Thursday, 25 March 2021
Civil Liability and Courts (Amendment) Bill 2021: Second Stage [Private Members]
I move: "That the Bill be now read a Second Time."
Insurance fraud should never pay. Insurance fraud costs each and every one of us in this country. Someone making a fake injury claim believes there are no consequences but there are significant consequences for each and every one of us. The difficulty is that there is no downside for the individuals involved in making fraudulent claims. We hear regularly that fraudulent claims are thrown out of court but there is no follow-up or no penalties imposed on the individuals involved in taking those claims in the first place. There is no cost or consequence as a result of this practice. The majority of claimants who take cases in the courts do so in good faith. However, a small minority are making fraudulent claims in the hope of gaining large awards of tens or hundreds of thousands of euro and, as I said, without any risk to themselves.
We all accept that there is no single measure which can tackle insurance costs in this country, but fraudulent and exaggerated claims have an impact on the increasing cost of insurance. Every week, the Garda Síochána receives reports of fraudulent insurance claims. There is a perception that fraud and exaggerated claims have been increasing in recent years without any consequence or risk to the claimants submitting them to the courts.
The purpose of the Bill before us is to increase the penalties for those found guilty of an offence under section 26 of the Civil Liability and Courts Act 2004, which deals with fraudulent actions. Our Bill is based on amending legislation that was in the past brought forward by the current Minister for Public Expenditure and Reform, Deputy Michael McGrath, and by former Deputy Billy Kelleher. However, we have added to the draft of the legislation that was brought forward previously by colleagues. The Bill states that where a person's case has been dismissed pursuant to section 26 of the Civil Liability and Courts Act 2004, the plaintiff must pay the legal expenses of the defendant. The Bill goes on to state that in the event of a case being struck out because of fraudulent evidence, the court will be allowed to direct that the matter be referred to the Director of Public Prosecutions for investigation. However, it leaves the discretion with the judge in that instance. The Bill also increases the fines that the District Court can hand down under the Civil Liability and Courts Act 2004 from the current €3,000 up to the maximum permitted class A fine, which currently stands at €5,000.
The legislation would bring this very innovative and unique provision into Irish law to provide discretion to a judge to refer a case to the Director of Public Prosecutions. We believe it is imperative that such a provision is set out in law. We hope the Government will support the principle behind the Bill and allow it to progress to Committee Stage.
I thank my fellow members of the Regional Group for their hard work in bringing this Private Members' Bill to the House. The main purpose of the Bill is to increase the penalties for those found guilty of an offence under section 26 of the Civil Liability and Courts Act 2004, which deals with fraudulent actions. The aim of the Bill is to act as a genuine deterrent to those people who make false claims and, in turn, increase the penalties for such offences, and to have such matters referred to the Director of Public Prosecutions for investigation at the court's discretion.
Everyone will agree that insurance payouts in this country are too high. If we look at payouts in other EU countries, as well as the UK, we can see clearly that insurance payouts are much greater in Ireland. There are a number of reasons for this, including high legal costs, but also the number of fraudulent claims being made. At present, there is no obvious deterrent for someone making a fraudulent claim. That needs to change. This is exactly what our group is looking to achieve with this Private Members' Bill. We must, once and for all, have a real deterrent in place to stop this fraudulent behaviour.
I have seen at first hand the devastating effects false insurance claims can have on small businesses, and I have spoken to many victims in my own constituency of Louth who have been subject to this. The sad thing is there are simply no consequences for making such claims, which is simply wrong. Before I came into the Dáil, I had my own business. Insurance was always one of the most costly expenses and it became more expensive each year. The bottom line is that it is business which suffers.
Defending cases of this nature in court is extremely costly, with the end result being that insurance premiums go through the roof. In addition, many business owners feel that insurance companies settle dubious claims too quickly and easily. This needs to be locked at and the insurance industry must be open to scrutiny in this regard. Why are some claims challenged and others not? It should be noted that it is only a very small minority who take part in this fraudulent behaviour but it is the majority who end up paying for it. People think that insurance companies are out of pocket with these claims but the simple truth is that they just increase the premiums for everyone else in order to recoup the money they pay out on claims. It can be seen clearly that we are all paying the price.
I hope Members on all sides will support the Bill. It is badly needed and must be supported.
The Regional Group is very clear that it wants to work with the Government and all Members of the House to bring an end to this fraudulent behaviour. Party politics simply do not come into it because as a society, we are paying a hefty price for insurance fraud and it must stop. We accept that there is no simple solution but do not accept that there is no way to tackle the problem. The bottom line is that fraudulent claims result in extraordinary payouts, which result in increased premiums that affect us all. As my colleagues have said, we need a range of measures to tackle insurance fraud and this Bill is just one such measure. It targets the minority of clients who bring fraudulent claims to court in the hope of receiving significant awards. It will deter individuals from making such claims. There must be repercussions for those who believe it is acceptable to submit fraudulent claims for damages.
On behalf of the Regional Group, I ask Members on all sides of the House to support this Bill so that we can begin the process of eliminating the scourge of false insurance claims in Ireland.
This Bill is long overdue. For far too long, a minority of people have brought false and fabricated insurance claims before the courts, in the same way as others might place a bet. They have gambled and taken a chance because they knew they had little to lose except perhaps the cost of their own legal representation, assuming they were not using a no-win, no-fee solicitor. Insurance fraud is prevalent across Ireland. It is so common that many do not see it as an offence. As it stands, there is no penalty or deterrent for abusing the system and making a false claim. Too many people see our insurance industry as a soft touch and some are prepared to go to extraordinary lengths to exploit a porous system. That mindset has clogged our court system with fraudulent and exaggerated insurance cases and resulted in people walking away with large sums of money for minor incidents.
Insurance fraud happens right across society, from the deliberate staging of a physical accident to those who try to claim double the value of an insured item. Some people feel that they have paid insurance premiums for many years and it is time they got some of that money back. There is a mistaken belief that the insurance companies can afford to pay out on claims without impacting premiums. People imagine that the insurance industry charges high premiums so that it has the money to pay out claims but this thought process must change. People must realise, for the first time, that not only do exaggerated insurance claims not pay but that by making such a false claim, they will pay a price. That price will act as a sufficient deterrent to them and others and eliminate the scourge of insurance abuse. Significant costs are incurred by individuals and business owners in defending such cases in court. Businesses have faced soaring insurance premiums as a result of the actions of fraudsters. Many business owners are of the view that insurers settle dubious claims too easily.
There are two main types of concocted insurance claims, the staged claim and the opportunistic one. Staged claims are more common than people realise. We regularly read about so-called crash for cash cases whereby people stage a car accident with another driver known to them or an innocent motorist. They invent the circumstances of the crash, exaggerate their injuries and often attend hospital complaining of random neck and back injuries. They claim medical benefits, hire a legal representative and head to court. In some cases, rather than engage in lengthy and costly legal proceedings, insurers settle cases outside court and the claimant walks away with a tidy sum. An opportunistic claim is different. Generally an incident of some kind occurs and the injured party has a genuine claim to make. However, the claimant chooses to overstate the claim to increase its value or overstate the damage to an item to get maximum value. The prospects for making opportunistic claims are as endless as the numbers engaging in such activity.
This amendment will act as a deterrent to those who consider making a fraudulent claim at either end of the scale. It will make the opportunistic claimant think twice and will make the staged claimant realise that his or her activities are not a pathway to easy money and that the penalties are real and far-reaching. This amendment is long overdue. Had there been a deterrent in place before now, millions of euro could have been saved by insurers which would benefit all of us through a reduction in insurance premiums. This Bill is only one of many measures required to end the culture of insurance manipulation.
I am delighted to speak in favour of the Regional Group's Civil Liability and Courts (Amendment) Bill 2021. So far in this Dáil, my colleagues and I in the group have chosen to prioritise reform of the insurance industry. Outside of Covid-19, insurance dysfunction has cost so many people so much, including families, homeowners, drivers and many small business owners. This dsyfunction did not happen by accident. It is the result of a closed market where there is little or no competition. We see profiteering, gouging and the very opposite of decent business practices that should incentivise customer loyalty. The insurance sector has been protected by years of Government inaction. Many Governments have dragged their feet when called to reform the industry and the dysfunction has wreaked massive damage throughout society.
There is no doubt that businesses are being wiped out. I have been talking to people in my constituency about insurance premiums. In one case, insurance costs went up from €2,000 to €15,000 in the space of a couple of years while in another case, the cost rose from €50,000 to €130,000. For most businesses, margins do not allow for that level of cost increase, that is assuming they can get insurance in the first place. Drivers have been gouged. Under the current system, the more loyal the customer, the more of a fool he or she is. The pricing model acts as a tax on older people who do not have the ability to shop around. Children's sports groups, Irish dancing classes and festivals around the country have contacted my office about their inability to procure insurance. If they cannot procure insurance, they will be wiped out.
