LEADING INSURANCE COMPANIES have denied the industry is operating a cartel.  

Three major insurance companies operating in Ireland denied to an Oireachtas committee today that they were ripping off their customers, stating that fraudsters and those who exaggerate claims are driving up costs. 

The company chief executives also claimed the level of payouts awarded, as well as high legal costs are to blame. 

Last month, it was reported that profits for the insurance industry jumped by 1,300% in 2017. 

FBD boss Fiona Muldoon, Axa Ireland chief executive Philip Bradley and Allianz boss Sean McGrath denied their companies were excessively profitable.

McGrath said tackling fraud cases would make a difference, adding that “there is no consequence for the claimant” if they take a fraudulent case. 

Muldoon added: “It is a one way bet – if you take a case you aren’t going to pay costs anyway.”

She admitted that her company is charging its customers more than in previous years, adding that FBD made a €50 million profit in the last two years. 

“Like all businesses we do not apologise for making a profit,” she said. 

Axa made €89 million in profits last year, the committee heard. 

Going out of business

Sinn Féin’s Rose Conway Walsh agreed with Muldoon that there is “nothing wrong with a company making a profit, that is what companies do. But I do think you have to be cognisant of the businesses, some operating for generations, that the insurance industry have pushed out of the business, due to huge premiums that have been imposed on them”. 

Insurance premiums will fall if the cost of claims in Ireland falls, said McGrath, who added that the single biggest issue facing the cost of claims is getting the high level of injury awards under control.

“You are in here with your big profits. People are being fleeced and gouged, and you point at the consumers and say it is all about fraud,” said Sinn Féin’s Pearse Doherty.

Speaking about fraud cases, McGrath said about 20% of Allianz’ personal injury cases have “red flags” for fraud, where further investigations are warranted

While Axa said it is difficult to know the exact number of fraud cases, it agreed it was also around 20% of personal injury cases that had signals for fraud investigations.

FBD argued that exaggerated claims are “as big as fraudulent claims” for their company. 

Jackie McMahon, the chief claims operator for FBD, said the exaggeration of claims is “much more significant to ‘pure fraud’”, adding:

“We hardly see soft tissue injury that doesn’t have psychological trauma associated with it.”

Reporting fraud to the gardaí

Doherty said the insurance company bosses message to the committee today is that the blame for higher premiums should be laid at the feet of those who make fraudulent claims.

However, he said the industry has only reported a handful of fraud cases to the gardaí.

It was reported this month that just fifty cases of suspected insurance fraud have been reported to the gardaí in the past eight months. 

If around 20% of personal injury claims raise concerns about fraud taking place, a lot more reports should be sent to the gardaí for investigation, Doherty argued. 

“You don’t give a damn about it [fraud] as you are not reporting it,” he said, adding that if the industry is stating that there is an issue with fraudulent claims being made, then they should be reporting such suspicions to the authorities. 

“The guards would not thank us if we brought each claim to them,” said Muldoon, who argued that of the cases that are suspected fraud, not all can be proved. 

She added that FBD has secured the only conviction in this jurisdiction for a fraudulent claim in 2018. 

Fraud claims is a nice headline from the industry, said Doherty, “but you are not reporting it”. 

“I take your point,” said Bradley, who added that most suspected fraudulent cases are withdrawn. 

“But the crime has been committed, you should report it,” said Doherty.

When asked about the industry operating as a cartel, McGrath said he had “never seen any such cartel like activity”. 

Earlier this year, the European Commission announced that it was opening a formal investigation into Insurance Ireland’s data pooling system.

The investigation will assess whether the association is operating a cartel with the conditions of access to its data pooling system. The Commission will look at whether these conditions restrict competition, which would be a breach of EU rules.

Speaking about customers getting letters in the door about the rising insurance premiums, Fianna Fáil’s John McGuinness said companies should have to explain to people why exactly the price has doubled or tripled. 

“If I overcharged you for sweets, I would have to tell you why,” he told the insurance company bosses. He urged them to act as a collective and begin to tell their customers about how much the company has paid out on a claim, and why impact it might have on their future premiums.