Jobs ‘Armageddon’ warning over insurance hikes

MORE than 1,200 small businesses are operating without public liability insurance because they cannot afford premium increases of up to 250%.

The Small Firms Association (SFA) has warned thousands of jobs will be lost unless something is done to curb crippling insurance costs. Research by ISME (Irish Small and Medium Sized Enterprise Association) and the SFA found the hike in insurance costs has forced the closure of an estimated 100 small businesses, with the loss of 3,000 jobs, over the last two years.

SFA director Pat Delaney said those figures will rise ahead of the introduction of the Personal Injuries Assessment Board (PIAB), which it is hoped will cut payouts and lead to reductions in premia.

"We're facing Armageddon if something isn't done now. Thousands of companies are at risk and thousands of jobs," he said.

The problems facing businesses was highlighted last week by Francis Brennan, owner of the five-star Park Hotel in Kenmare, Co Kerry.

He told a meeting attended by Tánaiste Mary Harney that his insurance premium has risen from 37,000 in 2001, 67,850 in 2002 to 103,541 this year a rise of 274% in just two years. It's been 12 years since anyone has made a claim against the hotel.

Mr Delaney said the average insurance increase among his 8,000 members was 42% in 2001 and 56% last year. But he said he knew of instances where companies had been quoted up to 200% more on the previous year. In some cases companies couldn't get quotes.

He warned that company directors could be held personally liable if an accident occurred and they weren't covered. However, they are carrying the risk rather than closing down and laying off workers.

"Directors of companies are exhausted from worry. It's impossible for small companies to withstand. It's like a cancer eating away at Irish society," the SFA director said.

Research by the SFA has shown for every 100 spent on public liability cover here, similar cover in Britain is 34 and 13 in Holland.

The chief executive of ISME Mark Fielding, told an Oireachtas committee earlier this month that insurance costs for its members had risen by 290% on average over the last three years. He said the rise for 2003 alone was 52%.

A spokesman for the Department of Enterprise, Trade and Employment said it was expected the Personal Injuries Assessment Board would be up and running by the beginning of next year.

"A lot of administration structures have already been put in place and an interim board which was set up has already done a huge amount of work," the spokesman said.

He added 67 recommendations on insurance industry reform were being studied by the Government.

"Justice Minister Michael McDowell is proceeding with making it an offence for people to make false or exaggerated claims. It is expected to be enacted before the end of this year," the spokesman said.