Insurance costs ‘set to fall by 25%’

INSURANCE costs are set to fall by up to 25% this year due to increased competition and Government initiatives to reduce the cost of claims, according to a leading insurance and risk management consultancy.

Coyle Hamilton said foreign insurers would be attracted to the Irish market during 2004 and the new Personal Injuries Assessment Board (PIAB) and new legislation, such as the Courts Bill, would streamline the process of dealing with accident claims.

Speaking at the launch of Coyle Hamilton’s annual commentary on the insurance and pensions market, chief executive Hugh Governey said the insurance industry was now “on the mend” after a difficult period.

He said insurers became less reliant on investment income, which improved in line with the recovery in equity markets, as profitability was restored to their underwriting activities.

“There is a determination on the part of consumers and others to eliminate or reduce all factors that are contributing to the high frequency of accidents and claims, to the cost of claims and the consequent high premium levels,” Mr Governey said.

The group also said consumers could look forward to premiums falling by between 10% and 25% as competition intensified.

The PIAB, which is expected to start work in April, will assess claims for damages in cases where liability for an accident is not disputed. The board will aim to deal with cases without the need for lawyers, whose costs are believed to account for up to half of a typical claim for damages.

Coyle Hamilton also said the new Courts Bill would help stamp out fraudulent claims by putting new obligations on people taking actions and imposing heavy penalties, including jail terms, in cases where fraud was identified. The new legislation would make it easier for insurance companies to fight such claims and reduce the incidence of out-of-court settlements.

The group said current levels of insurance premium reductions would continue, ending what it described as “overpricing”. But it warned the trend may be short-lived and prices would probably stabilise.