The claim game
Bogus and exaggerated insurance claims are becoming a real issue for retailers. If you get hit by a number of personal injury claims it can have huge repercussions on your insurance bill and in turn, your business. Fionnuala Carolan and Gillian Hamill report
12 March 2015 | 0
An RGDATA members’ survey has revealed that over 60% of retailers have been impacted by claims for trips, slips and minor injuries over the last 24 months. At least 10% of retailers have suffered more than five claims in that period.
During the same period retailers have seen their insurance costs increase significantly. One shop owner reported that his insurance premium has jumped from €65,000 to €106,000 for his five outlets. Another shop owner reported that he had a 20% increase even though the case is still pending.
All respondents confirmed that they are investing heavily in security and the upgrading of CCTV to help tackle bogus and spurious claims. The average upgrade in CCTV is costing €4,500, according to shop owners. Many indicated that these increased costs are putting their business at risk and damaging their potential to recruit additional staff.
Tara Buckley, RGDATA director general said that the persistent complaint from retailers is that insurance companies are too eager to settle claims for a nuisance value and do not vigorously resist claims that are spurious or bogus. She said that it is important that insurers invest in resisting claims, rather than settling them for a nominal or nuisance value.
“Insurance companies need to take a tougher line on bogus and spurious claims against retailers. All too often retailers learn after the event that their insurers have paid off spurious claimants without their consent. In some cases these costs are considerable – in one case ranging up to €30,000, but more typically paying off €3,000 – €7,000. Insurance companies need to invest in resisting such claims. Otherwise they are encouraging a “Have a go at retailers” culture which will sustain more claims and damage business and employment.”
Buckley also called on the insurance industry to maintain a database of solicitors firms that are most often involved in prosecuting claims that are found to be bogus or spurious. She said that the solicitors on the database should be challenged by the Law Society to determine what steps they are taking to establish the veracity of these claims at an early stage.
RGDATA will be asking the Minister for Jobs, Enterprise and Innovation and the Oireachtas Committee on Jobs to investigate the rising number of these claims and to seek a new commitment from the insurance sector to invest in resisting bogus claims.
Some of the cases reported by retailers highlight the weakness of the insurance industry’s response to claims.
A customer injured himself (cut his thumb) while vandalising a toilet in a shop and claimed against the shop-owner. The shop-owner couldn’t prove the injury was self inflicted – even though two people said they heard unusual noises from the toilet area. The Personal Injuries Board made a recommendation and the customer got a payout of €45K without going to Court. The shop-owner’s insurance went up by 30%.
A customer claimed they had spilt coffee on their hand. The shop-owner agreed she spilt the coffee. The medical report showed that she had a slight redness and no nerve damage. She settled out of court with the insurance company and secured a payout of €6,000 and the solicitor got €6,500. The shopkeeper commented: “While this wasn’t a bogus claim, the level of payout is ridiculous. There is a lack of willingness by the insurance companies to challenge these claims.”
A shop-owner reported that a woman got paid €40K resulting from her slipping on a potato on the shop floor and breaking her hip. The insurance company settled before going to Court. The shop-owner in question had no proof of what happened. His premium was increased by €2,000 following this claim.
Shop-owner has two claims involving customers. One relates to a fall which happened a year and a half ago, and he no longer has CCTV footage of the incident. The two main witnesses no longer work for him, and have left the country. The shop-owner thinks that the two year statute of limitations is too long. He thinks if that could be reduced it would be a huge help.
The second claim relates to a young boy who was not looking where he was going and cycled into a bollard in the car park. The onus is on the shop-owner to prove he was not negligent.
A shop-owner had a claim from a customer who said he slipped in the shop and hurt his knee. This happened on a day that the cameras were down (which might happen once or twice a year). The customer was out of work for a week and wanted to be reimbursed for that week’s wages. This member’s solicitor advised him to pay. The member’s insurance premium went up by 20%.
One shop owner currently has four claims involving Polish employees. One of these former staff members, whose claim is currently being processed, rang him to say a solicitor had contacted her and encouraged her to take a case against him. “[She] had actually gone back to Poland and the solicitor involved called her there, told her he heard she’d had an accident and said he’d get her €3,500/€4,000 and that it wouldn’t cost the employer anything. She actually rang me up afterwards; she must have got a bit of a conscience about it, and told me about the situation.”
This particular incident was not the first claim made against the store. The first was made by a “disgruntled employee” who the store owner says “was very close to being let go and I suppose this was her way of trying to strike back”. According to the retailer: “She went to the solicitor [as] she wanted to take a claim against the shop, saying that she hurt herself putting up shelving, which she absolutely didn’t do…She claims that we forced her to move shelving and slide it down the run of the shop. Something that you wouldn’t do anyway, but you certainly wouldn’t use a girl to do it. But that in turn led to three more people, her friends; she got them all to put in claims, all through the same solicitor.”
The retailer says one of the four cases is actually genuine, whereby an employee cut herself with glass at work. However, ironically this is the one case out of the four that the store is likely to win, because as he explains: “There’s no negligence on our part at all…It wasn’t something that we could have foreseen.” He says it’s “common currency” that the other three cases are false and most of his employees, the vast majority of whom are also Polish, are “disgusted at this behaviour”.
The store owner alleges: “The solicitor seems to be advising them, from what we’re hearing, on how to make them up and what to say to the doctor so that they’ll make the [diagnosis].”
