Peter Boland: More competition in the Irish liability insurance market is essential

More competition in the Irish liability insurance market is essential. This must be a major priority for the new team at the Department of Finance, as Minister Michael McGrath will be overseeing reforms.

While insurance reform has been the subject of considerable focus from government for six years now, the reforms have not yet worked for liability insurance policyholders such as voluntary and community groups, charities, sports, and cultural organisations or SMEs. Indeed, premiums for these sectors continue to rise and many organisations now cannot get affordable cover at all.

And yet among all the crises facing government in 2023, and because of all the work that has been done so far by the previous and current governments, by the opposition, and by the judiciary, insurance is the crisis closest to being resolved. The low-hanging fruit.

Reforms

Major reforms implemented to date include the establishment of the Central Bank’s National Claims Information Database, the enactment of the Judicial Council Act 2019 and the subsequent implementation of the Judicial Personal Injury Guidelines, the establishment of the Garda Insurance Fraud Coordination Office, the enactment of the Consumer Insurance Contracts Act 2019, and the enforcement of mandatory access to Insurance Ireland’s Insurance Link claims database by the European Commission. And in the last few weeks, we have seen the strengthening of Personal Injuries Assessment Board through the enactment of the Personal Injuries Resolution Board Act.

The other key reform awaiting the urgent attention of acting Minister for Justice Simon Harris is the set of amendments to the Occupiers’ Liability Act currently making its way through the Dáil.

In essence, the occupiers which include sports clubs, community centres, hospitality businesses, or charity event organisers are now regularly assumed to have an absolute duty of care in the courts when it comes to visitors such as customers, clients and others, while the concept of personal responsibility has been significantly diminished in recent times.

The pending amendments seek to rebalance the duty of care responsibilities of occupiers with those of visitors, recreational users and trespassers, in a way that is reasonable, practical, proportionate and in the public interest. But all they are right now are a set of pending amendments. They must be enacted and commenced as a matter of urgency to have any impact.

More competition in the Irish liability insurance market is essential. This must be a major priority for the new team at the Department of Finance, as Minister Michael McGrath and Minister of State Jennifer Carroll MacNeill will be overseeing the Office for Insurance Competition charged with the job of attracting more competition into the Irish insurance market.

Micro-sectoring

An additional insurance issue for government to address in 2023 is the issue of micro-sectoring. This is a problem created by insurers, who are insisting on smaller and smaller niche sectors covering their own risk. So where thatched cottages, circuses, and numerous other micro-sectors might previously have been insured as part of a more general sectoral grouping, they must nowadays deliver a profitable risk on their own.

This runs contrary to the basic principle of insurance, that the misfortunes of the few are covered by the fortunes of the many. So for many of these micro-sectors, affordable insurance is becoming a distant memory and if the government wants these smaller sectors to survive, it will have to intervene directly, as the Department of Rural and Community Development has done recently with its Community Support Fund which helps some community groups and facilities deal with increases in costs such as insurance costs.

If lower premiums are finally delivered in 2023, intense vigilance will then be required by policyholders, the government, and other stakeholders, to ensure they stick. Already, the judicial guidelines, the most significant reform to date, are under intense attack by the legal profession, with two challenges due in the Court of Appeal and the Supreme Court in early 2023.

And while some insurers continue to fight business interruption claims arising from Covid-19 tooth-and-nail, we are starting to hear reports of some insurers settling litigated personal injury claims by thirds parties for more than the Judicial Guidelines, a tactic that would serve to fatally undermine the same guidelines. So ultimately, the low hanging fruit must be grasped but it will then have to be protected for a long time to come.

 Peter Boland is a director with Alliance for Insurance Reform.