Two investigations into this dysfunctional market are under way. An investigation by the Competition and Consumer Protection Commission, CCPC, has found that five insurance companies, an insurance industry trade association and an insurance broker allegedly engaged in anti-competitive co-operation. A parallel investigation into the insurance industry is being undertaken by the European Commission. There were dawn raids on the offices of insurance companies in 2017. One literally could not write this.
This Bill, one of several being worked on by the Regional Group, seeks to reform the sector and protect the consumer. My political party, Aontú, has been working with the Alliance for Insurance Reform. We have organised public meetings, including in County Meath, in an effort to raise the profile of this critical issue. The purpose of this Bill is to increase penalties for those found guilty of an offence under section 26 of the Civil Liability and Courts Act of 2004 which deals with fraudulent actions. People should not be able to bring fraudulent claims to court and if they do so, they should not get off scot-free. There must be a cost to fraud.
Earlier in this Dáil term, the Regional Group tabled a Private Members' motion on perjury in court. I urge the Government to go further on this and to create a Garda insurance fraud unit. We need to redefine and rebalance the common duty of care to require the occupier to have duty that is reasonable, practical and proportionate. We need to reform the Personal Injuries Assessment Board, PIAB, ban dual pricing and make the insurance industry more competitive.
Insurance reform is a buzzword which has been thrown around quite a lot in recent years. I have certainly heard plenty about it in my 13 months in he Dáil. There has been no shortage of talk about insurance reform but a major shortage of action. I welcome the fact that the Regional Group has the opportunity today to take action. We must take these issues by the scruff of the neck and make the necessary changes. The aim of the amendment Bill presented today by the Regional Group is to act as a deterrent to those making false claims by increasing the penalties for such offences, imposing legal costs on the plaintiff and having such matters referred to the DPP for investigation at the court's discretion.
Back in February, Wexford man Liam Griffin was interviewed in the Irish Independent. Mr. Griffin is a successful businessman and hotelier whose Ferrycarrig Hotel and Monart Spa are popular destinations in County Wexford.
In that article he said he believes the high cost of insurance is turning people off doing business, and even compromises community spirit. We constantly hear warnings about the childcare sector and the rising costs of insurance that force closures. There are big price rises for parents. Providers are leaving the industry. With regard to Covid, we are 192 days into a lockdown where a massive number of businesses have been forced to close, but the premiums are still rising. The whole insurance issue is currently causing major headaches for business people.
With all these points in mind, the need for colleagues to support our amendment Bill should be obvious. People who make fraudulent claims contribute to all the problems I have just discussed. In order to help solve those problems, we must ensure that attempted insurance fraud is met with a very strong deterrent. Having the provision for attempted insurance fraud cases to be referred to the Office of the Director of Public Prosecutions, DPP, is, quite simply, a no-brainer. Fraud is a crime and suspected fraudsters should be investigated by the DPP. I hope to see unanimous support for this stance. If we have strong deterrents against people chancing their luck with a fraudulent claim then we can help contribute towards an overall reduction in undeserved pay outs and, hopefully, towards a reduction in premiums for people.
I am disheartened and disappointed by the reaction of representative bodies in the insurance industry to the new Judicial Council's reductions in personal injury rates. I believe there may be a certain amount of heel dragging when it comes to insurance companies reducing premiums. The Minister of State, Deputy Fleming, has stated that delays in the reduction of costs will not be tolerated. This sounds promising from the Government but the Minister of State needs to ensure that he follows through.
There are other issues in the area of insurance that also need reform. For community, voluntary or sporting groups, and even for public amenities, a situation has developed where we have struck an insurance fear into the hearts of people trying to run events. Even if an organisation wants to run something as harmless as a field day, it feels the need to have an insurance policy in case the wrong person twists an ankle and looks to claim. We need to tackle frivolous claims and ensure that we do not continue to deter volunteerism and community activities or end up with the closure of amenities.
On behalf of the Minister for Justice, Deputy Helen McEntee, I thank Deputy Naughten for introducing the Bill on behalf of the Regional Group of Deputies.
Insurance reform is a key priority for the Government. This is reflected in the programme for Government, in the Government's action plan for insurance reform, which was launched last December, and in the Justice Plan 2021, which the Minister, Deputy McEntee, published recently.
I very much appreciate that the objective of the Bill is to deal with the issue of fraudulent actions, and particularly as it arises in cases which may come to be dismissed under the specific terms of section 26 of the Civil Liability and Courts Act 2004. I wish to state that the Government has decided not to oppose the Bill at this Stage but notes that substantial amendments will be required to it. The Government also notes that it has already committed in its action plan on insurance reform to review the issues raised by the Bill, and work is under way in this regard.
The Government's action plan for insurance reform sets out 66 actions designed to: bring down costs for consumers and businesses; introduce more competition into the market; prevent fraud; and reduce the burden on business, community and voluntary organisations. The action plan includes actions to be taken by a number of Departments and implementation of the plan is being overseen by the Cabinet committee on economic recovery and investment’s sub-group.
The Government recognises that there is a challenge with awards and claims inflation in the insurance sector, along with the premium inflation that comes from them. At the same time, certain areas of risk are being avoided, in the commercial sense, across the sector and this is disadvantageous to both vulnerable business and other types consumers.
Orders for costs are a major issue. Section 2(a) of the Bill addresses amendments to section 26 of the Civil Liability and Courts Act 2004. Section 26 of the 2004 Act provides that a court shall dismiss a plaintiff's personal injuries action in circumstances where the plaintiff or another person knowingly engages in the giving of false or misleading evidence unless the dismissal of the action would result in an injustice being done. This amendment would require the court, where it so dismisses an action, to also make an order that the plaintiff shall pay the legal costs of the defendant, unless this would result in an injustice being done. As Deputies will be aware, however, section 26 of the Civil Liability and Courts Act 2004 deals with the issue of case dismissal on the basis of false or misleading evidence given in a personal injuries action. It does this both in regard to the relevant proceedings and to any affidavit sworn in support of those proceedings under section 14 of the Act. The section provides that the court shall dismiss an action in such circumstances "unless, for reasons that the court shall state in its decision, the dismissal of the action would result in injustice being done".
When considering section 26 of the 2004 Act, it should also be noted that it needs to be read in conjunction with section 25 of the same Act. Section 25 already makes it an offence to give or adduce false or misleading evidence in personal injuries cases. It also makes it an offence to give, or dishonestly cause to be given, an instruction or information to a solicitor or a person acting on behalf of a solicitor or an expert in regard to a personal injuries action. For the purposes of section 25, the act is done dishonestly if the person does it with the intention of misleading the court. It is clear, therefore, that the avoidance of an injustice already runs to the root of section 26 as it currently stands and is implemented and, to that degree, it is already aligned with the Bill.
The view taken by the Government is that the Bill is, to some degree, a restatement of what is already happening in relation to costs before the court in personal injuries cases. The Bill would impose a requirement on the courts to make orders for costs, despite this being a matter for which there is some existing judicial discretion and existing legislative basis. I remind the House that under the long-standing principle that costs follow the event, the courts already have the power to award costs and have done so against a plaintiff at the discretion of the judge in many cases.
A further important consideration is that Part 11, sections 168 and 169, of the Legal Services Regulation Act 2015 was commenced in October 2019. Under section 168 of the 2015 Act a court now has the power to order that a party to a proceedings pay the costs of, or incidental to, the proceedings of one or more other parties to the proceedings. The order may relate to, for example, part of the costs, costs incurred between specific dates, costs incurred for particular parts or steps in the proceedings, and costs relating to successful elements of the proceedings. Section 169 of the 2015 Act gives effect to the principle of costs following the event. It states that a party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings, unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties. The effect of the commencement of Part 11 is that the principle that costs follow the event was strengthened significantly and given legislative authority. I believe that, as currently drafted, section 2(a) of this Bill runs the risk of impinging on existing legislation.
Section 2(b) of the proposed amendment makes provision for the courts at their discretion to refer cases that have been dismissed under section 26 or the Civility Liability and Courts Act to the Office of the Director of Public Prosecutions. While it has been the case that judges on occasion have ordered matters to be brought to the attention of the Office of the Director of Public Prosecutions, the DPP would generally refer any alleged criminal matters onwards for the consideration of An Garda Síochána. It should be noted that the DPP does not have investigative powers or the power to direct An Garda Síochána to do so. Accordingly, where there is a question of whether there should be an investigation into the commission of a criminal offence, in this case of alleged insurance fraud, it is considered that it should be referred to An Garda Síochána.