He believes doctors need to be more judicious when diagnosing patients. Several years previously, the retailer actually made a complaint to the Irish Medical Organisation (IMO), when staff who “weren’t even in the country” were given sick certs. He was not impressed with the response he received. “They told me they were there to look after the doctors’ interests… and that they didn’t consider it anything to assess.”
However the retailer believes this presents an important ethical issue which doctors need to consider. “I remember [a newspaper] did an investigation when they sent people into a surgery and there was nothing wrong with them. They went in telling the doctor that they weren’t ill, that they were looking for sick certs.” The vast majority were nevertheless granted the certs. “Clearly [some] doctors don’t see it as an ethical issue whereas I think that to give a sick cert to somebody who’s not sick, you’re aiding theft,” the store owner says.
He also believes that the compensation amounts awarded by High Court judges are often ludicrously high. “They don’t seem to realise that the money has to come from somewhere and that everybody else then has to pay for their generosity…It’s just insane, the money that they’ve been throwing around.”
However the store owner has personally felt the financial effect from such claims being made. His insurance premium has increased significantly from €11,000 to €19,000.
A claim was made against one city-based retailer when a woman slipped on the street outside his convenience store. A contract cleaner was cleaning the exterior of the butcher’s shop next door to him with a power hose and the street was wet as a result. He explains: “A girl walked past the butcher’s, came into my shop and bought a mobile top-up and on the way out, she stepped out on to the street and fell. Our shop was perfectly dry inside, the camera shows that she put her foot out on to the street where it was wet.”
The retailer feels it is unfair that a claim was made against him as he was not responsible for the street being wet. However the contract cleaner involved had no public liability insurance, which he believes is why the “nonsense” decision was taken “to sue the shop that the girl walked out of”.
The store owner believes that in cases such as these, the insurance company representing the retailer does not seem to be concerned about finding out who is actually responsible for such incidents or defending the retailer. They merely want to avoid the expense of going to court, where they could have to pay out €30,000 or €40,000 if a claimant is successful. He says that in his case, no investigation was made into who was at fault. The two parties’ insurance companies simply had the claimant’s injuries assessed by the Personal Injuries Board and then awarded the woman who fell €17,400, after ruling that she had sustained tissue damage to her arm. This is despite the fact that the retailer spoke to the girl involved around an hour afterwards. He claims her biggest concern at the time was that her mobile phone had smashed and that “she wasn’t out of work for any length of time”.
This was subsequently an extremely frustrating result for the retailer as his insurance policy requires him to personally pay the first €5,000 of any claim. He also points out that his insurance premium will now go up by around 20/30%. “They [the insurance company] are very aggressive about getting their money back so they [would] get that back over four or five years from me anyway,” he says. He subsequently refused to pay this amount and the case is currently ongoing.
In a previous incident seven years ago, troublemakers set cardboard alight outside his store and damaged the entire front of his shop. “The insurance claim that I put in for that cost €15,000 and my insurance went up from €4,500 to €11,000 because of that claim.” He has another store on the same street which is twice the size, but the insurance premium there is only €5,500. He therefore says that through collecting an extra €6,000 from him for the past seven years, the insurance company has got back around €40,000 “for a claim that cost them €15,000; there’s no logic to that”.
“I believe that incidents are not being looked at in a moral way,” he adds. “‘I have to claim off somebody’ was what that girl [who fell] said to me on the day. She was so brazen about it in that way. She said, ‘Look I know it’s not your fault, it was caused by the [cleaner] but I was in your shop’. It doesn’t make sense but she had no problem with that within her conscience and that is the problem.”
Two cases in 15 months drives premium up
This shop-owner has received two large claims in the last 15 months. In the first case the customer slipped, fell and broke her hip. The insurance company paid out €70K and it didn’t go to court. While this was a genuine case, the amount of the payout was a concern. He said he didn’t hold any bad will against the customer in this case but was frustrated with the insurance company. “You always show empathy towards the customer. I called up to her to see how she was. She was a very good customer and is still a very good customer since. I don’t have any different relationship with her because of it.”
In a second case, the customer slipped and fell in the shop and broke her arm. The insurance company paid out €34K. “It was a wet day and the girl had a pair of crocs shoes on her and she slipped. She did damage her wrist but part of it was her own fault. She contributed to it herself as she was hurrying out of the shop and she just slipped. She got into the car and drove off. The claim just seems very high for what happened.”
While these are not bogus claims as such, the shop owner believes that there is an increase in the number of people claiming and the amount the insurance companies are paying out without going to court. “I feel people are encouraged to claim as the payouts are so large and they go unchallenged,” he said.
The retailer says that you are obliged by insurance companies to notify them as soon as an accident happens but says you don’t hear any follow up after that. “There is very little correspondence with the shops afterwards. We would have filled in our forms and sent them off but I was never told how much people got. The first I heard was when my insurance premium went up from €17,000 to €38,000. It was because of two claims in the one year. Subsequently we put it out to tender and we got insurance from another company for €24,000 which wasn’t so bad. But with our original company, we hadn’t had a claim in 14 years of business. Our practices were very good in the shop but it’s just unfortunate that when they come, they come all together. That’s the way it can happen.”
He believes that the culture has changed since the recession hit. People are much quicker to put in claims now than in the past.
“I’m not saying that the customers shouldn’t have gotten anything because at the end of the day they were affected by what happened in the shop. The customers probably wouldn’t be aware that it’s going to cost you another €10/15,000 the next year.
“I just think that the insurance system is not explained to the trade. We should know that if a person breaks their arm on your premises how will that affect your policy.”