“We welcome this report and the trend in general damages awards reflected in it,” said AIR Director Peter Boland, “But that trend and the effort that went into generating it will be of no value unless they lead to substantial reductions in insurance premiums. While we’re seeing some downward movement in motor insurance premiums, the experience of SMEs, voluntary & community groups, sports and cultural organisations and charities is that renewals are actually increasing right now. Why aren’t they falling?
“The insurance industry cannot have its cake and eat it,” he continued, “They identified the cost of claims as the key driver of insurance costs and this has been addressed by Government and the Judiciary. So the risk associated with every policy has reduced significantly and this must be reflected in premiums. If the savings in PIAB settlements do not go into reductions in unaffordable premiums, they go directly into insurers’ profits.”
The Alliance has also called for full transparency from the insurance industry.
“PIAB and the courts account for a small proportion of settlements and it’s vital that insurers, who finalise the vast majority of them, provide data this year to confirm whether or not they are holding firm on the new judicial guidelines,” Peter Boland said.
Eoin McCambridge, Managing Director of McCambridge’s of Galway and Director of the Alliance, added, “The data in this report makes it clear that most personal injury claims have no business in the High Court. The Judiciary and insurers must call time on the tactic of pursuing small claims in the High Court in order to extort a higher settlement and bigger legal fees from defendants who live in fear of the cost of a protracted High Court case taken by an impecunious plaintiff, with no chance of recovering costs if they win. This tactic is particularly reprehensible at a time when the High Court is under considerable pressure to process its caseload.”
Survey shows spiralling premia, plummeting costs
AIR also published the results of an ongoing survey showing that insurance premia continue to rise despite trends in claims costs and recent reforms.
The Alliance has been running this survey since the implementation of new Judicial Guidelines for Personal Injury Awards on the 24th of April 2021. Since then, over 450 businesses and voluntary and community groups have responded, stating that:
- their premiums have increased by 15% on average on renewal
- homecare businesses are being hit by average increases on renewal of over 122%
- nursing homes are seeing average increases on renewal of over 35%
- hospitality premiums are up another 9% despite a significant drop in the level of activity in the sector.
In a follow-on survey, member organisation The Wheel found that 45% of respondent charities, voluntary and community organisations have seen increases of over 10% in their liability insurance.
Respondents reported an average reduction in private motor insurance renewals of under 10%, consistent with CSO data for the same period.
“The total number of liability-related personal injury claims has reduced by 47% over the 11 years between 2009 and 2019 and a further 16% last year,” pointed out Eoin McCambridge, “PIAB has just announced a 40% reduction in average Personal Injury Awards. The Perjury Act has been commenced. The Garda Insurance Fraud Coordination Office has been opened. Economic and social activity has been slashed for the last 19 months. And to further reduce future risk, insurers are excluding Covid-19 from many policies on renewal.
“The risk associated with each and every insurance premium has plummeted in the last year-and-a-half.”
Tracy Sheridan, owner of Kidspace play centres and Director of the Alliance, added, “Everything is being done to facilitate affordable insurance. And yet we still see premiums increasing. Before the pandemic, premiums were already unsustainably high for so many sectors of Irish society. Now, if the economy and society as a whole are going to recover from the pandemic, premiums must come down significantly for SMEs, voluntary and community groups, sports and cultural organisations and charities as a matter of urgency.”
Peter Boland summed up the situation: “It’s clear that the incumbent insurers cannot be relied upon to pass on savings.
“Government must act now to improve competition by getting additional underwriters into the market as a matter of extreme urgency. They must ensure that insurers hold firm on the new Judicial Guidelines rather than settling at higher rates to clear claims. And they must rebalance the duty of care in a way that is fair, reasonable, practical, proportionate and in the public interest; reform PIAB in a meaningful way and get a publicly-owned fraud database established. Ultimately, they must ensure that all the savings being made are passed on to consumers so that Ireland gets affordable insurance right now and in the long term.”