Another fundamental consideration is that of differing standards of proof. Where a case is dismissed under the terms of section 26 of the Civil Liability and Courts Act 2004, this is a matter on which the court has been satisfied on the balance of probabilities that false or misleading evidence was intentionally provided. It would be for another court to decide in the context of a criminal trial whether it was satisfied beyond a reasonable doubt that an offence was committed under section 25 or any other relevant provision.
Section 3 of the Bill proposes an amendment to section 29 of the Civil Liability and Courts Act 2004, which deals with offences under Part 2 of the Act. The amendment has the effect of increasing the maximum fine for an offence under the Act from its current level of €3,000 to a class A fine currently set at €5,000.
It should be noted that what is proposed in this Bill contrasts somewhat with the provisions of the Perjury and Related Offences Bill 2018, which was adopted as a Government Bill on 19 November 2019. That Bill is currently awaiting Committee Stage in the Dáil and the Minister, Deputy McEntee, expects the Bill to be enacted later this year. The Bill will provide clear direction to the courts in respect of the necessary penalties to be applied regarding the nature of the offence being prosecuted. The penalties in the Bill are in line with those in the Civil Liability and Courts Act 2004 regarding false evidence and fraudulent claims. The amendment to the 2004 Act proposed in this Bill could, if enacted, create a situation where a person could be liable to different levels of maximum penalty on summary conviction for the same offence.
I should add that in addition to the prosecutions relating to insurance fraud which may be brought under the 2004 Act and under the Perjury and Related Offences Bill upon its enactment, the Government is committed to increasing co-ordination and co-operation between An Garda Síochána and the insurance industry. The Government has also indicated its intention to expand the Garda National Economic Crime Bureau, GNECB, which deals with fraud, and to ensure the relevant fraudulent claims are forwarded to the DPP. In addition, insurance fraud data will be published to allow for detailed analysis in this area with a view to taking the appropriate actions to address any pertinent issues. When the perjury Bill is enacted, it will be a very important measure in countering insurance fraud and the compensation culture and high cost of insurance it fuels.
The legislation to give effect to the recently adopted personal injuries guidelines is currently making its way through the Oireachtas. As shown even by the examples I have given in response to the Bill, these mutually reinforcing measures have a particular focus on the area of insurance fraud and, as such, are strongly intended to augment the original policy objectives of sections 25 and 26 of the Civil Liability and Courts Act 2004.
Along with the Minister, Deputy McEntee, the Tánaiste and Minister for Enterprise, Trade and Employment, the Minister for Finance and the Minister of State at the Department of Finance, Deputy Fleming, who has responsibility for insurance issues, I am very conscious of the issues highlighted in this Bill. However, we need to ensure that any legislation produced in this House is legally robust. I welcome the opportunity to contribute to this debate.
Now, more than ever, things like the cost of insurance can tip the balance when businesses are trying to remain viable at a time when the Covid-19 pandemic has already put many of them out of operation entirely and others are on the brink of closure. That is not even to mention the impact of Brexit. All of us have heard the stories from business owners whose insurance premiums have doubled, tripled and quadrupled in the space of a few years. At least part of the reason for high insurance premiums are the so-called day trippers - people who are carving a career out of making false claims for personal injuries and getting away with it. I have been contacted by several Galway business people operating in different fields for whom the cost and availability of insurance cover is literally a matter of life or death for the businesses they operate. They support a campaign for an 80% reduction in damages awarded for minor, fully recovered injuries to bring them into line with international norms. That is not part of this Bill but is something that should be addressed in the future. I believe that reducing the amount of compensation in such cases would make it a less appealing process for people making bogus or exaggerated claims.
Tackling incidents of fraudulent claims, as proposed in this Bill, will play a part in making insurance cover more affordable. That could make all the difference in the world to businesses. Some time ago, an insurance company told the Oireachtas finance committee that it believed 20% of its claims were fraudulent. The company claimed to have caught approximately half of those. One in five claims is an extraordinary level of fraud and it is obvious that those people are not put off by the current penalty structure in the event of them being caught. We need to have serious consequences in place for insurance claim fraud that would make very public examples of those criminals and make others think twice about doing it in the future. In my opinion, this Bill will do that. First, the fraudsters would have to pay the court costs of the people they are trying to defraud as well as their own legal representation costs. Second, a judge throwing out a case for personal injuries compensation because of fraudulent evidence would have the option to refer the matter to the DPP for possible prosecution. Third, the fines those people would face on conviction would be increased to a more realistic level.
I am aware there is a debate over the extent to which fraudulent claims have an impact on the cost of insurance cover. If we can seriously tackle and reduce the number of bogus claims, the insurance companies can no longer use that as an excuse for charging exorbitant premiums. This Bill will not entirely solve the problem of crippling insurance costs, but it is a step in the right direction and part of a range of measures that can be taken to tackle the problem.
As a member of the Regional Group I am very happy to be in the House this evening to support this proposed amendment to the Civil Liability and Courts Act. I thank the Minister, Deputy Michael McGrath, for his work in the area during the previous Dáil.
Many members of the public, and especially people in private industry, were shocked, in the past 12 months particularly, to hear insurance companies outline large-scale fraudulent personal injury claims, albeit without insurance companies making large-scale complaints to gardaí to any great degree. Instead, many insurance companies prefer to transfer the liability cost onto hard-pressed businesses and consumers who, as a result, pay some of the highest insurance premiums in Europe on property, public liability and employment liability insurance.
It has long been known that the burden of proof for personal injury claims has been of a low order. Many soft tissue injuries cannot be confirmed on medical scans. Therefore, they are, to a degree, subject to what the claimant is putting forward. The onward incapacity is rather subjective on the claimant also. That makes for a very difficult environment in which claims can be estimated.
In many cases, it is well described how insurance companies will settle a case only with the minimal amount of investigation rather than proceed to open court where compensation can vary widely and insurance companies will also face the legal claims and costs from the plaintiff's side.
Despite talk of reform of fraudulent injury claims for a number of years, the issue is still pervasive and, in many cases, downright brazen. Topical in recent weeks was the sight of Pat McDonagh, of Supermac's, refusing to make video evidence of fraudulent trips and falls available to clients in advance of their court sittings. His defence rightly argued that they would amend their claims on seeing whether he had video evidence or not. Legal defences claiming advance sight of such video evidence that could undermine a claim is making a mockery of general data protection regulation, GDPR, rights. It is also making a mockery of a fair and legal process.
Beyond that, there is recent evidence of legal practices trawling through claimants of the Personal Injuries Assessment Board, PIAB, and highlighting that post-traumatic stress disorder could be considered a follow-on consequence of a personal injury claim and could be argued in court, whereby the claimant would receive a higher level of payout and the security of their legal fees would be insured where such a case was discharged. That practice should be discouraged.
The amendment Bill before the House this evening is not about prosecution but rather about prevention, although prosecution is part of the Bill. It is designed to make both claimants and legal counsel consider heavily before embarking on a case for personal injury awards through the courts as opposed to through the PIAB.
Insurance fraud is not a victimless crime. I am sure the Minister has heard all the speakers before me speak about the effects it is having on business, particularly the SME sector in this country. There is a need for enforcement of bogus insurance claims and I ask the Minister to engage with the Department of Justice regarding setting up new initiatives with An Garda Síochána to provide oversight on tackling insurance fraud. Businesses within the entertainment and childcare sectors and the leisure industry are really struggling now with insurance premiums, as are people paying motor insurance. The time has come for the Government to take a strong strand. We have been hearing about reform of the insurance sector for quite a number of years.
We need reform within the legal sector to get these costs under control. We are paying the highest costs in Europe for insurance premiums. That makes us uncompetitive in economic advancement and when exporting. It is an issue that has to be tackled as soon as possible. I ask the Minister to give it his full attention.
We will support this legislation. We understand exactly what it is about and the good intentions around it to ensure that we do everything possible to mitigate against people who make bogus and fraudulent claims and try to defraud either insurance companies or indeed businesses that are doing their best to try to survive in the difficult climate that we are in. We also believe that it needs to go to Committee Stage and that considerable work is needed. I hope that the proposers of the legislation would not in any way feel slighted by that. There is work to be done on it. The issue of insurance, the insurance industry and its reform is one that we all take seriously in this House and we all want to see much more work done on it. We were all disappointed in recent weeks when limits were put on payouts for minor injury claims, when we heard the insurance industry come out almost immediately and say that it will not really make any difference and that it will not really be reducing premiums because it has not gone far enough.
