Hoteliers say insurance premiums still too dear

The Irish Hotels Federation (IHF) said today that its members pay insurance premiums that are "at best 50% higher than those in Britain and four times that of the Netherlands."

The claims were made to a Joint Oireachtas Committee on Enterprise and Small Business.

IHF Chief Executive John Power says that recently added competition has led to a downward trend in insurance costs. "In the period from April to October 2003, premiums in the hotel and guesthouse sector continued to increase at an average of about 7%," he said.

"However, between November 2003 and February 2004 average renewal premiums in the sector showed a reduction on average of 19%. By March 2004, serious reductions in premiums averaging 46% were seen."

The IHF also acknowledged that the impending Civil Liabilities and Courts Bill will further improve the insurance environment here. Within the legislative changes are provisions that anyone who made a false or misleading claim can be fined up to €100,000 or jailed for up to 10 years.

But the Federation says that this downward movement of insurance costs is happening too slowly and Ireland is still high up on the European league table of insurance costs.

Looking to increase the pace of change in the industry, Mr Power pressed for the introduction of further competition, speedy implementation of the new legislation, and certain changes in the way that insurers operated.

"The present system of ad valorum fees or commission payable to brokers gives brokers perverse incentive in that the lower the insurance premium, the less the broker earns. This practice should be terminated and a set fee system introduced," he said.

"If brokers gave additional services, such as risk reduction services, they could be appropriately remunerated for those particular services.

"Given that over 70% of the members of the IHF have less than 50 bedrooms and are small to medium sized enterprises this would be a more equitable fee system."