Issued 8June, 2016.   Insurance Ireland welcomes the current debate on the rising cost of insurance.  We have been lobbying on behalf of our members for the last 18 months for a number of actions to be taken to address the spiralling cost of claims and the consequent increase in premiums.

 The increase in the cost and frequency of claims has been well established by competent authorities such as the Central Bank of Ireland, The National Competitiveness Council and the Injuries Board to mention a few (please see notes for editors below for detail). As a matter of urgency Insurance Ireland are calling for the following

1.    Strengthening the Injuries Board: “We’re supportive of the role played by the Injuries Board. It has done good work over the last 10 years, in particular, we welcome the swifter settlement of claims, but the claims environment has changed and it needs new powers.  These include simple things like compelling claimants to provide loss of income information and to attend medicals.

2.    Internationally benchmarking awards: 8 out of every 10 motor injury claims in Ireland are for whiplash. In Ireland, the average whiplash settlement is €15,000, whereas it’s €5,000 in the UK.

3.    Fixing Setanta: As things stand, insurers are being asked to price a product to factor in the cost of a competitor failing. We can’t think of any other sector where this happens (for example, Dunnes Stores wouldn’t be expected to do this for Tesco so why should insurance companies?)

4.    Increasing road traffic enforcement: “The Road Safety Authority said recently one third of drivers in fatal collisions have no insurance. There’s simply no substitute for law enforcement.

High premiums are not in insurers’ interests, as the threshold of affordability is raised, leading to more uninsured driving.  The preference is for a more reasonable level of premium, sustained by a reasonable level of claims costs.

The Bar Council said recently legal fees have fallen by 30-50%, but Insurance Ireland members have not seen that reduction in their legal costs and the statistics don’t back it up. We stand over our assertion that the cost of claims, including legal fees, are leading to rising insurance premiums.

On this issue of transparency, Kevin Thompson, CEO, Insurance Ireland, said “The insurance industry has robust, independent regulation in place from the Central Bank.  It is incorrect to say there is no industry data available. We are already held to an extremely high standard on data reporting and we welcome that. The reports produced on insurance, contain more detail than almost any other sector.  The Central Bank’s annual insurance statistics report lists what insurers take in and what they pay out, it’s all there and available to see.  Data is a complex area and there are commercial competition and data protection issues which cannot simply be set aside because of a desire to see more detail.  Having said that, we are working with Government to try to standardise data so that it’s more easily understood.” Irish insurance companies willingly provided claims data to the Injuries Board to allow for the updating of the Book of Quantum.  

 Notes for Editors

•   The number of formal awards made by the Injuries Board increased 32% from 2008 to 2015.
•   The Bodily Injuries Review published by the Central Bank of Ireland highlighted an increase in cost and frequency of claims.According to the Central Bank the   average cost of claims in Motor Insurance rose by 8%, for Employers Liability it rose by 27% and for public liability it rose by 8% between 2012 and 2014.
•   The OECD have found that Ireland is the 8th most expensive country in which to enforce a contract.
•   The National Competitiveness Council has stated that “reform of legal services is also urgently required to reduce legal costs”.     http://www.competitiveness.ie/Bulletins/Insurance-Bulletin.pdf
•   The National Competitiveness Council have also stated that “there is a need to comprehensively benchmark insurance costs and the drivers of commercial      and private costs”. http://www.competitiveness.ie/Bulletins/Insurance-Bulletin.pdf
•   The Injuries Board costs are 6.5% versus 60% in litigated cases. http://www.injuriesboard.ie/eng/News-Information/Press-Releases/Injuries-Board-2015-    Annual-Overview.pdf
•   The increase in the frequency of claims is apparent from the figures produced by the Injuries Board. Since 2008 there has been a 36% increase in the claims   submitted over a period where cumulative economic growth was less that 13%.

·         : Injuries board figures:

Ends