INSURANCE companies have noticed a "significant rise" in fraudulent and suspicious claims as a result of the downturn in the economy. As a result, fraud-investigation teams within insurance companies have recruited additional staff to cope with the volume of suspicious claims.
One trend among fraudulent claimants is expensive cars and properties they can no longer afford being set on fire. "We have noticed an increase in fraudulent claims and expect it to increase even more over the next few months," said Willie McGee, a former detective superintendent with the garda fraud squad and current head of Axa's special investigation unit, which probes suspicious claims. The unit has increased its staff from four to 10.
"Without a doubt this is due to the downturn in the economy. We're dealing with things like expensive cars being set on fire by their owners as well as homes and business properties. All of the cases we establish as fraud are passed on to the gardaí, who try and pursue criminal convictions. At the moment, I have three sitting on my desk waiting to send to the gardaí. We get a lot of tip-offs from members of the public about this kind of activity."
The director of FBD insurance, Martin Moran, said his company had also recently bolstered its fraud unit as a result of a huge increase in suspicious claims.
"There's no doubt that there's been a significant increase in the number of fraudulent claims," he said. "This is mainly due to the recession and the fact that people are under severe pressure. We're dealing with a particular increase in people setting fire to their own high-end luxury cars because they find themselves in negative equity. The same applies to unaccompanied properties and business properties. There is definitely a lot of strange activity going on out there at the moment."
Moran stressed that people making genuine claims had nothing to worry about and said the company paid out €25m a month in claims. At the beginning of the year, FBD hired a former senior garda fraud-squad member to head up its unit.
"We've also seen a rise in fraudulent 'escape of water' claims," he said. "People have literally pulled out the piping to flood their houses and claim the money.
"We're in different times. While most people would never dream of doing this, some people who usually would not do something like this now are."
John Higgins, of the loss-adjustor service Higgins Claim Services, also said he was aware of a definite increase in suspicious claims – "expensive cars particularly, and for some reason, a lot of BMWs. With immobilisers and anti-theft measures in cars nowadays, it's harder and harder to steal them and therefore it's also harder to pretend your car has been stolen," he said.
Higgins said he thought there was a "real risk" Ireland might revert to a "compensation culture".
Staged rear-ending accidents – so that several passengers can claim for whiplash – have become common in the UK again recently, he said, but were not common here.
"I have come across it rarely," he said. "There's little evidence of staged accidents here at the moment."
In 2006, Dubliner Daniel O'Halloran was sentenced to three years in jail after being convicted of defrauding Axa to the tune of €1.1m. Most of the sentence was suspended and O'Halloran went on to serve less than a year in jail. Axa is still pursuing him in court for most of the money stolen, which, it told the courts last year, actually amounted to €1.6m. O'Halloran had worked as an insurance-claims handler for the company.
He defrauded Axa by reopening insurance claims that had already been settled and changing the name on the application forms.