Reform lobby set to fight compensation culture

Some 250 companies, large and small, have joined the Alliance for Insurance Reform, a lobby formed to tackle the rise in insurance costs for Irish businesses.

It was an incident last year in the men's toilet of a Supermac's restaurant in Eyre Square, Galway, that initiated the alliance. A youth was caught on security camera splashing water from the hand basins onto the toilet floor, practising sliding on it, then lying down, pretending he had slipped. He made a claim, subsequently withdrawn, for £30,000 (€38,000) damages.

Supermac's managing director, Mr Pat McDonagh, chairs the alliance which was formed in June to highlight the effect fraudulent claims have on premium levels and fight what it refers to as the "out of control" compensation culture.

"It's just too easy," says Mr Michael O'Sullivan, financial director of the Campbell Bewley Group. The group was one of several core businesses, including Supermac's, McDonalds and Superquinn, that contributed the capital to get the alliance off the ground. The Alliance for Insurance Reform wants the Law Society to outlaw "no foal, no fee" services, where the client pays no legal fees if the case is successful. It is calling for the immediate operation of the Personal Injuries Assessment Board, standardisation of injury awards and the jailing of fraudulent claimants.

The alliance is also lobbying against compulsory employers' liability insurance. "We feel it would only add to the pot available for claims," says Mr O'Sullivan.

According to a recent IBEC survey, more businesses are being asked to accept higher excesses on their policies. If an accident was to happen on their premises, they would be liable to pay this amount before their insurance policy kicked in.

The Campbell Bewley Group adopts a practice known as self-insuring, putting away €600,000 every year to fund claims. "Probably only bigger companies can afford to do that," says Mr O'Sullivan. But he believers smaller firms could self-insure on an association basis.