The trouble with insurance…..
“This is no longer a business issue, it’s a societal issue,” claims Peter Boland, Director and Administrator of the Alliance for Insurance Reform, a lobby group set up to push back against a seemingly runaway insurance industry.
AIR is very broad-based, he says, “We’ve general industry groups like ISME, more specific ones like the Society of the Irish Motor Industry and very specific groups involved in hospitality such as the LVA, the VFI, the RAI and the IHF.
“But then it broadens out way beyond that” he asserts, “from business interests into society as a whole.”
Other member groups now include, for example, the Association of Irish Festival Events, Motorsport Ireland, the Irish Street Art Circus & Spectacle network and The Wheel, the representative body for charities and community groups.
This ever-expanding list illustrates his claim that insurance has now become a societal issue.
“Insurance costs are currently shrinking Irish society,” he believes, “This is very relevant to the drinks trade. Taking just one example, if they want sporting events and festivals to be assisted by street artists and circuses etc then this issue needs to be addressed urgently.”
With over 90 members ISACS saw its individual members’ premia go up by over 400% on renewal this year, “… a massive increase” says Peter, who, over the years has worked in various marketing and communications roles, many of them in the drinks industry including spells at Bulmers and Beamish & Crawford.
He also ran the award-winning Cases Wine Warehouse in Galway for 10 years before shifting emphasis to corporate wine gifts and spent nine years as Marketing Director at Supermac’s. Today he works on business development projects for multinationals as well as being a Director and Administrator of AIR.
The trouble with insurance……
Insurance companies are manifestly unwilling to pursue cases which are obviously fraudulent, exaggerated or misleading because of the costs involved, he believes.
But the terms and conditions that apply to insurance premia have also changed. In the case of ISACS, members can no longer train more than 1.5 metres off the ground which, for an acrobat, stilt-walker or tightrope-walker, is just not feasible.
“So the chances of having a vibrant street performance culture in Ireland have been knocked on the head,” he says.
“If you want a vibrant society in Ireland that has festivals, street performers and sporting events, then we’re going to need action on this urgently because all those categories are being threatened by insurance costs now.”
Transparency
The lack of transparency in the industry has become a key issue.
“All the data is with the insurance companies but there’s no publicly-available data to show the extent of the crisis in the area of Liability,” he points out, “By that I mean Public and Employer Liability.”
AIR conducted a survey in January. Some 45% of the 950 responses said insurance costs were a threat to the future of their organisation.
“It’s important not to be alarmist about this” he explains, “so we went back and asked some of the respondents about that statement as it’s fairly hard-hitting.
“Summarising it, the response we got was that the bulk of respondents were small businesses, small charities and small voluntary groups.
“And in many cases, if you double the insurance premium from €10,000 to €20,000 in a year, it often makes no commercial sense to continue operating because that’s effectively taken out of the operator’s wages in the year for a small business or directly from the fund-raising that a charity has conducted.”
Insurance & the drinks industry
Insurance here can be split into three very specific areas: issues in regard to Public Liability (which have an enormous impact on pubs, restaurants and hotels); Employer Liability (a big issue in the drinks production and hospitality sectors) and thirdly – particularly for producers – there’s the issue of motor insurance.
It’s not just a cost impacting on the drinks industry but with Public Liability it’s the relentless number of claims being lodged against hospitality venues, he says.
“For example, it’s now becoming commercially unviable to have a late-night operation in Ireland because of the costs of insuring it, particularly in Dublin.”
This has a knock-on impact in terms of tourism.
“What we’re seeing here is an increasing pattern of manifestly unjust claims” says Peter, “claims that are clearly either fraudulent, exaggerated or misleading.”
Two things have happened.
“First of all, there’s a reluctance on the part of insurance companies to contest claims and secondly – regardless of the result – it’s the policy-holder who pays.”
It’s hitting home.
One member stood up at an AIR meeting in Cork recently claiming that he’d rather stage a false insurance claim than rob a bank as there were no consequence to the former.
If caught, he claimed, the worst that can happen is that you get no money.
PIAB
The Personal Injuries Assessment Board was established to manage and control personal injuries, points out Peter, “But, increasingly, offers made by the PIAB are being rejected by claimants and their lawyers, safe in the knowledge that going to court will net a better offer.”
AIR therefore seeks three significant changes.
“We want to prevent fraudulent, exaggerated and misleading claims,” he says, “We also want consistency in the level of awards for personal injuries to international norms and consistent within the personal injury system in Ireland.
“The third thing we want is transparency on two levels.
“We want data showing what’s happening within the insurance industry because there is no data.”
The Central Bank used provide this but ceased doing so at the end of 2015.
“So there’s currently no data oversight of the insurance industry and given how systemically important that industry is, it’s a scandal in its own right,” he claims, “A new report is due in 2021, so we have a five or six-year window with no data oversight.
“The second part of the transparency thing is that insurers must communicate with their customers. What our members are finding at the moment – and there are umpteen examples of this – is that where a claim is made against them, they’re not kept informed by their insurer about what’s going on.”
Cost of Insurance Working Group
The Department of Finance is responsible for co-ordinating and reporting on attempts to reform the insurance industry but there’s been a distinct lack of any meaningful impact on insurance costs by this Group who’ve published five quarterly updates since the original CIWG report in January 2017.
He points to the last quarterly report released last May.
“Of the 48 actions heralded in that update, eight are reviews, eight are consultations and six are reports,” he says, “Several of the rest are meetings, proposals and requests for consideration.
“The original report is a very good report,” he stresses, “It’s just the pace at which it’s not happening is our issue. It’s not enough to say, ‘We’re working on it’.”
Lack of political will to quicken the pace of reform is the only thing that’s stopping immediate and successful change, he believes and AIR has expressed bewilderment at the lack of urgency.
“This looks to us like a five-year plan to address an immediate problem. Our view is that people mightn’t be around in five years’ time!”
Putting it simply, the Alliance shouldn’t exist as the Cost of Insurance Working Group is in place.
“However it’s become very apparent to us that the CIWG is working at a pace that will not address the insurance crisis in the short-term.”
Thus the reluctant logic behind the Alliance for Insurance Reform’s existence.
For a man who doesn’t want the job, Peter Boland and AIR could be around for some time yet.
