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Insurance fraud database plan shot down by privacy concerns

12 Aug 2019 / personal injury Print

Insurance fraud database shot down by privacy issues

Plans to create a register of all personal injury claims in order to drive down insurance fraud have been shelved over data privacy concerns, according to an RTÉ report.

The register was mooted as a means of identifying multiple claimants by listing all of their previous cases, but the Department of Justice has now shot down the plan, citing scarcity of resources to deal with the technical challenges.

The Data Protection Commission also demanded further work to detail the evidential requirements for the creation of a new database to combat fraud.

The proposal has been knocked back after a review of the law by the Department of Justice, which has now been submitted to the Department of Finance.

Wasteful

It concludes that a national claims register would be "prohibitive at a technical level" and "wasteful of scarce resources". 

The register was first provided for in law under the Civil Liability and Courts Act 2004. It was to hold the name, address and occupation of each party to a personal injury action, and be viewable by those who had a "sufficient interest in seeking access to it".

The report says that the 15-year-old legislation "was considered to be a means of identifying multiple claimants where dishonesty might be involved", but was never commenced.

Last year, the Government-established  Cost of Insurance Working Group called for increased transparency from the insurance sector.

To this end, it recommended pushing ahead with a national claims register in its October 2018 report.

Fraud patterns

An insurance fraud database would provide a mechanism to identify patterns of fraud at any stage in the policy lifecycle, the working group report said.

Insurers should share their data through a secure protocol “subject to data protection restraints.”

The report expressed the hope that a database would “play an important role in the fight against insurance fraud” and would be available to all insurers participating in the Irish market.

The report says: “an improvement in transparency, facilitated by additional collection and publication of data in the insurance sector, is essential”.

In early 2018, a sub-group was formed to consider the feasibility of a longer term claim-by-claim register.

This group had representatives from the Department of Finance, the Central Bank of Ireland, the State Claims Agency (SCA), the Central Statistics Office (CSO) and the Personal Injuries Assessment Board (PIAB).

No ‘cogent case’

However, last October a Department of Finance report in response said that there was no “cogent case” for such a register, and no clear need or purpose had been put forward for one.

“Making an assessment of the feasibility of a claim-by-claim register in isolation is difficult,” the report says.

“It is a new project which potentially could be modelled in a wide variety of ways and for a range of different purposes.

“There is no clear overriding direction of travel for this project as different stakeholders have different views on this matter,” the Finance Department report says.

It also points out that there is no international precedent for such a project and warns that such a project “could take years to operationalise and … could cost a lot of money”, with limited added value.

The report also warns that the granular level of information on such a database would be personal in nature and commercially sensitive and that, while greater transparency would benefit consumers, a necessary balance is also important in terms of data privacy.

Extensive safeguards

The report warned that any claim-by-claim register would have to be underpinned by legislation to include extensive safeguards. It concludes that there is no consensus among stakeholders as to what the end product and interface of such a register should look like.

The report also draws comparison with the Central Credit Register which has cost over €3 million to date and is expected to cost €47 million in the first ten years that follow the passing of the underpinning legislation, the Credit Reporting Act 2013.

The Department of Justice Insurance Fraud Database Working Group, which has made the decision on the fraud database, was chaired by the crime division of the Department of Justice and Equality.

This working group was established to assess the measures required to allow insurance companies to share information in order to combat fraud.

It has representatives from Insurance Ireland, the Motor Insurers’ Bureau of Ireland (MIBI), the Garda National Economic Crime Bureau, and the civil and criminal law reform divisions of the Department of Justice and Equality.

Talks

The group also had talks with the Office of the Attorney General, the Office of the Data Protection Commissioner and the respective British bodies dealing with insurance fraud (the Insurance Fraud Enforcement Department and the Insurance Fraud Bureau).

The Courts Service currently collates data from 75 databases countrywide. This data would require further development to compile the information legislated for under the Civil Liability and Courts Act.

Doing so would be an "unhelpful diversion of resources at this time," the department review said.

It also said that the Courts Service had raised "significant concerns" about the data protection implications of such a register.

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