AIG Ireland, said the research demonstrated a "deep frustration with the current compensation culture".

The data will bolster the industry’s ongoing PR battle around rising premiums which swelled by about 25 per cent last year and more in 2016. The industry has been lobbying since the beginning of 2015 for action to reduce the spiralling cost of claims.

While consumers become more outraged at the price of cover, insurers place legal fees and the cost of whiplash payments, in particular, at the centre of the problem.

Supportive

AIG's findings – published on Friday and for which the Ignite Research agency polled 1,000 people – found the public broadly supportive of their position.

“The research shows that 76 per cent of people would prefer that whiplash claimants receive medical expenses, a rehabilitation programme and loss of earnings rather than cash compensation,” it said.

“Sixty six per cent believe a medical panel independent of both the claimant and the insurer, who can see objective proof and evidence of injury, should be required to diagnose whiplash.”

In Ireland, according to the industry, the average whiplash settlement is €15,000 compared with €5,000 in the UK.

"We're supportive of the role played by the Injuries Board [which assesses claims]. . . but the environment has changed and it needs new powers," Kevin Thompson chief executive of Insurance Ireland, the sector's lobby, said earlier this year. "These include simple things like compelling claimants to provide loss of income information and to attend medicals."

Mr Thompson has repeatedly called for awards to be benchmarked against international standards and said eight out of every 10 motor injury claims in Ireland were for whiplash.

Data published last month by the Personal Injuries Assessment Board showed awards for whiplash neck injuries ranged from €15,700 for minor cases in which there was substantial recovery to between €44,600 and €77,900 for severe and permanent injuries.

Setanta

The legacy of the collapsed insurer Setanta has also yet to be settled, another player in the high price of Irish insurance premiums.

The Maltese-registered company sold policies exclusively in Ireland before it failed in 2014. The cost of outstanding claims could run to about 90 million and the Motor Insurers’ Bureau of Ireland (MIBI) is fighting liability in the courts.

Last month the Supreme Court said it would give its judgment on the case at a later date.

The AIG research shows more than half of respondents (60 per cent) agree that the collapse of companies such as Setanta and Quinn Insurance has led to a rise in insurance premiums.

A further 67 per cent believe prices are rising due to the high legal costs involved in settling claims.