THE MINISTER OF State with responsibility for bringing down the cost of insurance travelled to the UK this week to try to convince insurers to operate to the Irish market, in the wake of the departure of one company which has caused grave concerns for the leisure industry.
Minister Michael D’Arcy was due to meet with a number of UK insurers and underwriters in London this week.
The purpose of these meetings was to “advise them of the most recent legislative changes and promote Ireland as a place to continue to write business,” Minister for Finance Paschal Donohoe told the Dáil in response to a parliamentary question.
Donohoe added: “I think it is an important exercise as hopefully it will encourage some insurers to rethink their position about the Irish market.”
‘Compo culture’
The insurance industry has repeatedly said that the high level of personal injury awards and the number of fraudulent cases has driven up the cost of premiums in Ireland.
The government set up the Cost of Insurance Working Group in July 2016 to try to develop proposals that would bring down the price for consumers.
A number of developments that have been made include the establishment of a personal injuries commission to help to benchmark awards. It found that the payout for soft tissue injuries in Ireland is over four times more than the payouts in England and Wales.
And, although the cost of insurance is going down according to CSO stats, concerns have been raised that the industry could be knowingly misrepresenting the full picture in these statistics.
In a meeting in June, Minister D’Arcy asked representatives from Insurance Ireland for a guarantee that premiums would be lowered to reflect the action being taken to reduce the level of awards for personal injury claims.
Insurance Ireland replied it would be “difficult to persuade insurers to expand their risk appetite”.
A recent investigation by Noteworthy found that insurers’ spending on liability and motor claims has barely changed in a decade despite suggestions that Ireland’s rampant ‘compensation culture’ has been behind the country’s recent insurance crisis.
The leisure industry is one sector hit hard recently, after provider Leisure Insure announced that it was withdrawing from the Irish market.
The decision caused shock in the leisure sector, which has struggled in recent years to afford insurance – especially in an Irish insurance industry that has typically been unenthusiastic about offering insurance to such companies.
The government said that its hands were tied with limited options to offer relief to such companies affected.
One leisure centre and swimming pool in Kildare recently said it was shutting down after failing to secure cover, with the only potential quote more than four times what it had been paying before that.
Spin Activity Centre said there had not been a claim against it in the three years since it had opened.
Failure to secure insurance also hit the Dublin Oktoberfest festival which was cancelled this year with organisers citing high insurance cost.
Steps forward
Another action the government has taken has been the enactment of the Judicial Council Bill 2019. This provides for the establishment of a Personal Injuries Guidelines Committee.
While this hasn’t been put in place yet, Minister Donohoe said it should be before the end of the year.
Commenting on the withdrawal of Leisure Insure from the Irish market, Donohoe said that Minister D’Arcy had met with the company and was told “certain parts of the company’s leisure book were not profitable over the last number of years”.
“I acknowledge that the level of awards and the inconsistency in such awards is undoubtedly a factor in many insurers’ decisions not to continue in the Irish market,” Donohoe said.
He said that, in light of this, the “single most essential challenge” was to bring the level of personal injury damages down.
Commenting on D’Arcy’s trip to speak to insurers in London, Donohoe said he hoped Irish-based companies would also be mindful of recent changes.
I believe that Irish based insurers should also reflect on these reforms and in that context Minister of State D’Arcy has been engaging with them in order to seek a commitment that they will reduce premiums and widen their risk appetite to reflect savings made or potential savings, in particular if there is a recalibration of award levels downwards.
Donohoe concluded that he was confident that over time the pressure on businesses when it comes to the cost of insurance “should recede”.
TheJournal.ie has contacted the Department of Finance for comment on this week’s talks.
With reporting from Peter Bodkin
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