Fraud due to incorrect information on insurance applications higher than anticipated

Submitting incorrect information in order to get cheaper insurance quotes is becoming quiet prevalent. This form of fraud could be carried out by up to a fifth of applicants. Although official figures show the incidence of exaggerated or false declarations to be at 7%, it is likely for this figure to be as high as 20% due to the inability to cross examine customer information due to the strict Data Protection Act.

In general, brokers have noted many instances of false declarations occur when people submit information when getting a car or house quote. But it was not until a claim had to be made that discrepancies between the information the policy holder submitted and the information saved against the national claims database were examined. Withholding information regarding claims history, penalty points or convictions reduces premiums which explains the temptation for those to not declare all material facts.

Brokers in Britain have access to claims databases as a measure to clamp down on this activity at the underwriting stage. Although brokers here could benefit from a fully integrated system, data protection laws prohibit the transfer of data relating to customers. Our database can only be accessed at the claims phase and not before the policy is made live – when it is often too late to intervene.

Unfortunately for these people, claims will not be honoured and will have to expense any financial losses themselves. Indeed, the boss of the Irish Brokers Association (IBA), Brian McNelis, has called for an integrated system that can warn brokers of any cases where fraudulent information is submitted prior to writing any business. This would help cut down on the cost of insurance fraud which is costing the State around €100m a year.