High cost of insurance threatens future of over 40% of organisations, Committee told

Alliance survey shows premiums have risen by 16% since new judicial guidelines for damage claims were introduced

The ongoing high cost of insurance is threatening the future of more than 40 per cent of commercial and voluntary organisations in the State, the Oireachtas Committee on Enterprise, Trade and Employment has been told.

Addressing the committee on Wednesday, the Alliance for Insurance Reform said a recent survey of its member policyholders had found that since the implementation of new judicial guidelines for damage claims, insurance premiums have actually risen by 16 per cent overall.

Alliance director Peter Boland told TDs and Senators the alliance has more than 55,000 members which employ 700,000 people, while also representing 622,000 volunteers and 374,000 students. Mr Boland said the members’ response to a survey to mark the first anniversary of the new judicial guidelines was stark.

He said while 42 per cent of respondents felt the cost of insurance was threatening their future, 31 per cent said insurance costs were preventing them from providing additional services — a rise from 26 per cent in a similar survey of members undertaken in 2018.

Mr Boland said it should be noted that the 16 per cent increase in premiums since the judicial guidelines were introduced was on top of “savage increases” experienced by many policyholders each year since 2017.

He said the most recent survey also showed 73 per cent of organisations have had additional excesses or exclusions imposed on their policies since 2019. Mr Boland described these as ”stealth increases”, and said some 90 per cent of respondents to the survey felt the Government “is not doing enough to address the issue of insurance costs”.

He said while reforms undertaken to date were having an impact on private motor premiums, which the survey showed have dropped about 9 per cent since May of last year, “they are not having an impact on the liability premiums paid by businesses, voluntary and community groups, sports and cultural organisations and charities”.

Mr Boland agreed with Insurance Ireland that one of the major issues in the industry was the costs imposed by some members of the legal profession. He said claimants should be made aware that going to court often resulted in a claimant getting less compensation.

He said the Personal Injuries Assessment Board (PIAB) makes average compensation awards to plaintiffs of €26,760, with average legal fees of €1,705. However, he said claimants “who listen to their solicitor’s advice”, and reject the PIAB assessment, wait a further 2.7 years on average for compensation and get €1,672 less through the courts.

“The only beneficiaries of this extended process are lawyers, who get an average of €18,680 in fees, 11 times more than the cost of delivering compensation through PIAB,” he said.

Moyagh Murdock, chief executive of Insurance Ireland, told the Committee Government proposals to reform the PIAB as part of a new Bill were strongly supported by Insurance Ireland. She said for premiums to reduce two issues must change; the large-scale legal costs associated with court compensation awards and the amount of responsibility allocated to premises owners in the case of personal injury claims.