One of the central tenets of what we need to look at here is that the insurance companies will always have reasons they need to keep premiums so high. Normally the reasons are about fraudulent claims and about how so much fraud is happening. Deputy Grealish mentioned some of them saying that up to 20% of claims were fraudulent. When they were questioned about whether they reported these fraudulent claims, they had not reported any of them. If they actually believed that the claims were fraudulent, why were they not reporting them? The other issue that we need to look at, which they always put forward, is the high level of payouts that we have in Ireland. There are high payouts for minor injuries but when one looks at the whole spectrum of payouts, there is little or no difference between them and other jurisdictions. They are quite similar because at the higher end, payouts in many jurisdictions are much higher than they are here. All of this needs to be balanced.
One of the primary things that we need to look at, which this legislation deals with, is section 26, about fraudulent actions, of the Civil Liability and Courts Act 2004. A case has to be dismissed on that ground for this to apply. Less than 1% of the cases about insurance claims over the past years were dismissed on that ground. It is seldom that an insurance company puts forward "fraudulent claim" as its defence. In most cases, it simply puts forward the reality that it feels that the person putting forward the claim either has not suffered the full extent of the injury or that the injury has not been that bad. It is seldom that a company tries to suggest that it is a complete fraud, because that is a dangerous route for companies to take. Work needs to be done on that.
The Bill states "the court shall make an order that the plaintiff shall pay the legal costs of the defendant". In the vast majority of cases that go to court, legal costs follow the judgment. If the judgment is against a particular party, the legal costs go against that party too. That is the case in all cases regardless of whether they are insurance cases. It reinforces something that already exists. While it is perhaps the right thing to do and needs to be done, we need to be careful about that. The court must be able to use a certain amount of discretion in these matters.
Subsection 2B states that the court may make the order for costs at its discretion. That is exactly as it happens at the moment. Maybe that needs to be tightened up or we need to examine where that is going. Regarding whether a file should be sent to the Director of Public Prosecutions, what we have here is a civil case being taken by an individual against another individual or a business which the individual claims that he or she has an injury as a consequence of. In that civil case, if the judgment goes against him or her, the judge will, in many cases where he or she feels it would be fraudulent, suggest that the gardaí investigate it. Whether or not it would be sent to the Director of Public Prosecutions, it would certainly not happen prior to gardaí investigating it and determining whether there is a criminal case for action to be taken. Work needs to be done on all of that. The part of the Bill which suggests that the fine should increase from €3,000 to €5,000 may well be appropriate. I would not have a problem in that respect where a case is fraudulent. One has to understand, as I said at the outset, that a tiny minority of these cases are defended on the basis that they are fraudulent. It is seldom that an insurance company defends them on that basis. It is only when that happens that this legislation would come into play. Work needs to done to make it more robust if that is what is needed.
We are talking about bogus and fraudulent claims. The excuses being put forward by the insurance industry in this country for the exorbitant cost of premiums in cases which are, if not bogus, certainly exaggerated in many cases need to be borne in mind too. The insurance industry is making a lot of money. It is doing well in this country. It continues to charge high premiums. At the same time, it always has a reason for it, and the reason is never that it is making too much profit. The reason is always fraud, and this, that and the other. We need to mitigate against that. Where there is genuine fraud, it needs to be dealt with. There are also cases where people have had a genuine accident, they take a case and go to a solicitor. The legal profession will of course encourage them, tell them that they have a case and to move forward with it. They will go to a doctor and get reports and so on.
In fairness to the vast majority of people, they will put their best case forward. In most cases, I do not think it is unfair to say that most people will not underestimate how bad their injury is, but they will try to be truthful about it. If the judgment goes against them and the judge says that he or she does not think the person is as bad as claimed, that could be considered a fraudulent case. Should that person then have to pay the full costs of the insurance company after getting reports from doctors and so on? There needs to be balance in this. We all have insurance for a reason, whether it is car insurance, business insurance or any other sort, so that if we suffer a loss or injury, we will be compensated for it. It is right and proper that people should have that and they should be compensated for it. There is nothing wrong with people making claims when they are genuine and can be stood over. That needs to be brought into this too.
I have no issue in supporting this legislation going to Committee Stage, teasing out and perhaps improving it to a stage where it would do what it says on the tin, which is to mitigate against fraud and ensure that we put in place strong penalties for people who intentionally set out to defraud insurance companies or businesses. At the same time, we have to have balance and not go down the route of believing everything that insurance companies put forward as their reasons to skin people. That is exactly what they are doing with insurance premiums in this country.
I thank Deputy Naughten and his group for tabling this Bill. As my colleague, Teachta Kenny, has outlined, we support this. However, we believe that it would benefit from discussion on Committee Stage so that we can all work together to improve it. One thing that we are all aware of in our constituency offices is the cost of insurance and its impact on our constituents. There are issues, especially with regard to the high price of insurance. That causes much distress. I hope that Deputy Naughten and the members of his group would be amenable to working with us on Committee Stage to ensure that, where this Bill can be strengthened, we all work together to ensure that we can do that.
Insurance is at the forefront of the mind of anyone who is old enough to have cause to pay for insurance, whether for their car, motorbike, business, house, boat or whatever else. The cost of insurance has rightly been defined as having reached something of a crisis point, especially vehicle and business insurance. While the issue has many layers and complexities, there are core issues which need to be addressed and can be done relatively simply. This is the second Bill about insurance which has come before the House in the past weeks. Like Teachta Pearse Doherty's Bill to ban dual pricing, this also targets a problem area, which is fraud. There is doubtless fraud related to insurance claims.
As an Teachta Kenny has pointed out, the level and extent to which people believe this happens depends on who one is talking to. Some believe it is rife; others believe there is only a small element of it. That is where this legislation would benefit from a full discussion on Committee Stage.
We know fraud exists. That is why the establishment of a stand-alone insurance fraud unit within An Garda Síochána to investigate insurance fraud, if and when it occurs, is long overdue. It is clear that various criminal activities in the insurance market are becoming more sophisticated. As a result, Garda operations must become more sophisticated and be better resourced. That is why Sin Féin is seeking the establishment of a stand-alone specialist Garda insurance fraud unit made up of detectives, Garda staff and financial investigators. This unit would be initially funded with the reserves built up by the Personal Injuries Assessment Board and supplemented with additional public resources, as required. It would created a hostile environment for organised criminality engaged in fraud, including ghost brokers, and ensure insurance companies comply with section 19 of the Criminal Justice Act 2011 by reporting all suspected fraud.
However, we must also pull the insurance industry up on its own behaviour. As insurance companies have begun to charge more for insurance premiums, they have run a simultaneous public disinformation campaign on the level of fraudulent claims to justify these extortionate premiums. Companies have repeatedly said that 20% of all claims are fraudulent and are causing premiums to rise. However, under questioning at the Joint Committee on Finance, Public Expenditure, and Taoiseach by an Teachta Pearse Doherty in 2019, it was revealed that companies only report a fraction of claims to the Garda as fraudulent. For example, Axa reported only 1% of claims to the Garda as fraudulent in 2018, not 20%. For Aviva, it was 4% and for Allianz, this figure was as little as 1%. Section 19 of the Criminal Justice Act 2011 makes clear that it is an offence for companies to fail to report known crimes such as fraud. Therefore, either the industry is exaggerating or there are persons involved who are in breach of the law.
According to Insurance Ireland's own figures, the number of motor insurance claims from 2014 to 2017 went down by 22%, amounting to 55,000 fewer claims. Despite this, the average motor insurance premium rose by 45% in the same period. This is also in the context of total personal injury awards being paid out through the courts and Personal Injuries Assessment Board falling by 15% from 2014 to 2018. It is crucial that Insurance Ireland speaks out on the fact insurance premiums have risen, despite the falling numbers and the falling cost of claims. It is important we challenge all of the issues in the area of insurance. Otherwise, we are letting the big players in the insurance industry off the hook completely.
As I said at the outset, this is a multifaceted issue. Indeed, we need to tackle the wrongdoing everywhere, from fraudsters, to companies using aggressive and anti-consumer pricing practices, customers facing artificially high prices, the industry overblowing levels of fraudulent claims, and criminal activities in the area such as the use of ghost brokers. It all must be challenged. People who commit fraud somehow think it is just the insurance company they are ripping off. It is not; it is all of us in the insurance pool.
As has been said here previously, this is not a victimless crime. This sort of carry on destabilises the insurance pool, because if fraud results in increased insurance premiums, it means some people will no longer be able to afford the premiums and they have to leave the market. As the numbers drop, the risk increases and therefore the price increases further. Across the board, we know rising premiums have caused havoc for small businesses, such as restaurants, pubs, hairdressers and childcare to name but a few. I know the live events sector is another area where insurance costs have put a lot of strain on events organisers and artists themselves. While we all know the importance of insurance cover, it must be accessible for those who work in the area and need it to work. There cannot be a continuation of the situation where insurance is an actual barrier to businesses operating or people being able to something as simple as drive.
