Rising insurance costs blamed on ‘excessive’ awards for injury

Insurance fraud costs businesses in the Republic up to €200 million a year, according to Insurance Ireland.

The umbrella body for the insurance industry also said rapidly rising premiums paid by hoteliers and others, was a direct result of court awards for injuries, which it believes are out of line with Britain and the rest of the EU.

Insurance Ireland, the Small Firms Association and now the Irish Hotels Federation have all said they believe the Book of Quantum – an analysis of court awards for personal injuries – shows awards are too high.

In a statement, the Small Firms Association said the book “merely reflects the level of awards that have been made in recent years, rather than assessing what would be an appropriate and fair award for specific injuries. This should be benchmarked against other EU jurisdictions.”

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The association has recommended a move to a “care not cash” approach, replacing financial payouts with the provision of rehabilitation until the claimant has recovered. It is also calling for more to be done to combat insurance fraud.

Fairer premiums

President of the Irish Hotels Federation Joe Dolan said the Book of Quantum published last October does not benchmark awards internationally, leading to higher awards and premiums. “We are getting feedback from some members regarding more pronounced increases in excess of 50 per cent. Increases of this level are unjust and unsustainable” said Mr Dolan.

Businessman and hotelier Pat McDonagh believes rises in the amounts courts can award have affected the issue. The maximum awards in district courts have risen from €6,200 to €15,000 and at the Circuit Court to €75,000.

A new forum for individual and business insurance customers which may address some of these issues is to be set up by Insurance Ireland in the coming months, as part of efforts to tackle the problem spearheaded by Minister of State Eoghan Murphy.

A working group on insurance chaired by Mr Murphy has drawn up a report with actions designed to reduce motor insurance premiums. A second phase, currently under way, will address the wider insurance area.

“There is no silver bullet to reduce the cost of insurance, insofar as no one recommendation will solve the problem on its own. However, co-operation and commitment between all bodies and individuals with a stake in a stable and accessible insurance market can deliver fairer premiums for consumers without unnecessary delay,” Mr Murphy said.