TDs attack insurance quote methods

MEMBERS of an Oireachtas committee have criticised insurance brokers who reduced quotes only after clients informed them they had found a cheaper price elsewhere.

Labour TD Kathleen Lynch told the Joint Committee on Enterprise and Small Business yesterday that she had personal experience of her broker reducing her motor insurance premium by €700 upon hearing she had got a much lower quote independently.

Committee chairman Donie Cassidy (FF) said such an incident was “not an isolated example” as he personally knew of several similar cases. The Westmeath TD said such a practice was extraordinary.

His Galway East party colleague, Joe Callanan TD, said the phenomenon did not suggest brokers were giving their clients “best advice”, contrary to their legal obligations.

Senator John Hanafin (FF) said anecdotal evidence about such experiences was threatening to bring a good industry into disrepute.

The committee heard representations from a number of brokerage firms who challenged several adverse findings of a recent interim report by the Competition Authority into the industry.

Jim O’Connor of Coyle Hamilton said his company was not influenced by whether insurance companies paid commission or not in offering quotes to clients.

He accepted insurance premiums had risen by almost 80% over a three-year period but claimed costs had risen even further in Northern Ireland. However, he reminded the committee that premium reductions ranging from 15% to 50% had been achieved over the past six months.

Mike Murphy, head of another firm, said a reduction in the number of insurance companies from a figure of 90, several decades ago, to around 15, currently, had resulted in reduced competition and increased premiums.

Several brokers including David Dillane of Dolmen said the international perception of the Irish insurance industry was highly negative.

The Construction Industry Federation said there had been a significant positive turnaround in the availability and cost of employers’ and public liability insurance over the past year.

CIF director George Hennessy attributed falling insurance premiums to a 30% reduction in site accidents and a 20% reduction in the cost of settling claims, and that construction firms had on average experienced a 25% drop in renewal claims since July 2003.