To do this, we must tackle the causes of excessive premiums and do all we can to ensure these premiums are affordable and accessible. This legislation is an important part of that. As I have said, we will be supporting its passage, and we hope Deputy Naughten and the members of his group will work with us to strengthen it on Committee Stage.
I thank the Regional Group for bringing forward this Bill. I welcome the opportunity to speak on it.
The purpose of the Bill is to increase the penalties for those found guilty of an offence under section 26 of the Civil Liability and Courts Act 2004, which deals with fraudulent actions. Section 26 states the plaintiff in a personal injuries action who gives evidence that is false or misleading in any material respect and knows it to be false or misleading shall have his or her action dismissed unless such dismissal would result in injustice being done. The proposed amendment Bill states that where a person's case has been dismissed pursuant to section 26 of the Civil Liability and Courts Act 2004, the plaintiff must pay the legal expenses of the defendant. The Bill provides that the court can direct that the matter be referred to the Director of Public Prosecutions, DPP, for investigation. The Bill allows for judicial discretion, which I support. The Bill also increases the fine the District Court can hand out under the original Act from the current €3,000 to €5,000. My colleague, an Teachta Kenny, has spoken on the issue.
In an answer to a parliamentary question submitted by my colleague, an Teachta Doherty, in 2019, the then Minister for Justice and Equality stated that in the period 1 November 2018 to the end of May 2019, 50 incidents of insurance fraud were recorded, an average of seven cases per month. Some spurious cases may have been encouraged by a no win-no fee arrangement with a solicitor. There is a perception that fraud and exaggerated claims have been increasing in recent years with little or no consequence or risk to making such claims. I understand some have no choice but to use the no win-no fee arrangement because they simply cannot afford anything else. That does not mean all of those claims are fraudulent.
Many insurance customers are of the view that this has significantly contributed to a culture where a small percentage of people may be encouraged to make fraudulent claims without any real consequences should they be unsuccessful. Significant costs are incurred by business owners, in particular in defending their case in court. Businesses have faced soaring insurance premiums as a result of the action of fraudulent claims . Some business owners have told me their insurance companies are too quick to settle claims because it is sometimes more expensive to fight them.
A minority of claimants bring fraudulent claims to court in the hope of receiving significant awards. The aim of this Bill is to act as a deterrent to those making false claims by increasing penalties, including the possibility of the plaintiff having to pay the legal costs of the defendant and of the matter being referred to the DPP for investigation.
Insurance fraud should not pay and this message is evident in this legislation. Not only should it not pay, it should not be a burden on innocent insurance customers. It has a cost for every one of us. While there have been some recent cases of claims being thrown out of court, there has been little or no follow-up or penalties incurred as a result. Without penalty or consequences, the practice will only continue.
This Bill is similar to one published by the now Minister for Public Expenditure and Reform when he was in opposition. Unlike so many of the initiatives proposed by the Opposition in the term of this Dáil to date, I hope the Government will not turn its back on measures each party has supported in the past. I believe this Bill will act as a genuine deterrent to those making false claims, and I add my support to it.
I welcome the opportunity to speak on this Bill proposed by Deputy Naughten. The Labour Party is happy to provide its support to enable the Bill to get to Committee Stage at least, where we can complete a more detailed analysis which is required.
The explanatory memorandum of the Bill makes some very interesting points in respect of the purpose of the Bill. I note that refers to "a perception that fraud and exaggerated claims have been increasing in recent years". I note the careful language used. The jury, as it were, is out on that particular claim. The figures the industry has published on its view of fraudulent or exaggerated claims are very much open to question.
The memorandum also states, "Businesses have faced soaring insurance premium costs as a result of the actions of fraudsters." It is at pains to point out that only a minority of claimants bring forward fraudulent claims to courts.
The Bill seeks to ensure that an automatic referral of a claim that has been found to be fraudulent would be made to the DPP, which could act as a deterrent to would-be fraudsters. This is a function that our courts already enjoy and an option that is available to judges sitting in adjudication on cases. By all means, judges and the court system should avail of the opportunities provided to them to make sure that fraudulent or exaggerated claims are moved on to be investigated by the relevant agencies and that justice is done in this regard. As other Deputies noted, fraud is not a victimless crime. We all pay for it through higher premiums and the increase in the cost of doing business that arises when there are fraudulent claims. Where fraud occurs, it should absolutely be rooted out and dealt with in a very severe and serious manner.
There is much that is wrong with the insurance industry. In an effort to fix those wrongs, I am not sure that I would necessarily start from this juncture. Experience and history show us that we must take everything the industry tells us with a liberal pinch of salt and not buy the line it is selling. Claims made by representatives of the industry a couple of years ago at the finance committee that up to 20% of claims are false, fraudulent or exaggerated have not been substantiated to anyone's satisfaction. A fact-checking exercise by thejournal.ienoted: "There is a large discrepancy between the low number of reported cases of fraud and exaggeration to gardaí and the estimated 20% figure stated [by the industry] in the instance of personal injury cases." The movers of the Bill are in danger of producing legislation that is in search of a problem. It would be letting the exceptionally profitable Irish insurance industry off the hook if we were to exaggerate the impact on premiums of what is, in the scheme of things, a small number of fraudulent claims.
Let us look at the facts around the cost of insurance in this country. There is a massive problem with profiteering and cartel-like behaviour in the sector. The accusation of anti-competitive practices and cartel-like behaviour is not my charge alone but what the Competition and Consumer Protection Commission, CCPC, described in its interim report, published last September, on its investigation into so-called price signalling in the motor insurance industry. Over a 21-month period in 2015 and 2016, the commission suspects that some motor insurers were systematically ripping off punters by co-ordinating market activity. That is code for operating a cartel-like system to stiff car owners. It is important to look at the facts in this regard. Between 2013 and 2018, motor insurance premiums rose by a massive 62%, on average, from €435 to €706. At that time, the industry persistently cried foul and put the increase in premiums down to rising claims costs. That is manifestly not true. In fact, claims costs rose by a mere 14% in that period. This issue needs to be addressed swiftly.
The Government and its predecessor have very dutifully done everything the industry has asked of them, but the industry has not reciprocated. We now know a lot more than we did before about the dynamics going on under the bonnet of this industry. The national claims information database, NCID, is operational. It has reported on motor insurance and the industry has been caught with its hands in our pockets. As far as I know, it has not yet reported on public liability and employers' liability insurance. Legal fees are one of the major contributors to eye-watering legal costs in this country. That needs attention. The work of the Judicial Council and the revised personal injury awards regime should see movement in this regard and a reduction in costs for business and ordinary consumers as a result.
As I said, successive Governments have been very malleable in meeting the demands of the insurance industry. It is right that awards for minor damages from which personal injury claimants almost always recover well should be drastically reduced. We all want to see that. We know that the small businesses that are in the firing line in this regard, including retailers, restaurants and cafés, are getting absolutely hammered on the cost of claims in respect of soft tissue damage and so on. That is a risk to businesses and jobs. However, even after the Government and the Judicial Council attended to this matter, we are still waiting for the industry to drop its premiums. The new regime can and will see claims costs go down at some point in time but it has not happened overnight. I am interested to know the Government's perspective on when that might happen. Insurance companies have yet to factor in the new regime and provide the reductions for consumers that the logic of the new system was supposed to deliver. The industry is coming up with excuse after excuse not to refund a few euro to car owners whose vehicles have been parked in their driveways for most of the period since Christmas. In a reply to me yesterday, the Minister for Finance, Deputy Donohoe, and the Minister of State, Deputy Fleming, stated that they plan to raise this issue with the insurance industry.
I have noted that there are a lot of things wrong with the way in which the insurance industry works in this country. Fraud is a problem and I am at one with the movers of the Bill that it absolutely should be rooted out in a deadly serious fashion. In doing so, however, we must not lose sight of the impact the actions of the industry itself is having on business and regular customers. We need to have a sense of proportion when addressing this issue. Our focus should be on the industry's cartel-like behaviour, price signalling, dual pricing, penalising of loyal customers on renewal, failure to refund hard-pressed customers at this unprecedented time and refusal to reduce premiums immediately in response to the new personal injuries regime. We know why premiums are out of kilter with analogous markets. It is not all down to the level of fraud that some claim goes on but which is unsubstantiated at this point in time. There is a larger question that we, as a Legislature, need to address. We know how it can be addressed but the insurance industry has been dragging its feet in this regard for far too long. This Government and the previous one has done everything the industry has asked of them. It is now time for the industry to act.
