Crisis fund for creches at risk of no cover

Additional reporting by Eamon Quinn

The Government is willing to consider an emergency fund to prevent creches from closing because of a withdrawal of insurance cover.

Children’s Minister Katherine Zappone said it is very worrying that there is only one insurer left in the market after hundreds of care companies were told they would have no cover from January 1.

Asked if the Government would consider establishing an emergency fund, the minister said: “We will consider everything.”

She was speaking after the Irish Examiner revealed yesterday that hundreds of childcare operators face having to close their doors or operate without insurance in January after the withdrawal of one of two insurance companies.

She said reports of insurance premiums for childcare providers being trebled from €3,000 to €9,000 in some cases were “news to me”.

“Well, that’s a huge increase, you know, and that’s news to me, that’s very serious. And, obviously, we can’t control the cost of insurance,” said Ms Zappone.

But to go from €3,000 to €9,000 is massively significant. And that information needs to be fed into that review process and that we need to seriously look at whatever recommendations are coming out of that if they’re sufficient.

She said the issue of insurance is wider than the childcare sector and a group is investigating that, and the proposal of considering a referendum to limit court awards is “under discussion”.

Motor insurers meanwhile, have come under huge pressure to cut premiums after a Central Bank report detailed the healthy profits earned by the industry even as their claims costs fell and premiums soared.

The report is the first from the regulator and provides a thorough breakdown of the costs and prices charged by the motor insurance industry in Ireland. Insurers have long been under the spotlight as the cost of motor premiums climbed for a number of years before levelling out more recently.

However, the industry had repeatedly pointed to the elevated costs of personal injury and liability settlements in the courts, saying insurers needed to rebuild profits following a number of loss making years.

However, the Central Bank report provided new ammunition for consumer advocates. It shows that after falling for a number of years, that the average motor premium rose 42% to €706 between 2009 and 2018.

Premium costs climbed sharply since 2013, by 62%, the figures show. At the same time, the report details that insurers faced lower cost of claims per policy — down by 2.5% between 2009 and 2018 while the number of claims fell 40%.

That included claims for injury and damage in the same period. Last year, motor insurers made a profit of 9% but the industry worldwide is nonetheless characterised by cycles of years of fluctuating profitability and competitive pressures, according to the report.

The Central Bank also found that injury settlements for less than €100,000 taken through the Personal Injuries Assessment Board between 2015 and 2018 resulted in around the same level of settlements as cases taken through the courts.

The report helped reignite the row over insurance costs and led to a renewed blame game between the Government, opposition politicians, insurers, and lawyers.

Consumers’ Association of Ireland policy director Dermott Jewell said the Central Bank figures will “definitively” put pressure on insurers to cut premiums and will inform the Government’s ongoing Cost of Insurance Working Group.

Minister of state Michael D’Arcy, who has special responsibility for financial services and insurance, blamed insurers and lawyers, saying that “both are culpable for the difficulties we have faced over the last number of years with the price of motor insurance”.

He said companies had first under-priced premiums and then increased prices “and are now making significant profits as a result”.