Leading business organisations joined forces yesterday to call for immediate action on fraudulent and exaggerated personal injury claims.

The cost of personal injury compensation was more than €2 billion (£1.58 billion) for 2001, according to Mr Tony Briscoe, assistant director of social policy at IBEC. Mr Briscoe supported calls made by Mr Pat McDonagh, chief executive of Supermac's family restaurants, for criminal penalties to be applied where claims are false or exaggerated.

He said personal injury claims should be supported by a written affidavit. Such a measure would prevent people making paper claims without exposing themselves to criminal sanctions. Mr Briscoe suggested a change in the law which would require the judge to deprive plaintiffs of compensation where a claim or part of a claim was made in bad faith.

"Until such measures as are necessary to eliminate fraud through spurious and exaggerated personal injury claims are introduced, employers and the public will continue to have to deal with and pay the cost of fraud, which the current system seems unable to effectively address," said Mr Briscoe.

Mr McDonagh said exorbitant insurance premiums were costing Irish jobs and costing the taxpayer millions. Small Firms Association director Mr Pat Delaney said that more than 1,000 jobs had been lost as a result of insurance problems.

In November 2001, Supermac's had a €38,000 claim against it withdrawn from the Circuit Court after the plaintiff realised video evidence of the alleged accident would be presented in court. The plaintiff claimed to have slipped on a wet floor of a Supermac's restaurant. But the footage from the camera showed him and two colleagues deliberately splashing water on the floor of the toilets, practising a skid and ultimately feigning a fall.

Of the 111 public liability claims outstanding against the 46 Supermac's restaurants, up to 50 per cent are estimated to be exaggerated, with 50 per cent believed to be false, said Mr McDonagh. The legal profession should review how it addressed the issue, he added.

Chambers of Commerce of Ireland chief executive Mr John Dunne called for legislation to create a new criminal offence of issuing fraudulent or exaggerated personal injury claims.

But Mr Ken Murphy, director general of the Law Society, said existing legislation was sufficient to deal with the matter.