Injury awards driving up insurance prices – insurers
Insurance premiums will fall if the cost of claims in Ireland falls, insurance companies have been telling the Oireachtas Finance committee.
The Chief Executive of Allianz, Sean McGrath, said the single biggest issue facing the cost of claims is getting the high level of injury awards under control.
Mr McGrath said that awards in the Republic of Ireland are 4.4 times those in the UK, excluding special damages and legal costs.
A number of representatives of Ireland’s largest insurance companies have been appearing before the committee.
Philip Bradley of AXA rejected suggestions of excessive profitability by insurance companies and said that the Irish market is relatively small.
“It has also proven to be a difficult market in which to develop a sustainable and profitable business with high and volatile claims costs,” he said.
“We are all aware of the high-profile companies who launched in to this market only to withdraw or fail as times got tougher.”
He said the motor and liability insurance between 2013 and 2017 was not profitable.
Mr Bradley said that the introduction of the Personal Injuries Assessment Board (PIAB) had directly led to a fall in insurance premiums of around 40%.
However, he said the legal profession in particular has found ways to work around PIAB and the system encourages lawyers to do just this.
“Its effectiveness has been hugely undermined as a result,” Mr Bradley said.
Fiona Muldoon, chief executive of FBD, said the high cost of bodily injury claims remains the biggest factor.
“If we take the example of the play-centres, the average public liability award at PIAB is €27,000,” she told the committee.
“If the premium for a business is €2,500, then if there is even one claim in ten years, the ten year premium will not exceed one single average PIAB award, never mind a claim that goes to court.”
She said structural reforms are necessary to moderate the cost of claims.
“The current one way bet in the courts system must change,” she added.
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