Updated 15.31
MOTOR INSURANCE COSTS is one of the marquee political topics of the moment, with spiralling premiums causing outrage across the board in Ireland at present.
This afternoon’s hearing of the Oireachtas Finance Committee heard from the legal side of the issue – that being representatives of the Law Society and the Bar Council – after the likes of the taxi and haulage industries had their say this morning.
And the legal view is, in no uncertain terms, that the insurance industry is to blame for the enormous hikes in premiums being seen by road users.
“We need to uncover the truth of what’s going on,” said Stuart Gilhooly, senior vice president of the Law Society.
But real and accurate data is the key. To say otherwise is grossly insulting to people whose lives have been lost by the carelessness of others.
“There has been no significant rise in the number of claims,” said Paul McGarry of the Bar Council in his opening statement before the committee.
And contrary to popular belief, the Injuries Board has been successful in stopping two-thirds of cases from going to unnecessary litigation.
Add to this the fact that barrister fees have fallen. Meanwhile, in 2014 71% of cases were settled privately by the insurers. There is no information on any of these claims.
“The process is greatly hindered by the fact that no information is forthcoming from the insurers,” McGarry added.
He suggested that there is a “€1 billion discrepancy between premium levels and actual published awards”.
“It seems likely that insurers are trying to recoup losses from a period of imprudent policy provision seen in recent years,” he said.
In which case private insurance holders are being asked to foot the bill, a scenario that needs to be clarified according to McGarry.
Damages
Gilhooly claimed that in 2016 thus far the issue of exorbitant damages payouts was being dealt with by the judiciary:
“In the last nine months it has become clear that damages must be in line with what society expects from its citizens. In that time there has been at least five cases in which damages have been halved.”
He did acknowledge that at the “lower levels” of the courts, “damages do seem to be a bit higher”, but “not at the higher levels”.
Asked about a ‘Care Not Cash’ approach, which would see the provision of care such as physiotherapy and rehabilitation as opposed to cash payouts, Gilhooly replied that such an approach “can’t work” in Ireland:
“How do you distinguish between what injuries it applies to and what it doesn’t?” he said.
Victims
Meanwhile, director general of the Law Society Ken Murphy said that with all the discussion of motor premiums the “voices of accident victims” aren’t being heard.
“There is no powerful lobby coming to hear their story. These are people who have suffered great pain and suffering as a result of the carelessness of others,” Murphy said.
These are vulnerable individuals without representation.
Murphy likewise pointed the finger of blame firmly at the insurance industry saying: “It seems to us that the insurance industry are the ones who have caused these problems.
Insurance companies are telling the market, and each other, what they are planning on charging the next year, that seems to be dubious to me.
Earlier
This morning the committee focused on professional issues being seen with premiums. The issue is far from confined to individual drivers it seems.
Representatives of the Irish Road Haulage Association (IRHA), the Irish Taxi Drivers Federation (ITDF), the Car Rental Council (CRC), and the Freight Transport Association of Ireland (FTAI) were all present this morning to make their case.
Joe Herron of the taxi drivers’ body said that taxi insurance has risen by 60% across the board in recent times.
“You have people surrendering licences because they cannot afford them, and driving on other people’s licences to get block insurance, and still the costs are going up,” he said.
Herron related the story of one taxi driver who had been driving for 11 years without an accident or a claim, who had seen his premium increase from €1,040 to €3,000.
“It’s just unbelievable, he hasn’t even had an accident,” he said. “A large part of the issue is that there are only three insurers in Ireland who will touch taxi insurance.
If you’re refused by all three companies, who are looking for minimum three years experience, then you can have to get onto the insurance federation to force one of them to insure you.
I mean how are you supposed to get three years experience when no one will insure you?
“We need other insurance companies to come here, but they won’t do so until the Irish companies start divulging what their claims are,” Herron said.
We need the state to encourage foreign companies to come here. At present we are seeing no such encouragement. We would like to see the market being made much more open.
Car rentals
Paul Redmond meanwhile of the Car Rental Council said that his industry is forced to self-insure because insurance companies will no longer charge affordable premiums.
“Our industry is fundamentally important to Irish tourism. We’re needed to get tourists around the regions,” Redmond said.
He cited figures saying 626,000 car rental agreements were signed in Ireland in 2015, with another 323,000 signed in the first six months of this year.
“Payment of claims is now a significant operational expense for rental companies,” he said.
Third party liability costs have trebled here in the last four years. Claims are three times those of France, twice those of Spain and the UK.
“Such are the potential rewards, car rental companies are suspicious they’re being targeted by criminals from other countries,” Redmond added.
The Minister spoke of ‘perverse incentives’ – well that’s one of them.
Redmond insisted that a claim payout of €5,000 in another country could end up costing over €100,000 in Ireland – “after being sent to the courts by the Injuries Board, and taking into account multiple claimants and legal costs”.
“You don’t have to be a genius to see you can’t resist too many of them in a year,” he said.
Discussing the Book of Quantum, a record of compensation claims in Ireland which hasn’t been updated since its institution in 2004, Redmond said the book itself is significantly flawed.
“It’s outdated, and even then it reflects levels, not recommended levels. We have no confidence in it unless it reflects European standards,” he said.
Why should payouts here be two or three times that of France or Britain?
Redmond called for a reform of the Injuries Board (which often sees cases referred to it kicked on to the courts when no settlement can be agreed), and said that denying certain categories of claims (soft tissue injuries such as whiplash in particular) access to the courts would be “the quickest win”.
“All the claims are coming from the one firm of solicitors,” he added. “But it is very, very difficult to prove intent to defraud.”
Road hauliers
Verona Murphy (IRHA) and Neil McDonnell (FTAI) spoke regarding the insurance issues facing road hauliers.
Murphy in particular cut a feisty, indignant figure. “We are committed to tackling the issue of insurance costs,” she said.
The average cost of insuring a truck in Ireland is €5,000, she said, which compares with €3,000 in Britain, and €2,500 in France and Belgium.
When asked if she thought the insurance industry in Ireland is a cartel, Murphy replied:
If it walks like a duck and sounds like a duck, well then.
“It is the opinion of the IRHA that the legal impediment that blocks a haulier from using an out-of-state broker is not fit for purpose, and is definitely not conducive to a single market,” she said.
She added that getting a meeting with the Minister or Transport (Shane Ross at present) is quite difficult: “If we were based in Brazil I’m sure we would get a meeting quicker with the minister.”
Murphy said that Northern Irish hauliers operating in the Republic are at a “significant advantage”.
She called for claims to not be encouraged to end up in the courts, and for imprisonment and fines for fraudulent claims to be implemented to battle “Ireland’s claims culture”.
“There is no point just blaming the Book of Quantum,” she said.
“Ridiculous payouts are not victimless,” McDonnell meanwhile added.
He called for a “threat of persecution” for those practising claims fraud.
“We have no such threat at present, but escalation of costs does not have to be inevitable,” he said.
More than half of the problems are within the gift of the Oireachtas as legislators.
We’re asking for leadership in calling out Ireland’s compensation culture for what it is.
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