I welcome the opportunity to speak on this Bill. We all agree that affordable insurance is fundamental to the well-being and interests of the country. The sky-high premiums that are being charged add significantly to the cost base of our economy and are a substantial financial burden for individual households. We all know that insurance costs in this country are high by international standards. Despite falls in the average costs of claims over the past ten years, premiums continue to rise.
To be clear, there is no argument against the fact that there are exaggerated claims and insurance fraud. There is no doubt that fraud happens; it is to the question of the degree to which it happens that we need to apply our attention. We must take greater steps to reduce fraud, such as the introduction of a dedicated Garda insurance fraud unit to bring prosecutions against those who exaggerate or make outright false claims. People who purposely mislead the courts should expect to face consequences. We all pay a price for not ensuring that happens and it is short-sighted to fail to invest in enforcement.
Fraudulent insurance claims are already criminalised under section 25 of the Civil Liability and Courts Act 2004. It is an offence under that Act to give false or misleading evidence in regard to personal injury actions. The existing penalties are significant, involving a €3,000 fine, imprisonment for up to 12 months, or both. However, the number of prosecutions brought under this section has been minuscule. Whether this is the result of a lack of cases or a lack of Garda resources to pursue such matters is not entirely clear and warrants further investigation. This Bill would increase the financial penalty for fraudulent claims by raising the fine to €5,000 plus the legal costs of the defendant. However, if there are very few cases brought to the Garda and very few prosecutions, it is not obvious how increasing the penalty will make a significant difference. There certainly is a discussion to be had on strengthening our laws in this regard.
In driving up penalties for such claims, we must be careful not to initiate a chilling effect on people who have legitimate claims.
Not every legitimate case before the courts will have airtight evidence in its favour. Insurance companies will contest legitimate cases as well. If increasing the financial penalty for a small number of guilty individuals will make it more difficult for innocent people with a legitimate claim and where they are rightly due damages, we must be careful.
The explanatory memorandum mentions the perception of fraud and exaggerated claims. We must go beyond that as the official data on fraudulent and exaggerated claims are limited. Data on insurance costs in general are thin on the ground and I have not found any data indicating significant increases in insurance fraud in recent years. It is important to separate the facts on insurance fraud from the insurance industry's continuous narrative that there is an epidemic of insurance fraud responsible for driving up costs. The argument that soaring premium costs can be attributed to criminal acts of a few individuals is a narrative that is quite definitely promoted by the industry for very good reasons. We must be very careful. There is no doubt there is a concern but we must ensure we get to the source of the problem.
Insurance companies have put the rate of fraudulent and exaggerated claims at 20% but those figures are, of course, largely inflated. Insurance companies report only approximately 1% of claims to gardaí as fraudulent, so as the rates of fraud are exaggerated, it stands to reason that the effect on premiums is also exaggerated. Mr. Justice Kevin Cross is the High Court judge currently in charge of the personal injuries list and he has shared his view, stating it is fundamentally dishonest to blame supposedly fraudulent claims for the cost of insurance. In its 2017 report, the cost of insurance working group stated that fraud was not one of the main reasons for increasing motor insurance costs and a follow-up report noted there were no official data to indicate that insurance fraud was widespread.
The reality is we are lacking official data on liability insurance, which makes it very difficult to pinpoint cases for high premiums and the areas in which we must strengthen legislation. The data we have indicate that public liability insurance premiums have jumped by 15% to 20% over the past three years, as reported by the CCPC. The sharp increase in cases and the exit of a number of overseas providers from the market has been devastating for so many community groups, sports clubs, childcare facilities, etc. The CCPC report highlights the lack of independent public data on the insurance market as a barrier for new entrants to the market. We must pay very serious attention to that. Businesses and community groups must be supported by the State so they can engage with the market and lower risk profiles where possible.
A recent Central Bank report on motor insurance claims indicates people were not benefitting from settling personal injury claims through litigation and they often ended up waiting twice as long for a settlement almost similar in size. The report indicates the litigation costs accounted for approximately 67% of compensation awarded, bringing average claim costs to €40,000. In comparison, legal costs under the PIAB account for less than 4% of compensation awarded and the total for average claims is less than €24,000, which is a difference of €16,000 per claim. There is also a significant difference in the time taken to settle a claim. Claims involving litigation take an average of 4.7 years, whereas the PIAB took 2.9 years on average. The benefits of the board's process are clear and there is great benefit to expanding the role of this board. There are areas like mediation of settlements where this should happen.
We must examine evidence and we need more data. We are not opposed to this legislation but more information is needed. Perhaps it does not get to the crux of what will resolve this matter.
I support this important legislation from the Regional Group, particularly Deputy Naughten, which is very badly needed. We need insurance reform. I detest fraud and those who commit fraud but I am not the judge and jury. I cannot prove these things and it is often hard to prove fraud. The advertisements run by insurance companies implied people were putting their hands in our pockets and they were very effective. They made people think.
This is not by any manner or means a panacea for fixing the insurance industry. As others have said, insurance is a lucrative business and because some firms have left our market, it is less competitive than it was. I deal with insurance all the time because I am part of a company that employs many people and that has a turnover. Insurance is vital for it but it is very hard to get it. We are given every reason in the book for these companies not dealing with the problem but instead getting as much as they can, in the main, from the people who pay for insurance. I raised yesterday how the Judicial Council is trying to deal with overpayments for small and trivial injuries; it is only tinkering with this and it is not really serious about the matter. We must deal with the judges and legal people, including free legal aid. We must tackle the payouts and provide refresher courses for members of the Judiciary.
This legislation is very important but we need more. It is the same with banks, which have no governing legislation. It is like the Wild West and they can do as they like. The insurance companies are nearly the same. We cannot operate without them. As I said, I have no time for people who defraud these companies but some of the increases in premiums are astronomical. They have put many people out of business. Although it may be difficult to deal with the problem, I support the legislation.
I certainly support this legislation because we need insurance reform. It is long overdue. I was elected in 2016 to the Dáil and it is embarrassing to face my constituents time and again when they ask me what I have done about insurance. These are business people working their butts off, whether in a garage or elsewhere in west Cork. They are murdered by having to pay huge rates of insurance without any mercy. We have spoken about this time and again but nothing has changed. The young people out there trying to get car insurance are being fleeced along with older people. Everybody is being caught one way or another.
The way hard-working publicans have been treated is scandalous. They paid their insurance through the years but the insurance companies were not willing to pay when there was a genuine reason. Sometimes it looks like people must pay the bill but there is no guarantee of getting back the money. Community voluntary organisations are suffering severely. Many claims should be disputed and fought in court but they are just settled. A voluntary organisation I am involved with saw this happen some years ago when it was a disaster to pay money on the claim. It was done almost automatically and the consent of the organisation was not sought. We gave an instruction that the claim should be fought as we felt we were in the right. Voluntary groups must raise funds locally but they pay massive money for insurance. It is the same for sports organisations throughout west Cork.
We need to make changes. We cannot be talking about this year in and year out without anything happening on the group. I will certainly support this Bill.
There is only one way we will stop insurance fraud and that is by making people accountable. There are people whose families have a history of claims. We probably all know people or families who have made massive claims.
There is no problem with people making insurance claims that are warranted, needed and just but we have serial claimants. We have to link it to something. We have to know if they come into the courts or if families have been organising these things. They have to join the dots. There could be two or three different people coming into court every six months making claims and it is not being picked up on. There has to be accountability for it. Anyone who deserves a claim for an injury or anything, deserves it because of their health. However, people who do it on a constant basis need to be penalised, summonsed and dealt with on that basis.
Deputies said that price rises are not based on claims. If one goes to insure one's car, the insurance for a car in each county is different and depends on the claims within the county. The Minister can go online and check it. In different parts of the country, insurance for the same vehicle with the same stats are higher in certain counties because of the claims within the counties. That means there is an issue in those counties and it needs to be dealt with. The people making the fraudulent claims need to be dealt with by the heavy hand of the law. I fully support this Bill.
Gabhaim buíochas leis an nGrúpa Réigiúnach, a chuir an Bille seo os ár gcomhair. Beidh mé ag tabhairt mo thacaíocht iomlán don Bhille. We have a compensation culture in Ireland that needs to be strongly challenged. Many businesses have been left high and dry and many have suffered much distress due to fraudulent compensation claims. This Bill is relevant and appropriate to what is happening in Ireland. As Deputy Naughten made clear, the Bill's aim is to act as a genuine deterrent to those making false claims by increasing penalties for such offences, imposing legal costs on the plaintiff and having such matters referred to the Director of Public Prosecutors for investigation at the court's discretion. This is an excellent objective. I am tempted to say we have enough gangsters in the insurance sector without having chancers in the courtrooms too.
