Insurance fraud crisis is costing jobs, says top judge

April 12th, 2019

Insurance fraud crisis is costing jobs, says top judge

Former High Court president Nicholas Kearns has expressed frustration at the slow pace of insurance reform, saying the country risks reputational damage if the claims culture is not tackled.

He is baffled that a dedicated Garda unit has not been set up to prosecute fraudsters, and called on insurers to publicly commit to reducing premiums if award levels do come down.

Mr Justice Kearns headed up the Personal Injuries Commission, which found that awards for minor injuries in this country are almost five times those paid in England.

“It is staggering,” he said of award levels, in a hard-hitting speech that also criticised lawyers.

His report has recommended that judges be tasked with recalibrating award levels.

Speaking at a conference organised by the Personal Injuries Assessment Board (PIAB), Mr Justice Kearns said there was no constitutional difficulty to capping awards for minor injuries.

The issue of rising insurance costs and high compensation was referred to as a crisis and a market distortion.

“This crisis has spread across many small businesses, leisure facilities, shops, places of employment and is now causing people to lose their jobs in areas where, but for this market distortion, would be thriving and prosperous,” he said.

Mr Kearns said of the slow pace of insurance reforms: “Those in a position to do something about the current difficulties must finally get up and do something about it.”

He said only “flat earthers” would fail to see the urgency for immediate changes.

The Personal Injuries Commission report recommended that once a Judicial Council was legally set up, the judges on it would provide guidelines on the appropriate damages for personal injuries cases.

But the legislation, which has been on the way “forever”, could be an other two years before it becomes law, he said, referring to recent comments from Michael D’Arcy, the minister with responsibility for insurance reform.

As an interim measure, judges could agree on guidelines to recalibrate award levels. These would be advisory, rather than mandatory. But as they would come from the judges themselves the judiciary would likely follow them.

This would lead to more consistent award levels, and reduce delays and appeals.

He said that if this “soft solution” fails, then the Government could press on with capping damages.

Mr Kearns suggested a bill, aimed at capping award levels, that has passed its second stage in the Seanad, could be amended to deal with soft-tissue injuries alone.

The Civil Liability (Capping of General Damages) Bill 2019, is being promoted by Fine Gael Senator Tony Lawlor.

Lawyers have questioned if this is constitutional, with others claiming it would trespass on judicial functions.

“Compensation has been capped in the past without the heavens falling in,” Mr Kearns told the PIAB conference.

He referenced a number of court judgments where awards were capped.

It was his personal view that a statutory cap on awards for minor injuries could survive constitutional scrutiny.

This was “because it would be fair, proportionate and in the public interest if it cures our present difficulties”.

Judges would still be fixing the amounts, up to and including the cap set by legislation.

“If the alternative is that businesses continue to go under at an ever-increasing rate, throwing people out of work and diminishing Ireland’s reputation as a place where business can flourish in a post-Brexit world, then those considerations will have to be factored in to any balancing of rights and interests in any constitutional evaluation,” he said.

Mr Kearns said he was “baffled” a dedicated unit within the Garda had yet to be set up to tackle insurance fraud.

“Fraud is crime, and rampant fraud makes a mockery of our compensation system, and its legal practitioners,” he added.

“It is hardly surprising that such claims abound in a jurisdiction where compensation levels are among the highest in Europe – and where the risk of detecting a fraudulent or spurious claim is small and where the risk of prosecution is virtually nil.”

He referenced remarks by Justice Minister Charlie Flanagan pointing out that insurers are now profitable.

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