The new data shines a light on what’s going on in the liability insurance market in Ireland.
It points out that lawyers are making an average of €22,792 in fees on Employer Liability claims for minor injuries, that insurers’ losses due to poor investment performance, increased broker commissions, increased reinsurance costs and increased reserves – not claims costs – are responsible as claims costs have been dropping since 2015 and were at a record low in 2019.
The Central Bank’s Employers’ Liability, Public Liability and Commercial Property Insurance Report of the National Claims Information Database is the first of its kind and relates to premia and other income, claims and other expenses and settlement costs.
However the report finds it “extremely challenging to provide meaningful data on the overall ‘average’ cost of claims or premiums per policy as it may not reflect the reality of a specific sector or the size of its insured business.
But the report does state that the overall average premium for package policies (86% of policies) decreased by 16% over the period 2009 to 2013, then increased by 24% from 2013 to 2019.
“Overall average premium increased by 4% between 2009 and 2019,” it states.
For Employers’ Liability, Public Liability and Commercial Property combined, the report states that, “Insurers’ Operating Profit across all years (2009 to 2019) was 5% of total income. This figure is inclusive of investment income. From 2009-2014 there was an 11% Operating Profit; from 2015-2019 there was a 3% Operating Loss”.
It also found that from 2009 to 2019 some 63% of the total income received had been used to cover claims and expenses related to settling claims.
“Claims settled through litigation cost more and take longer to settle than Personal Injuries Assessment Board or Direct claims on average.
“For all claims, settlements through the litigated channel are significantly higher than settlements through PIAB or Direct.
“When we look at settlements that have similar average compensation costs (in the <€150k total cost band), we can see very different legal costs attaching between PIAB (€1k) and Litigated (€21k) settlements.”
The report provides key information on a number of areas including costs, claims and settlement channels said Mark Cassidy, Director of Economics and Statistics at the Central Bank, “The data also highlights the considerable legal costs and significant time periods associated with settling injury claims through litigation.
“The Central Bank will continue to publish this data on an annual basis. This will allow us to gradually improve the transparency of premium and settlement information for particular sectors. This will help to bring transparency to the market for the public and inform the work of the Oireachtas and wider stakeholders in their consideration of these issues.”
“This report lays bare the scale of the greed that has driven the current insurance crisis, enriching underwriters, brokers and lawyers at the expense of Irish charities, community & voluntary groups, sport and cultural organisations and SMEs struggling to make ends meet.” claimed AIR Director Peter Boland, “The sheer scale of the fees being made by lawyers is reflected in these figures as it was in the NCID’s motor insurance reports. But what’s extraordinary here is that lawyers’ pursuit of fees is actually costing their clients when minor injury Public Liability or Employer Liability claims are taken to litigation.
“Claims for minor injuries cost up to 25 times more in legal fees than settlements via Personal Injuries Assessment Board, take 2.7 years longer to settle and yield less for the claimant than PIAB awards. For example, on public liability claims for minor injuries (<€150,000) between 2015 and 2019, the average PIAB assessment was €26,760.
“Whereas an average minor injury award via litigation was €25,088, 9% less. But lawyers creamed-off the equivalent of 74% of the litigation award, with fees of €18,680, compared to fees of €1,705 via PIAB. It’s clear that Personal Injury litigation is the motherlode of many Irish solicitors’ income at the expense of plaintiffs, policyholders and society.
“Meanwhile insurers have been insisting for years now that claims drive insurance costs but what is clear from the 11 years of data produced in this report is that it has been costs within the control of insurers that have driven their losses. Dramatically reduced investment income, increased commission levels paid to brokers and big increases in reinsurance costs and reserves for future settlements have driven recent losses. Meanwhile insurers’ loss ratio (ultimate claims costs to earned premiums) has dropped dramatically since 2015, the year liability premiums started to rocket. The loss ratio was at a record low of 56% in 2019.”
“Crisis….. fuelled by greed”
Eoin McCambridge, Managing Director of McCambridge’s of Galway and a Director of the Alliance said, “The crisis policyholders have been going through is fuelled by greed. This report clearly illustrates the extent to which Irish society is being held to ransom by lawyers and insurers. Government must now accelerate their reform programme, moving swiftly to get more competition into the Irish insurance market as the incumbents are not serving Ireland well. “Equally, the cost of litigation must be addressed. As a matter of extreme urgency the promised reform of PIAB must now be fast-tracked. But the scale and impact of legal fees can no longer be swept under the carpet. Government must act quickly and decisively to cap legal fees in the Circuit and High Courts. And finally the duty of care must be rebalanced so that it ceases to impose an unbearable burden on policyholders.“
Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole, also a Director of the Alliance, said, “It’s difficult to overstate the importance of this data for Irish charities, voluntary & community groups, sports & cultural organisations and SMEs which have long suffered from unsustainably high insurance costs. This is particularly true of the sectors worst-affected by insurance hikes which have been identified in the report. It’s now up to Government to ensure that insurance costs are reduced to affordable levels and kept that way because we cannot recover from Covid-19 as an economy or a society unless insurance is sorted.”