The damage to small firms through insurance fraud is massive. It can wipe out a business financially and destroy the businessperson who has spent many hard years building the business up. Jonathan Hehir, CEO of insuremyshop.ie, said recently:
Shops throughout [this] country [have closed] as a result of crippling fraudulent public liability claims and subsequent premium increases. False claims [he went on to say] are a 'plague' on many small businesses in Ireland, particularly those in retail, where some people attempt to sue after pretending to trip in a shop, or pretending to steal so [that] they can [then] accuse the store for defamation when questioned. From what [this group has seen] on the ground, a significant portion of these cases in some shops are intentionally planned by criminals [who] have invariably benefitted from similar exercises in the past.
That is why this Bill is so important. We need to make it easier for the small business to thrive and more difficult for the criminal or fraudster to profit from the hard work of others.
The Government supports this Bill, as the Minister of State told us earlier. I support it as a member of a Government party and personally. My then colleague, Billy Kelleher, now an MEP, introduced this Bill in the last Dáil and I spoke in support of it on that occasion. The Minister, Deputy Michael McGrath, introduced and took the baton forward on the Bill in the last Dáil and I commend his work on it.
There can be no doubt that the consequences for those who perpetrate fraudulent claims should be grave. Consequences should apply and the fact somebody can make an exaggerated or entirely bogus claim with no consequence is not acceptable. We heard the Minister of State particularise the measures that are in place at the moment for dealing with such claims.
There are a couple of things that are useful to reflect on in the context of the Bill. One is that in the Civil Liability and Courts Act 2004 there are already provisions – I think in sections 25 and 26 – that provide for it to be an offence for somebody to mislead the court. Every personal injury claim that is submitted to a court process requires an affidavit of verification where somebody has to swear on affidavit that they are telling the truth. It is important to note there are existing protections and precautions within the system. It is true, as the Minister of State referenced, that costs follow the event. That means in a civil case that if one loses, one pays. It is often said there is no consequence and people who lose do not pay. Often the reason they do not pay is they do not have anything to pay with. That is not an endorsement or excuse for somebody offering a fraudulent claim but it puts some context around the provisions. There is already a provision and costs go against the losing party. The question is how that is enforced. Does a sheriff go after somebody and pursue them to their home, if they have one, and take the car, vehicle or whatever assets they may have? Often they are people of little means. There is that practical issue to consider.
I support the Bill and I commend and see exactly where the Deputies are coming from in introducing it. Everybody in this House and this country would be against fraudulent claims. However, it is important to put some context on it. There is a narrative that has emerged in recent years and has been, I suggest, largely driven by insurance companies that every claim is fraudulent and everybody who walks up the steps of the courts is on a mission to defraud the taxpayer, the insurance company or the small business. That is not the case. We have heard already from other Deputies that it is a very small minority of claims that fall into this category.
It is also important to reflect that the foundation in our law for this type of claim goes back to first principles. These are important principles of employee protection, consumer protection and, in many cases, environmental protection. A century ago, coming out of the industrial revolution it was seen as acceptable to have workers, often from children up, spend their entire lives working in grimy pits and factories. They were in workplaces with no health and safety, no regulated breaks or working time and no protective measures. If somebody fell dead on the production line, they were effectively swept off the floor and replaced quickly. That might be an extreme case but there was no protection and no recourse if somebody was injured in a workplace accident or, indeed, if somebody brought a faulty product. A famous case where the law was changed concerned a young schoolgirl in a nightdress which went on fire in front of a fireplace because it turned out to be made of flammable materials.
Another landmark case was Donoghue v.Stevenson, 1932, which anyone who studied law in the last 90 years will be familiar with. It is often referred to as the tale of the snail in the ginger ale. It is the foundation of the modern tort of negligence. Effectively, that case was about a woman drinking a bottle of ginger ale and, to her horror, when she opened it, began to drink and had consumed half of it, she realised it was so putrid it had snails growing and living inside it. Snails are disgusting things to find in one's ginger ale but one could get worse: carcinogenic substances, cancer-causing materials and all kinds of hazardous materials in a product one has ingested, consumed, bought or had put upon one. It is reasonable to say one should be able to bring a claim in those circumstances and have right of recourse and redress. The manufacturer of a profit is the big fish in this. It is usually the small man or woman on the other end of these situations and they should have some right of reply and redress and be able to litigate that, if necessary, before the courts. It is important to hold that context. Many of the types of actions that go before the courts vindicate laws we make in this Chamber, that our predecessors made in the last decades or that have come from Europe. They are there for good reasons: to protect individuals and to protect the rights of the small man or woman against big corporations, be they employers, manufacturers of products or other things.
That is the principle point I want to make. Not everybody who brings a claim is bad, not everybody should be discouraged from bringing a claim and they are vindicating important rights that we and others have legislated for them to have. Society has progressed by giving those rights.
The other point has been made by other Deputies but I completely concur. It is that insurance companies would have us believe that every claim is fraudulent. There is an extent to which the media play into that narrative because we often read in the papers about shock-horror cases where either the case was thrown out of court or some huge award was given in circumstances where it seems a bit dubious or undeserved. We rarely read about the 99% of cases in between where people bring a legitimate cause of action, are rewarded an often modest sum and walk out of court no better off than they started.
Perhaps, however, the wrong is righted by some small award to compensate for what may have been a significant loss.
The insurance companies have major questions to answer. The suggestion is that fraudulent claims are the root of all evil in terms of the premiums that both small and large businesses and, indeed, individuals and consumers or anybody who bought or tried to get a car on the road in recent years, particularly younger people, have experienced. I know the blight of insurance premiums on businesses in my constituency. To suggest, however, that all of this can be laid at the door of the fewer than 1% of claimants who make fraudulent claims is to asking too much and going too far.
We in this House have done our bit, introducing successive items of legislation relating to this matter. We are now introducing with legislation to copper-fasten existing legislation. The Civil Liability and Courts Act 2004 is being supplemented with very similar provisions in the perjury Bill, which is passing through the House at the moment. The Bill with which we are dealing was brought before the House with absolutely good intent. I completely support and endorse the reasoning behind its introduction. It is, however, building on foundations that were laid 20 years ago in terms of recourse, penalties and sanctions.
It is time for insurance companies to get real and get on with actually dealing with this matter. I do not buy the argument that this is the cause of it all. The bottom line is that the profits of those companies are far more to do with it and that is really where the examination stops. This House and the political system in general have done their part. It is over to the insurers to bring premiums down and to look at the books and the reasons involved. It is important, however, that all of us in this House challenge the perceptions that exist in respect of fraudulent claims because, in my view, the companies involved are flogging a false narrative for their own commercial gain. It is very important that we do this while recognising the right and the legitimacy of the ordinary man or woman to bring a claim where he or she has been wronged. There is actually nothing untoward about that whatsoever in the vast majority of circumstances.
First, I thank Deputy Denis Naughten and his colleagues in the Regional Independent Group for highlighting the issue with which the Bill deals. I acknowledge the spirit in which the Bill has been brought forward. I also thank those Members who have participated so far in the debate.
As the Minister of State outlined, there is much common ground between this Bill and the Government's action plan for insurance reform. I acknowledge the various points that have been expressed by Deputies about the high cost of insurance in this jurisdiction and, most importantly, the adverse impact this has on our private citizens, enterprise and communities.
This Government is taking insurance reform very seriously, as are all Members who spoke here tonight. We know that a cost-competitive insurance sector is absolutely vital for our financial stability and economic activity. We know too that pricing and availability of insurance has been and remains a major problem for businesses, community groups and consumers. The programme for Government outlines a range of commitments to inform our insurance sector and the action plan for insurance reform, which was published in December, contains 66 specific actions aimed at bringing down costs for consumers and businesses including introducing more competition into the market, preventing fraud and reducing the burden on the business community and voluntary organisations. Those actions include examination of the very issues which are the subject of this Bill this evening, that is, the pursuit of fraudulent claims and the awarding of costs,
Every effort is being made to address these issues and, more generally, what is colloquially described as the claims culture that drives them. Insurance reform is a key goal for the Department and is included in our Justice Plan 2021, which was published in February. My Department is engaging in work in a number of areas to address these matters, including placing the offence of perjury on a statutory footing and making it easier to prosecute, examining and providing recommendations regarding changes to ensure insurance fraud data is published and enhancing co-operation between An Garda Síochána and the insurance industry.
