Law society says it is ‘vindicated’ on motor insurance

Insurance Ireland says it hopes reforms will address high cost of claims and level of awards

The Central Bank said “national financial regulators have no role in setting or capping premiums or renewal rates”

The Central Bank said “national financial regulators have no role in setting or capping premiums or renewal rates”

 

There was a predictably mixed response to Thursday’s Joint Committee on Finance’s report on the rising cost of motor insurance.

The legal profession has been accused by the insurance industry of contributing to the high cost of motor insurance by pushing expensive legal settlements, but the Law Society said the report had “vindicated” it by highlighting the lack of transparency on the part of the motor insurance sector.

“We have seen a blame game being played here, but I think the committee cut through the fog and pointed to a lack of transparency as the key issue,” the Law Society’s spokesman Ken Murphy told The Irish Times. “It was a good day for Oireachtas committees and a very bad day for the insurance industry.”

However, Insurance Ireland took a different view. Despite being sharply criticised in the report and in comments made by committee members at its launch, it said it welcomed the publication and claimed it had repeatedly called for action to be taken to address the spiralling cost of claims which has led to increases in motor premiums.

The umbrella group’s chief executive Kevin Thompson expressed the hope that it would “lead to the reforms necessary to address the high cost of claims and level of awards in the Irish market which has led to increased motor premiums”.

Public concern

“Insurance Ireland wants to work collaboratively with Government to take the necessary actions to bring stability to the sector.”

Referring to claims by the committee that a complete lack of transparency existed in the sector to the benefit of the industry, he claimed the group was “committed to, and is actively working on, transparency initiatives and data submissions to inform policy responses to the rising cost of claims”.

Addressing suggestions that the industry had been engaging in cartel-like practices, he said “Insurance Ireland notes some commentary made in relation to anti-competitive practices” and he urged “anyone who has such concerns to formally raise them with the appropriate authorities so that they can be comprehensively investigated”.

The Central Bank, which was also criticised in the report for not offering consumers enough protection in the face of spiralling premiums, issued a very measured response. It said “national financial regulators have no role in setting or capping premiums or renewal rates. This is specifically prohibited under EU law.”

Two roles

It said its second role was “to ensure that consumers are dealt with in such a way that they are treated fairly – that they are not sold unsuitable products, that they are provided with the information they need in a way that allows them to make informed decisions, and that they are dealt with in a way that conforms to codes of good conduct”.