A body representing Ireland’s insurance brokers has hit back at claims the profession is involved in anti-competitive practices, after the Government announced an investigation into the public liability insurance market.
Business Minister Heather Humphreys has tasked the Competition and Consumer Protection Commission (CCPC) to investigate, and said concerns have been expressed directly to her on the roles of insurance firms and intermediaries - including brokers - in what, “at times, appear to be very sharply increasing levels of public liability insurance premia”.
Responding to the announcement of the investigation, Brokers Ireland said insurance premia are a matter for insurers and not insurance brokers and rejected claims that brokers are in "cahoots in ripping consumers off".
“These are absurd and unfounded suggestions,” Cathie Shannon, director of General Insurance, which represents 1,250 Broker firms, said.
“Premia are set by insurers, not brokers. Public liability and all other insurance premia are a matter for insurers,” she said.
“Rising insurance premia in some sectors, including public liability, are not due to insurance brokers, who are as frustrated as their clients on the rising costs to individuals and businesses.
It is already a difficult trading market for insurance brokers, with fewer carriers in the market offering less choice and it is simply not in the interests of, or to the benefit of insurance brokers to seek increased premia.
“The suggestion that insurance brokers are ‘hiking premium prices’ is nonsensical and has no basis in fact. If insurance brokers were to seek increased premia, this would only serve to drive consumers directly to insurers and other intermediary channels and undermine the very business existence of insurance brokers. It would remove impartiality and choice for consumers,” Ms Shannon said.
Ms Humphreys has tasked the CCPC with investigating how the public liability market operates, how competition works in the market and “whether any practice or method of competition affects the pricing levels of public liability insurance within that market”.
“The issue of insurance for businesses, and its impact on their ability to operate, is a growing concern,” Ms Humphreys said.
“In particular, the issue of increases in public liability premia for businesses is being raised with me as Minister as posing a potential systemic threat to the very existence of many businesses.
“There is no silver-bullet solution to this issue but we are committed to ensuring that we are using every lever available to us to ease the pressure on businesses and consumers," she said.
The CCPC said its investigation is in the early stages and it would engage with stakeholders once the terms of reference has been finalised.
"This market has national significance and the CCPC looks forward to conducting this market study and contributing to the State’s efforts to bring about widely-supported change in the sector," it said.
The Alliance for Insurance Reform welcomed the announcement.
"Our members have struggled to understand how their liability premiums have rocketed in the last five years while there has been no corresponding increase in either claims or awards,” Alliance director, Peter Boland said.
“Research we carried out in May showed that on average, liability policyholders experienced an average increase of 204% in their premiums over the last 5 years, closing businesses, making many more unviable and threatening many organisations in the Irish voluntary and community sectors. We would welcome any additional transparency that might give an insight into why this happened,” he said.