In addition to the range of legislative and policy measures to which the Minister of State referred, legislation has already taken effect to help address this complex situation. The Central Bank (National Claims Information Database) Act 2018, for example, which commenced on 28 January 2019, establishes a national claims information database on a legislative basis to facilitate a more in-depth analysis of annual trends for motor insurance claims. We are also examining the potential to bring forward proposals with regard to other areas of reform such as occupiers liability and the potential to cap awards. This is in addition to the personal injury guidelines which Deputies have outlined. These were recently adopted by the Judicial Council and legislation relating to them is currently going through this House.
A key component of many of our reforms is the need to tackle insurance fraud. This includes examining those areas which are central to the root of the Bill being considered here, that is, awarding of costs and referral of fraudulent actions. As we have heard this evening, however, and as my colleague, the Minister of State, indicated, there are issues with the measures as outlined in the Bill which will require significant amendment. Given the broad range of challenges being faced, amending section 26 of the 2004 Act will not solve all our problems on its own. Indeed, there is no silver bullet when it comes to this complex problem.
In its Report on the Cost of Employer and Public Liability Insurance, the cost of insurance working group expressed a belief that for section 26 to more effectively achieve its aim of tackling personal injury fraud, there was a major onus on defendants to challenge misleading evidence, where appropriate, by taking it to court rather than settling on the court steps for fear of an unsatisfactory outcome. The working group was also of the view that appropriate use of the legislative provisions in the 2004 Act could be facilitated by encouraging the industry to make complaints to An Garda Síochána where it believes fraud to have featured in particular claims.
As previously stated, the Government is committed to increasing co-ordination and co-operation between An Garda Síochána and insurance industry . The action plan for insurance reform makes specific reference to an expansion of the Garda National Economic Crime Bureau, GNECB, to deal with the issue of insurance fraud. While reassignment of all Garda staff has been delayed due to Covid-19, it is expected that allocations of Garda staff to specialist units, including the GNECB, will commence towards the end of this month. In addition to this, a competition has commenced to recruit three forensic accountants for GNECB, which doubles the current allocation of three. I should also add that Perjury and Related Offences Bill 2018, which provides for a statutory offence of perjury that can be clearly interpreted by investigators, prosecutors and the courts alike and includes false statements on oaths, false statutory declarations, fabrication of evidence and subordination of perjury is currently going through the Oireachtas. I hope to have further progress on this in the coming weeks.
The Bill also consolidates other relevant legislation in the area of perjury and knowingly making false statements in formal legal proceedings. The Bill, when enacted, will provide a clear definition of perjury, and simply put, should enable the offence and related offences to be more easily prosecuted in the courts.
These concerted reform initiatives represent a series of mutually reinforcing measures that in their collective implementation will strengthen sections 25 and 26 of the Civil Liability and Courts Act. I reiterate that the Government is not opposing the Bill on Second Stage. The Government view, however, which has been expressed this evening by my colleague, the Minister of State, is that substantial amendment will be required to the Bill before it proceeds further.
I thank Deputy Naughten and all his colleagues for raising these issues and, most sincerely, the spirit in which that was done.
At the outset, I also wish to acknowledge the work of the Minister for Public Expenditure and Reform, Deputy Michael McGrath, and former Deputy Billy Kelleher and thank them for their contributions in bringing forward legislation in this area in the past. It is good that the Regional Independent Group has picked up the baton, so to speak, and introduced the strengthened legislation that is before the House this evening.
I am heartened by the position the Government has adopted in that it will not oppose the Bill. I am also encouraged that others in opposition have expressed support for it. That is a very good thing. Why would there not be cross-party support for this important legislation? Everybody in the House appreciates and accepts that the insurance crisis in this country is a cross-cutting issue that affects every facet of society. It impacts on our schools, crèches, public amenities, small businesses and friends and families everywhere.
I also totally accept that a multitude of factors are at play and that one single measure will not address the entirety of the problem. There is an issue, however, where a small minority of claimants submit spurious, exaggerated and bogus claims. If that issue were tackled, it would have a disproportionately positive affect downstream. It is something we should certainly go after.
I am very much in favour of this Bill for four reasons. The first is that the emphasis here is on deterrent, not punishment or retribution. Everybody understands that insurance is there for a reason. It is there for genuine people who have been genuinely injured. They should not be out of pocket. They should have their medical bills paid for and receive adequate compensation for their injuries. I believe everybody accepts that. It is also important, however, that the threshold of penalties is raised slightly in order that we absolutely discourage and deter spurious and bogus claims.
What is suggested in the Bill makes much sense. If a claim is thrown out of court because it is deemed to be fraudulent, then it is reasonable to expect that the claimant pays the defendant's legal fees. While the implementation is a little more complex, at least the principle is sound. The Bill proposes that a defined pathway will exist and that judges, should they choose to exercise this right, could refer fraudulent claims to the Director of Public Prosecutions for further consideration, if, again, it is deemed appropriate.
This legislation is appropriate and justified. More important, while it is a little bit delayed, it is proportionate and needed in this day and age. Another reason I support it is that it will free up a lot of court time. Much court time is wasted with unnecessary cases and claims. If we can preserve the time of the courts and the caseload for worthy and deserving cases, it would make a lot of sense, particularly with the Covid-19 crisis and the backlog of cases in our courts.
This legislation will reinforce the importance of the PIAB, an agency for which I have much time. The emphasis is on seeking a non-adversarial solution to many of these claims and to prevent litigation in the first place. It is swifter, as well as being much more efficient and effective at solving these problems. I am heartened that the Government is reviewing the PIAB process with a public consultation under way. I encourage anybody who has an interest in this area to make a submission to the relevant Department in that regard.
There is a compensation culture among a small minority. This legislation will challenge that. It will stimulate conversation and probably lead in time to the creation of a specialised Garda unit. I take the Minister's point and that three new forensic accountants are shortly to be employed. We probably need a specialised insurance fraud Garda unit, however big or however small.
I support this legislation. I am grateful to those colleagues who are happy to allow it progress to Committee Stage. I look forward to further discussions on this and the legislation being enacted as soon as possible.
I thank everybody for their support for this Bill.
Once a claim is notified to an insurance company, the company against which the claim has been lodged sees its insurance negatively impacted with the cost of its premia going up. That is a consequence for the company. For the person who may have instigated a fraudulent claim, there are no consequences. That is not right. This Bill is about fraudulent claims. The Regional Group is also working with the Minister on the Perjury and Related Offences Bill 2018, which is to go to Committee Stage. We hope this will happen as soon as possible.
This Bill is short but important to help turn the tide on the cost of insurance. I agree with Deputy Berry that we need a specialised Garda unit and control over the pay-out for personal injuries. I acknowledge the work of Peter Boland and the team at the Alliance for Insurance Reform, as well as ISME, in their efforts over the past number of years to highlight the detrimental effects insurance costs are having on their businesses.
As was stated earlier, Fianna Fáil supported the concept of this Bill in the previous Dáil. We realise now is the time to act on all of the talk and reports. Now is the time for action. Small businesses, voluntary clubs and sports clubs are all at risk. If they are not able to have insurance cover for their business, clubs or sports facilities, they will not continue to exist. No one wants to see anybody closing their business because they cannot afford insurance.
Over the years, some companies have been brave enough to pick on the fraudulent claims. We note the actions of Supermac's in taking on and beating the fraudulent claims against its business. We cannot rely on the Supermac's of this country, however, to actually do the business without backing them up with legislation. This legislation will ensure there are consequences for fraudulent claims while helping to reduce claims and premiums. It must be remembered at the end of the day we are talking about fraudulent claims.
I thank the Minister for her support and the Government for allowing the Bill to go through. I also acknowledge the work of former Deputy, Billy Kelleher, and Deputy Michael McGrath in the previous Dáil for the work they put into this area of insurance. We have spoken about it forever more. I know many businesspeople across the country who hold their breath when their insurance premium comes in the door. They do not know whether they will be able to afford to pay for insurance the following year or how they will pay for it. It is important that we as legislators provide the necessary support.
The plan in the programme for Government for insurance reform is to be welcomed. Everybody will support it. However, we need to have more than just reports or groups. We need to grasp the nettle. For too long we are looking for the reasons legislation will not work. We have got to a stage where we as legislators have to do what we are elected to do. We have to support the backbone of our economy, our small businesses. We have to support our sports clubs and the people who are keeping this country ticking over.
I look forward, as do all the members of the Regional Group, to working with the Minister to ensure this country is a better place for small businesses without having to worry about the cost of insurance. We must ensure that if a fraudulent claim is put in against a small business, it does not have to bear the brunt of the cost or the worry. Again, I thank the Minister and all Deputies for their support for the Bill.