Insurance companies can make profits with reduced prices, Minister says
Charlie Flanagan says rising cost for consumers does not reflect lower level of claims
‘In my view there is not a proportionate relationship between the claims made and the constant hiking of insurance costs which are threatening livelihoods at this stage,’ Minister for Justice Charlie Flanagan told the Seanad on Thursday. File photograph: James Forde
Insurance companies could reduce the cost of premiums and still make significant profits, the Seanad has been told.
Minister for Justice Charlie Flanagan said the rising cost of premiums does not reflect the lower level of claims made.
He called on the industry to do more to reduce the costs of premium as the Upper House debated legislation to limit awards for personal injuries claims.
“In my view there is not a proportionate relationship between the claims made and the constant hiking of insurance costs which are threatening livelihoods at this stage,” Mr Flanagan said.
Ten major insurance companies in 2017 had profits ranging from €6.1 million and €201 million, he said, adding that their total assets were worth €305 billion last year according to the Central Bank.
“There is clearly scope to reduce insurance costs for consumers and I am calling on the industry to act,” he said.
The Minister told the Seanad the Law Reform Commission would conduct a detailed analysis for the introduction of constitutionally sound legislation to limit the damages a court could award for personal injuries.
Mr Flanagan was speaking during the debate on private member’s legislation the Civil Liability (Capping of General Damages) Bill, introduced by his party colleague Fine Gael Senator Anthony Lawlor.
The Minister said he would not oppose the legislation as it was important to facilitate a debate. But he said there were many difficulties including constitutional problems in the Bill that would have to be addressed.
Mr Lawlor said up to 95 per cent of personal injury awards were for under €50,000 according to the Personal Injuries Assessment Board, but this represented an increase of more than 42 per cent since 2011.
The average payout for whiplash claims was €18,581 and 70 per cent of claims are for whiplash.
Mr Lawlor said he believed that “insurance fraud is probably at an all-time high”. The Judiciary was starting to recognise this and was working with insurance companies to reduce the volume of fraud.
“Claims, future claims and awards happen to constitute the most costly part of an insurance premium. Up to 70 per cent of a person’s insurance premium, for a car, home or business, is associated with awards,” Mr Lawlor said.
But he said Ireland’s awards, are “way out of line” with and much higher than in other EU countries.
Fianna Fáil Senator Lorraine Clifford-Lee however described the Bill as “bonkers” but “populist”.
Ms Clifford-Lee, a solicitor, said “people who are involved in accidents deserve to be compensated fairly for any injuries they incur”.
Blackening the name of everyone who brings a personal injuries claim “will not serve the cause of ordinary people who are injured through no fault of their own and deserve proper compensation”.
She also said the way to tackle fraudulent and exaggerated claims was to have a dedicated Garda fraud unit.
“We all know of fraudulent claims that are being thrown out of the courts but are not being tackled thereafter. Why are these criminal matters not being systematically reported to the Garda and investigated?”
She said “people are chancing their arms because they know there are no consequences. This is a very real issue.”