Follow the money: The buck stops where?

Insurance companies insist they are passing on to consumers a significant proportion of the savings achieved under the Personal Injuries Assessment Board (PIAB) system.

The board says it has saved €30 million so far by processing claims far more cheaply than before, but there have been claims that much of this money has gone to bolster insurance companies' profits.

The Irish Insurance Federation (IIF) said this wasn't the case, and pointed out that premiums are at their lowest level in years.

However, a spokeswoman said it was "not unreasonable" for savings in any business operation to be shared between consumers and shareholders in the form of dividends. Motor-insurance profits grew 21.5 per cent in 2005, and the sector made a total of €418 million in underwriting profits. Underwriting profits across the entire insurance business amounted to €800 million.

The IIF spokeswoman said insurance premiums had fallen consistently since the PIAB was set up in mid-2004. Motor premiums had dropped 40 per cent in the past four years, she added, and when adjusted for inflation, motor premiums were now lower, in real terms than at any time since mid-1989.

"The recent fall in motor premiums is not as a result of any single factor (such as the PIAB) but rather is attributable to a number of factors in addition to the PIAB, such as: a fall in accident frequency; greater efficiencies by insurance companies; and the success of IIF's anti-fraud campaign."

The spokeswoman said insurance was a cyclical business and years in which "robust" profits were made had to be set against years in which the industry made heavy losses. "We are currently in the profit phase and this ultimately has resulted in greater competition in the market and substantially lower prices for the consumer."