A consumer watchdog is to carry out an investigation into the public liability insurance market as businesses raise concerns about rising costs.
The review by the Competition and Consumer Protection Commission (CCPC) is being undertaken at the request of Minister for Business Heather Humphreys "as a matter of priority". The study will look at how the market operates, how competition works and if it is affecting the cost of public liability insurance.
The study comes as rising insurance premiums and denial of coverage lead to the closure of businesses around the country and put others at risk.
Last month Leisure Insure, a UK-based insurance company that provides coverage to many Irish leisure businesses, announced it was pulling out of the Irish market.
“The purpose of conducting this study is to bring greater transparency to the market by shining a light on the practices of insurance firms and intermediaries including brokers,” Ms Humphreys said. “The issue of insurance for businesses, and its impact on their ability to operate, is a growing concern. In particular, the issue of increases in public liability [premiums] for businesses is being raised with me as Minister as posing a potential systemic threat to the very existence of many businesses.”
The move was welcomed by the Alliance for Insurance Reform. Director Peter Boland said its research found liability policyholders experienced an average increase of 204 per cent in their premiums over the past five years. He urged the Government to publish other transparency measures on liability insurance, such as the National Claims Information Database and the Key Information Report on Employer and Public Liability Insurance Claims.
A report by the Department of Justice last year showed that payouts for minor ankle injuries could be up to €54,700, more than four times the maximum in the UK. The Judicial Council Bill, which was passed through the Houses of the Oireachtas before summer recess, will allow judges to recalculate damages and bring consistency to court awards.
“We urge Government and all other interested parties not to get distracted from more immediate reforms,” said Eoin McCambridge, managing director of McCambridges of Galway and director of the alliance. “Hard-pressed SMEs and voluntary organisations cannot wait for the years it will take for this investigation to be completed and have an impact.”
However, industry group Brokers Ireland, which represents 1,250 broker firms, refuted claims that insurance brokers were involved in anti-competitive practices.
“These are absurd and unfounded suggestions,” said Cathie Shannon, the group’s director of general insurance. “[Premiums] are set by insurers, not brokers. Public liability and all other insurance [premiums] are a matter for insurers,” she said. “Rising insurance [premiums] in some sectors, including public liability, are not due to insurance brokers, who are as frustrated as their clients on the rising costs to individuals and businesses. It is already a difficult trading market for insurance brokers, with fewer carriers in the market offering less choice, and it is simply not in the interests of, or to the benefit of insurance brokers to seek increased [premiums].”