Local authority charges 'crippling' tourist industry

Insurance premiums in the Republic remain up to 50 per cent higher than those in the UK, the Irish Hotels' Federation (IHF) warned the Government yesterday.

However, IHF chief executive John Power told the Joint Oireachtas Committee on Enterprise and Small Business that insurance costs had now been overtaken by the "crippling" impact of local authority charges as the number one concern for companies in the tourism sector.

Mr Power urged the committee to analyse and address increases in local authority rates, which he said were rising by an average of 6 per cent per annum and placed an unfair burden on the commercial sector.

He called on the Government to introduce a more equitable funding system and calculate contributions based on the profitability of the business rather than the size of the property.

On the matter of insurance reform, Mr Power called on the Personal Injuries Assessment Board (Piab) to benchmark its guidelines for personal injury compensation levels against those in the UK.

"A successful outcome of this exercise could result in our insurance premiums coming down very close to what they are in Britain today and place us on a level playing pitch regarding this particular cost of doing business," he said.

Minor soft tissue injuries lasting up to one year are settled for £500-£1,000 (€745-€1,490) in England and Wales, according to Mr Power, but Piab's Book of Quantum gives a guideline compensation figure of up to €18,000 for soft tissue injuries to fingers and thumbs.

The Alliance for Insurance Reform (Air), which also addressed the committee yesterday, said a third of its 1,800 members had seen their insurance premiums increase in 2004. Where there had been premium reductions, these had not been dramatic enough, the group said.

"There has been a phenomenal amount of reforms and the costs for insurers have come down as a result, but premiums have not fallen appropriately because there is not enough competition," said Barry English, a spokesman for Air. "All that is happening is that insurance companies are making higher profits."

Mr English added that reform of the intermediary sector and more competition in the market from new entrants were now necessary.