Creches scramble for insurance cover as premiums ‘double’

Over 400 operators still without quote after one of only two insurers in childcare market departs

One of the two companies insuring childcare facilities has decided to exit the Irish market. Photograph: Frank Perry/AFP/GettyImages

One of the two companies insuring childcare facilities has decided to exit the Irish market. Photograph: Frank Perry/AFP/GettyImages

 

Hundreds of creches are still without an insurance quote for 2020 while hundreds of others are facing at least a doubling of their premiums after the departure of one of only two insurers in the market.

More than 1,300 childcare facilities were told by broker Padraic Smith & Co last week that it was no longer able to secure cover due to the departure of Ironshore Europe from the market.

The broker is advising clients to contact Arachas Corporate Insurance Brokers immediately to establish if they would be in a position to take them on to access insurance with Allianz Ireland.

Frances Byrne of Early Childhood Ireland (ECI) told RTÉ Radio’s Today with Sean O’Rourke that by Wednesday morning 869 providers had received quotes from Alllianz, while 431 had yet to receive them.

Elaine Dunne of the Federation of Early Childcare Providers said that while Allianz would provide cover for the sector it came at a very high price that most childcare providers would not be able to afford.

“Yes Allianz will take us on, but at what price?” asked Ms Dunne.

“One of our members found their insurance increased from €3,400 last year to €9,000 this year. How are people to pay that?”

Speaking on RTÉ radio’s Morning Ireland, Ms Dunne said the Minister for Children needed to meet with the federation and the Taoiseach “needs to support us. We cannot do this on our own”.

Early Childhood Care and Education schemes (ECCE) could also close down, she warned.

Ms Dunne spent two days in the UK last week meeting with insurance providers, but she found that “people are not willing to touch us”. This was because of non-compliance regulations which were not varied and could range from an out-of-place toothbrush to children not being fed.

“If the Government thinks we’re going to find someone (to provide insurance), they’re very wrong. No one is going to touch us.”

She added Padraic Smith “broke his back” trying to find cover for the 1,300 childcare facilities. The federation had been in touch with Allianz but the prices they were quoting were 100 per cent higher than those arranged by Padraic Smith last year. “They have a monopoly now,” Ms Dunne said.

For ECI, Ms Byrne said she had been told by Allianz that it had a dedicated team attempting to get quotes out to all 1,300 creches so they could open after Christmas.

ECI represents 3,800 childcare members and has a long standing agreement with Allianz which offers a 30 per cent discount to its members.

Regina Bushell, owner of the Grovelands chain of creches in the midlands, who is also chair of Seas Suas, the organisation representing independent childcare providers, said she had joined ECI to avail of the members discount but she had still faced a 60 per cent increase in her insurance.

Another childcare provider, Gillian Murphy from Wexford, told of how her insurance had risen from €4,176 to €7,200 and on joining ECI it came down to €5,655. “I had no choice but to join Early Childhood Ireland.”

Ms Byrne pointed out that one third of their members did not avail of the group insurance scheme. “We are urging people to get in touch with us, we will help them to get over the line with regulations and documents.

“Please don’t close your doors without talking to us.”

Minister of State at the Department of Finance Michael D’Arcy described the issue as “a specific sector problem”.

Mr D’Arcy acknowledged that Allianz rates were higher, but pointed out that it already covers two thirds of the childcare sector, or 2,500 creches.

“They are paying those rates which work out at €60 per child per year to get cover. That’s not an unreasonable figure,” he added.

Reform of the insurance industry was not happening at the rate he would like, he added, but the Government could not intervene in a sector where there was a viable alternative for insurance.

Company acquisition

Meanwhile, the new owners of Ironshore Europe has said it was not to blame for the company’s decision to pull out of the Irish market.

The Bermuda-based group, Hamilton Insurance, said it was incorrect for Padraic Smith & Co to have suggested its recent acquisition of Ironshore Europe was the reason it had stopped providing cover to childcare facilities in Ireland.

The Bermuda group said the decision to cease selling insurance cover to childcare facilities in Ireland was made before it entered into discussions with Liberty Mutual to purchase Ironshore.

The deal, the terms of which were not disclosed, was completed on August 20th.

Hamilton said Padraic Smith had been formally notified of the decision by Ironshore to cease selling cover for creches in Ireland on July 17th, while additional communications were sent on December 4th to ensure policyholders were notified of the withdrawal of cover.

The group said it understood that Ironshore had decided to exit providing insurance cover for certain types of risk including childcare facilities.

Padraic Smith & Co said this week it had been unable to secure alternative cover for Ironshore’s 1,300 clients who owned creches and playschools, despite intensive efforts over the past six months.

Despite contact with over 35 different insurance providers, underwriters and intermediaries, the broker said it was not possible to source another insurer for customers who would need to renew their policy after January 1st 2020.

Speaking on RTÉ Radio 1’s Late Debate on Tuesday, Fianna Fáil spokesperson on Children and Youth Affairs, Anne Rabbitte, said many couples were facing the prospect of one partner having to give up work if the problem of insurance cover for creches was not resolved within a short space of time.

Ms Rabbitte called on the Minister for Children, Katherine Zappone, to source extra funding as measure to provide interim cover.

“We need to have some form of intervention or we won’t have creches on the 1st of January,” Ms Rabbitte said.

Labour’s education spokesperson, Aodhán Ó Riordáin, said the State had abdicated its responsibility in the early years sector by leaving services to be provided by the private sector.

Mr Ó Riordáin said a report by the Central Bank earlier this week had provided little evidence to support suggestions that the high cost of claims was driving increasing costs of insurance cover. Instead, the Labour TD, said there appeared to be “a massive amount of profiteering” by insurance firms.