INSURANCE PREMIUMS FOR liability cover increased by 8% in 2022, according to new data published by the Central Bank.
This increase was despite the total cost of settlements falling by 14%, or €43 million, on 2019 settlements.
The data was included in the bank’s latest National Claims Information Database (NCID) liability report, which covers the public, employer and commercial liability sector.
Injury compensation awards are assessed through personal injuries guidelines which were adopted by the Judicial Council in 2021. These guidelines replaced the Book of Quantum, which had been used as a guide to assess claims.
The guidelines are used by the Personal Injuries Assessment Board (PIAB) and the courts to set out the level of damages that may be awarded when resolving claims.
However, the data shows that 76% of all injury claims settled in 2022 were done with reference to the Book of Quantum, with only 24% settled under the new guidelines.
The average level of compensation awarded through the PIAB route was €21,439 for public liability to €26,366 for employers’ liability.
Average legal costs for the PIAB route ranged from €1,459 to €1,804.
For a litigated settlement, the average level of compensation awarded was €37,045 for public liability to €70,297 for employers’ liability.
The Central Bank of Ireland has today (Thursday, 04 April 2024) published the third Employers’ Liability, Public Liability and Commercial Property Insurance Report - National Claims Information Database (NCID).
— Central Bank of Ireland (@centralbank_ie) April 4, 2024
Full report: https://t.co/gyx0vx4W25 pic.twitter.com/p9pnbIzrca
Average legal costs for the litigation route was significantly higher, varying from €28,542 in a public liability claim to €40,013 in an employers’ liability claim.
The data states that the average cost of employers’ liability and public liability claims increased by 34% and 44% respectively between 2019 and 2022.
Insurers made an operating profit of 9%, or €98 million, in 2021, which rose to 14%, or €176 million, in 2022 across employers’ liability, public liability and commercial property.
These are the first years since 2011 that the industry has recorded a material profit, the data states.
It follows on from a loss of 14% in 2020, which was primarily driven by commercial
property and Covid-related business interruption claims.
The data also found that the overall average premium for ‘Package policies’ increased by 8% in 2022, to €2,781.
Of the employers’ liability, public liability and commercial property insurance policies taken out, 86% were taken out via package policies, while 14% were standalone policies.
The increase for other industries, however, was much higher. Premiums across the accommodation and food service sector increased by 24% between 2020 and 2022, while those in the administrative and support service sector saw a 34% rise in the same period.
Reacting to the data, Flora Crowe, grocery store owner and board member of Alliance forInsurance Reform, which represents 46 civic and business groups across Ireland, said the cost of doing business is “already too high”.
That message was echoed by the Irish Hotels Federation. “Despite insurance reforms introduced by the Government, businesses on the ground have yet to see any tangible benefits in relation to their premiums,” IHF President Michael Magner said.
“Much more needs to be done to ensure savings are passed on.
“This must go hand-in-hand with a renewed effort by Government to attract additional insurance providers into the market.”
“This report proves what we already know, despite all the reforms the Government introduced, and despite the decrease in the volume and cost of claims, our insurance premiums continue to rise,” she said.
“The Government’s insurance reforms still haven’t delivered for business.”
The government’s Action Plan for Insurance Reform, published in December 2020, sets out 66 actions for reform to bring down the costs for consumers and business and to introduce more competition into the market.
The fourth progress report, published in February, shows that approximately 95% of the 66 actions are being delivered on, including the strengthening of the Injuries Resolution Board and rebalancing the duty of care.
Minister of State for Financial Services, Credit Unions and Insurance Jennifer Carroll MacNeill said the Central Bank report does not capture the duty of care reforms introduced in July 2023.
“Businesses now know with confidence that the issue of ‘slips, trips and falls’ has been legislated for and the market has become more fairly balanced for all.”
She added: “I note the annual change in business insurance for 2022 mirrored the 7.8% inflation rate at that time.
“As the rate of inflation has since eased, it is my expectation that we will see the same happen in relation to business insurance premiums.
“I will continue to raise these two issues with the insurance industry on behalf of businesses when I meet them and expect that we will see the impact of the reforms, as well as the softer inflationary environment feature in future iterations of the NCID reports.”
Crowe also highlighted the rising premiums for certain sectors.
“In the three years between 2020 and 2022, the percentage change in average premium for the accommodation and food sector increased by 24%, for transportation and storage by 16% and in human health and social work activities by 22%,” she said.
“Arts, entertainment and recreation sector premiums rose by 8% in these three years but this comes on the back of a 111% increase in the six years prior. These sectors are the lifeblood of our communities.
“In the absence of meaningful competition and further Government action, insurers have shown they won’t voluntarily reduce premiums, despite a 41% reduction in the volume of claims since 2019 (PIAB, Annual Report 2022) and various other reforms such as the Judicial Guidelines.”
Speaking on RTÉ’s Morning Ireland this morning, Minister of State for Trade Promotion, Digital and Company Regulation Dara Calleary said he is “disappointed” not to see the cost of premiums falling.
“We don’t have official figures yet, but from dealing with the Alliance of Insurance Reform and our engagements with business daily, we get a sense that the kind of premium reductions haven’t been passed on,” he said.
“But we’re engaging with Insurance Ireland around that, we are looking at what’s causing that, and we will continue to work and continue to keep a focus on reducing the cost of insurance for everybody in Ireland.”
With reporting from Press Association
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