FG: ‘Compo culture’ behind claims

Junior finance minister Michael D’Arcy believes a “compo culture” is prevalent in Ireland and has admitted that insurance firms are making up for “lost money” from previous years.

The Fine Gael minister told the Irish Examiner: “We have a compo culture, of course we have, and the compo culture has been driven by the level of reward. So you can have somebody with a minor injury getting a lot of money.”

Mr D’Arcy played down the perception of recent findings by the Central Bank on motor insurance costs and insisted that high injury claim amounts are still to blame for the rise in premiums.

The bank found the cost of insurance claims fell by 2.5% over a decade, but premiums rose by 42%.

The report also revealed that insurers made an average of 9% profit last year.

Mr D’Arcy insisted the levels of individual injury awards were still very high.

“So 31% of the claims are going to litigation and the issue with that 31% is that they’re incredibly expensive to settle,” he said.

Settling an injury award of just over €20,000 through the Personal Injuries Assessment Board cost several hundred euro in legal fees, said Mr D’Arcy, but this jumps to €15,000 when cases go to court.

“The litigation fees are outrageous,” he added.

He said lawyers and insurance firms still have questions to answer.

“They are [making up for lost money], that’s what they are doing,” said Mr D’Arcy. “They want to be profitable — they are international companies. I’m saying that that’s wrong.

“It was wrong going back to 10 years ago, when the cost of insurance was so low they [the firms] were under- cutting each other. They were in a trade war among themselves. I don’t want them to be excessively profitable.

“I’m putting pressure on the lawyers who are making a very handsome living out of this as well. And I’m also putting the pressure on those who participate in the claims culture in Ireland.”

While the Government has commissioned reports and set up a judges’ body to adjust injury award levels, businesses in many sectors are facing a crisis over insurance prices.

Just last week, more than 1,300 creches were left without cover and some reported their premiums had increased manyfold.

Mr D’Arcy said there may have been alternative reasons why creches saw their insurance costs rise.

“Behind any of these cases that are presented to me that [insurance covers] go from €600 to €6,000, a tenfold increase, there’s always a story,” he said.

“There’s always an answer. I’ve yet to see a circumstance that there wasn’t something else.”

He also believes business owners need to take responsibility to protect against liabilities.

“Sporting clubs, activities... we have too many areas where there is zero regulation, zero oversight,” said Mr D’Arcy.

“While we all want to blame the insurance company for raising premium, we all have to have a good look at all our facilities, all of our own oversight per sector, whether it is sporting clubs, whether it is individual businesses, that if there’s nothing in place and an insurance company is putting the finger up in the air and trying to take a gauge of something, that era is ending for us all.

“If we want to get insurance, and if we want to have appropriate cover that’s affordable, we’re going to have to do a bit of work ourselves.”