'Unquestionable' that rising costs will feed into higher insurance

'Unquestionable' that rising costs will feed into higher insurance

Peter Boland from the Alliance for Insurance Reform said the Government has a 'golden opportunity to make the cost of insurance affordable now and forever'.

Insurance costs are in danger of rising on the back of soaring inflation being experienced across the Irish economy, an Oireachtas committee has been warned.

Moyagh Murdock, chief executive of Insurance Ireland, told the Oireachtas Enterprise committee it was “unquestionable” that rising costs in general commodities and resources was feeding into “everything that we do” and is having a “major impact”.

“Insurance has to cover the risk,” she said. “And if these costs go up, you want to make sure you’re properly insured.” 

The committee heard submissions from Insurance Ireland and the Alliance for Insurance Reform on their views on the General Scheme of the Personal Injuries Resolution Board Bill.

Under this proposed legislation, the powers of the Personal Injuries Assessment Board (PIAB) would be expanded. PIAB would be able to offer mediation as a means of resolving a claim, while the court’s discretion regarding costs in litigation would be tightened. This is part of a suite of measures aimed at reducing the cost of insurances for individuals and businesses.

The committee heard claimants often reject the compensation offer made through PIAB and opt instead for litigation through the courts, which can be a costly and lengthy process.

Peter Boland, from the Alliance for Insurance Reform, said the Government has a “golden opportunity to make the cost of insurance affordable now and forever”, and that it must expedite this legislation and other measures “before the opportunity is lost”.

He told the committee that members are met with “disbelief and in some cases laughter” from European counterparts at the extent to which insurance remains such an issue in Ireland.

“Even on the basis of media coverage in the last seven days, we had sectors as diverse as hotels in the South-West of Ireland, agricultural shows and festivals, and leisure centres saying that they’ve seen substantial increases,” he said.

Mr Boland said his organisation welcomed the measures in the proposed legislation but said they could go further. It includes expanding the role of mediation throughout the process and sanctions for not supplying a PPS numbers.

“We’d also suggest that if a claim goes from PIAB to litigation, and is materially different when it gets to court, it should be sent back to PIAB for reassessment,” he said.

Businesses find it infuriating to see cases go to litigation here — they know it’s a try-on, or a claim is exaggerated.” 

Both Mr Boland and Ms Murdock said that on average claimants do not receive more compensation after opting for the legal route, which results in high legal fees, which drive up premiums.

Mr Boland said: “There’s no benefit for people taking them into litigation, but they go into litigation because there's another pot of gold at the end of that particular rainbow.” 

The pair differed however, on whether the cost of public liability and employer liability premiums had gone up in recent times, with Mr Boland saying surveys from his members reported double-digit percentage increases.

Ms Murdock said this was not the experience of members of Insurance Ireland, and said she stood over the commitment to pass on savings to consumers. She said that, in some cases, they are seeing higher awards being given in court, despite the new judicial council guidelines.

She did, however, outline one case where PIAB had made an offer of €14,000 but the litigant going to court received an award of almost €80,000 with no explanation. Despite this, she said it was important to emphasise that people should go through the PIAB system.

“We need to get the message across to complainants that they’ll do better than going through the court system,” Ms Murdock said. “They can get their lives on track much quicker and they will be compensated.

“And in the context of the rising inflation, a bird in the hand is worth 10 in the bush at the moment.”

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