The cost to the economy of the high price being paid by business for basic insurance cover has been vividly demonstrated by the newly launched Alliance for Insurance Reform. Numerous examples were given yesterday of he impact on small and medium sized business of the exponential increase in nsurance costs in recent years. Unless action is taken further damage will be one and jobs will be lost, the Alliance has warned.
The case put forward by the new body is both cogent and succinct. The presence of two well known entrepreneurs - Mr Pat McDonagh of Supermacs and Senator Feargal Quinn of Superquinn - amongst its ranks requires that the issue be taken seriously. To some extent the new body is pushing an open door. Its main demands are already included in the Agreed Programme for Government published by the new administration last week. The Government has said it will move to limit the cost of public liability insurance on businesses. It has already made a number of promises including implementing the recommendations of the Motor Insurance Advisory Board and the setting up of the Personal Injuries Assessment Board.
But like most of the other commitments made in the new Government programme, there is no firm timetable for their implementation. This fact has not been lost on the new body which says it intends to keep up the pressure on the Government to make implementation a priority. The 400 businesses in the alliance have astutely linked their campaign to the motor insurance issue, by seeking the implementation of the MIAB's recommendations as one of their demands. This should ensure that the issue remains in the public eye.
But the linking of the two issues is more than clever tactics. Legal costs are a very significant contributor to the high costs of both types of insurance. Arguably they are a bigger problem in employer and public liability claims, where they can be has high as 56 per cent of the compensation sum awarded, compared to 40 per cent in motor claims. Legal costs are not the only factor driving up insurance costs in Ireland. The insurance companies themselves have a case to answer. But it is now abundantly clear that the legal costs issue must be tackled. It is also clear that this cannot be done without long over due reform of the regulation of the legal professions.