WHAT WILL IT take to bring insurance costs down? 

That depends on who you ask. The man put in charge of just that task – Minister of State Michael D’Arcy – has been talking to all stakeholders in recent months.

Documents released to TheJournal.ie through the Freedom of Information Act have shown that D’Arcy sought a meeting with Insurance Ireland to try to get a guarantee that the industry would reduce premiums to coincide with progress being made to reduce the value of personal injury awards.

At the same time, the Law Society was telling the minister that the main area of reform should be the premiums themselves, rather than the level of damages paid. 

Furthermore, correspondence was flooding in from business groups saying that the high cost of insurance was crippling companies and forcing many out of operation. 

The Cost of Insurance Working Group (CIWG) was set up by the government exactly three years ago to try to tackle the high cost of insurance in this country.

While CSO stats have said motor insurance is falling, for example, it has been claimed that data from industry could be knowingly misrepresenting “the full picture”.

Similarly, many are finding their insurance premiums consistently rising. 

Consistently cited by industry as a cause of high premiums are the high cost of payouts following personal injury claims. And international comparison stats do bear out that payouts here are high – a report last year found personal injury payouts in Ireland are on average four times higher than in the UK. 

The most recent statistics from the Personal Injuries Board, published just this week, found that there was a slight increase in the number of applications for compensation from insurers last year, with the total value of awards at €298.55 million. 

However, TheJournal.ie‘s FactCheck found that a claim from three of the largest insurance companies that 20% of personal injury claims they receive are fraudulent or exaggerated was unproven.

In a now-viral video, Sinn Féin’s Pearse Doherty grilled industry officials over this claim, while court figures this month show that there’s been a drop in the number of personal injury cases and the value of awards in the High Court have fallen almost 20%. 

And, when the government was pressed on “skyrocketing” profits in insurance companies, the reply was that the government has been “as aggressive as it can be”.

On Friday, Minister D’Arcy said that “much progress” had been made, and cited the recent passing through the Oireachtas of the Judicial Control Bill as an “important moment”. 

So, with the issue of insurance continuing to pose a problem for many, what have the lobby groups been saying to the government? And what has the government been saying back?

What the government has been saying

The government has been trying to tackle the problem of high insurance costs for years. 

Its working group set up in July 2016 came up with a number of recommendations, a number of which have been implemented. This included a Personal Injuries Commission which provided benchmark figures to compare Ireland with our counterparts.

There are two main things the government now wants to tackle – the high cost of premiums and the level of payouts.

Minister D’Arcy recently told an Oireachtas committee: “The cost of insurance working group has made it clear from the outset that there is no single policy or legislative silver bullet to stem or reverse immediately premium price rises and that some of the necessary reforms will take time to implement. 

The major constraints faced by any Government are twofold. Award levels are the prerogative of the courts and therefore, for constitutional reasons, the Judiciary cannot be directed as to the levels that should be applied.

Second, pricing levels are a commercial matter for insurance companies and are determined based on the risks that they are willing to accept.

The government now hopes that through legislation – such as the Judicial Control Bill – and getting all sides – insurance industry, legal profession and businesses – on board, it can begin to see wholesale drops in premiums. 

What business is saying

The case made by businesses is that high insurance costs are crippling them across a variety of industries. The Alliance for Insurance Reform wrote to the minister in March, expressing “disappointment” that there’d been no progress on the issue on so-called claims harvesters (CMCs). 

These are when people are pursued to file insurance injury claims after an incident. Minister for Justice Charlie Flanagan admitted last month that they are “increasingly complex to govern”.

The alliance also expresses concern about the Section 8 amendment, claiming it had been made clear to them that it will be “ignored or side-stepped wherever possible by those who would prefer it didn’t exist”. 

Section 8 of the Civil Liability and Courts Act 2004 has been recently amended by the government. It states that an individual attempting to bring a personal injuries case must notify who they’re attempting to sue within two months of the event occurring, e.g. fall, accident etc. 

