Minister accuses insurance industry of ‘profiteering’

Charlie Flanagan demands firms be ‘transparent’ about premium increases

Minister for Justice  Charlie Flanagan has said the insurance industry is ‘profiteering’. Photograph: Tom Honan/The Irish Times

Minister for Justice Charlie Flanagan has said the insurance industry is ‘profiteering’. Photograph: Tom Honan/The Irish Times

 

Minister for Justice Charlie Flanagan has said the insurance industry is “profiteering” and demanded that it be “upfront and transparent” about significant premium increases seen by consumers.

Mr Flanagan told The Irish Times he expects the industry to “play its part” in insurance reform, and called on it to “give certain guarantees” that costs to consumers will come down in the wake of proposed legislative reforms. The reforms are designed to help tackle the high cost of settlements, and the Minister said they will be introduced later this year.

He said he was troubled by “evidence of insurance premiums trebling where there have been no claims, [and of] gross inconsistencies from year to year”. “The insurance industry needs to play its part in insurance reform,” he said.

It is hoped the Judicial Council Bill, which is working its way through the Oireachtas, will help drive down the cost of payouts for soft tissue injuries, such as whiplash. Included in it is a provision to give a group of judges a remit to recalibrate guidelines for injury payouts in personal injury cases.

Last September, the Personal Injuries Commission found that payouts for whiplash and other soft tissue injuries in the State were four or five times higher than in the UK.

The industry has argued that these reforms will enable it to charge lower prices to Irish consumers.

“I expect to have the judicial council framework in place by the end of this year, in return for which I am calling on the insurance industry to give guarantees that they will act promptly to ensure a reduction [in costs to consumers] – and in the meantime, I call on the insurance companies to be more transparent in the manner in which they do business,” Mr Flanagan said.

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The Minister of State with responsibility for insurance, Michael D’Arcy, is expected to introduce amendments to a Sinn Féin Private Members’ Bill which would force insurers to disclose more information when premiums rise. The amendments would also reduce the amount an insurance company could hold in reserve until repair works, for example, on a damaged property, are complete. This practice is common in the industry.

Mr Flanagan said the industry was too quick to blame high costs on exaggerated or fraudulent claims.

“I accept there are fraudulent claims. My concern is that fraudulent claims are being put forward as a justification of high insurance costs, and I’m not sure that’s the case. There is fraud, it’ll be stamped out, but there’s more than fraud. There’s the high costs and the profiteering and a reluctance on the part of the insurance industry to be upfront and transparent.”

In response, Insurance Ireland chief executive Kevin Thompson said: “The cost of our compensation awards, and the cost of settling them, are the defining issues in the market.”

He criticised delays in bringing forward the “critically important” Judicial Council Bill. “We still do not know when personal injury compensation award levels will be recalibrated, and this is deeply concerning in the current climate,” he said.

“Insurers in Ireland have a strong track record of responding to reforms of costs when implemented.”