Insurers criticised for 52% premium hike

INSURANCE costs have jumped by 52% this year and by an average of 290% since 2000, a survey of Irish Small and Medium Enterprises Association (ISME) members has found.

Publishing the results of the survey yesterday, ISME said the insurance industry must be held liable for mismanagement of the sector and called for the establishment of an Independent Committee to monitor insurance industry pricing.

The survey, which was conducted over the last week, outlined that since the start of the year, insurance costs have increased by 52% on average, for SME businesses.

ISME chief executive Mark Fielding said the insurance industry was totally to blame for the latest surge in costs.

“The lack of commitment by the insurance industry to reduce premiums after a concerted campaign to address the causes of increases is inexcusable and intolerable. While insurance companies continue to preach to the rest of us, insurance costs continue to rocket and jobs are being lost,” he said.

Mr Fielding said the Insurance Industry Federation (IIF) had continuously blamed external factors, including the legal and medical professions, compensation culture, the health and safety record of companies, the Government, September 11, equity markets and the weather among other factors for rising premiums.

However, the IIF’s manager of non-life insurance, Michael Horan, said ISME was attacking the wrong target, and the number of claims, the cost of claims and legal fees were the real problems.

Mr Horan said that in 2001, the last year for which figures are available, insurance companies engaged in liability insurance made €75 million in losses after including investment income and this has resulted in companies like AXA and Generali leaving the market.

The ISME boss said that time and time again they have heard of cases where there is no correlation between an insurance quote and the previous year’s claim history.

“More often than not no explanation is given. If the party seeking insurance attempts to source an alternative quote, they simply cannot get one,” he fumed.

Mr Fielding said delaying notification of insurance quotes is a tactic consistently used by the industry.

“This policy of restricting the time that businesses can shop around effectively prevents them from receiving the best quote available and consequently, forces them into taking or leaving what’s on offer. In most cases they have no option but to accept the quote,” he complained.

Cherry-picking is becoming increasingly common in the insurance industry, according to Mr Fielding.

“The Government is also culpable in this charade by failing to take issue with the insurance industry and by failing to make them accountable for their actions.

This has led to absolutely no protection for the consumer or business community when it comes to insurance. If the situation continues, more businesses will remain uninsured through no fault of their own; further jobs will be lost, which in turn will have serious ramifications for the economy as a whole,” he predicted.