“As you are well aware, minister, we have reached the endgame with many of our members,” the alliance spokesperson Peter Boland said. “Play centres, convenience stores, marts, pubs, hotels, circuses, festivals and street entertainers for example, are closing down operations or considering doing so. 

What positive updates can we provide them?

Boland said later that month that there was very little awareness of the amendment to Section 8, and said members had said they’d been told by brokers that the amendment is “unenforceable” or that it “only applies to pubs”. 

In April, the Alliance for Insurance Reform against pushed for reform and said the minister should produce a “schedule of forecast insurance premium reductions”, arguing that it would prevent stalling of key reforms required.

In a meeting with Retail Excellence Ireland that same month, D’Arcy was told they were seeking increased investigative capacity from the gardaí with regard to fraud. It also highlighted “the role of solicitors in bringing such cases forward,” according to minutes from that meeting. 

The minister replied that he needed businesses represented by Retail Excellence to continue lobbying on the need for lower awards “to ensure that there continued to be political pressure on the necessary reform to happen with regard to the Judicial Control Bill”.

What the legal profession is saying

In a meeting with Minister D’Arcy, his officials, and members of the Law Society in April, the legal profession put the responsibility for high premiums firmly with the insurers. 

According to minutes from that meeting from a department official, the Law Society said that insurers were mainly to blame with regard to the level of premiums charged.

It also said fraudulent claimants should go to jail and that knowingly representing fraudulent claimants should be a career-ending offence for solicitors. 

“Its main issue today was that it believed that the focus of reform should be on insurance premiums and not on the level of damages paid,” the department official said of the Law Society. 

The minister disagreed that the focus should not be on award levels, and signalled he was actually intending to focus on that. D’Arcy did, however, agree with the Law Society that there was a need for a commitment from the insurance industry on decreases in premiums. 

In a meeting with the Bar Council in late May, D’Arcy was told it was the council did not agree that lower level personal injuries necessarily needed to be reduced in order to make insurance cheaper.

The Bar Council also “disagreed that the legal profession had played a role in bringing forward spurious claims”. 

It also noted a need for businesses to ensure health and safety standards were “actually complied with”.

“They had seen “nonsense” cases succeed on points where there was a level of carelessness by businesses in how they implemented health and safety rules,” the minutes say. 

D’Arcy and his officials then “challenged” a number of points raised by the Bar Council and it was put to them that recalibrating award levels was necessary as part of an overall reform agenda. 

What the insurance industry is saying

In a letter to Insurance Ireland CEO Kevin Thompson in May, Minister D’Arcy outlined what was being done by the government and what he expected from insurance companies as a result.

Referencing the enactment of the new Judicial Council Bill, D’Arcy said: “The government is of the view that with the implementation of this recommendation, the level of damages awarded in this country for soft tissue injuries can be brought more in line with those awarded in other jurisdictions, and that there can be a corresponding significant impact on premium levels. 

As you know, both I and Minister Donohoe have stated publicly that we expect the insurers’ pricing of premiums in general will take account of the measures which have been, and are being, implemented as a result of the CIWG recommendations more broadly and I believe you recognise this.

The minister goes on to say that he is seeking a strong commitment from the insurance industry that cost savings from lower awards in cases will be reflected in lower premiums for businesses and individuals.

He also seeks a meeting to “get a sense of the timeline for the delivery of such a commitment from the insurance industry”. 

That meeting took place on 5 June.

According to minutes of that meeting, this guarantee wasn’t given.

The department official wrote in the minutes: “[Insurance Ireland] noted the contents of the minister’s letter and stated that it was in the process of consulting its members on the minister’s request for a commitment on price reductions.

With regard to cover levels, it stated that a number of the lines where cover was not being provided were still considered to be loss making and therefore it was a commercial matter for the insurers themselves.

Insurance Ireland stated that it would be difficult to persuade insurers to expand their risk appetite to what they consider to be loss making areas in advance of any tangible change in award levels as they have to constantly conscious of underlying prudential rules etc.

D’Arcy responded with his “strong view” that a commitment as well as reflecting any present and future savings needed to be provided “sooner rather than later as a gesture of goodwill from the industry”.