Irish Examiner view: If personal injury claims have fallen, why are premiums still rising?

Insurance sector must not be allowed to exploit its customers

Legislation and guidelines are operating to reduce substantially both personal injury claims and the legal costs associated with them

Personal injury claims for public liability have more than halved over the past decade, while statutory reform has also ensured that payouts for such claims have dropped by more than 40%. And yet insurance premiums continue to rise.

A combination of fewer claims, lower payments, and less business activity due to Covid has combined to reduce substantially the future risk factor for insurance companies, yet they continue to fleece individuals, businesses, and charities.

For decades we have heard demands from insurers for reform of the claims system that they argued was costing them dearly and leading to higher premiums for their customers. 

Successive governments took on board these arguments, setting up the Personal Injuries Assessment Board (PIAB), in 2004. A statutory body, it provides an independent assessment of personal injury compensation for victims of workplace, motor, and public liability accidents, without the need for many associated litigation costs. 

According to PIAB, it has assessed more than 130,000 cases since its foundation, and over 60% of claimants have accepted its assessments.

More recent legislation and guidelines are operating to reduce substantially both personal injury claims and the legal costs associated with them. 

Survey

Yet, a survey carried out by the Alliance for Insurance Reform (AIR) has found that insurance premiums for businesses and voluntary groups have increased by an average of 15% since the end of April when new personal injury guidelines came into effect.

AIR says that premiums for homecare businesses have more than doubled on renewal, while nursing homes are seeing average increases of 35%. 

Hospitality premiums are up another 9% according to the group, despite a significant drop in the level of activity in the sector.

According to Eoin McCambridge, AIR director and managing director of McCambridge’s of Galway, the total number of liability-related personal-injury claims fell by 47% over the 11 years between 2009 and 2019, and by a further 16% last year:

The risk associated with each and every insurance premium has plummeted in the last year and a half.

Mr McCambridge cited a series of measures — including the dramatic reduction in economic and social activity over the past 19 months, the start of the Perjury Act, and the exclusion of Covid-19 from many insurance policies.

It is worth recalling last July’s Central Bank report that revealed the average cost of liability and commercial property insurance premiums rose by 24% between 2013 and 2019 from €1,828 to €2,269.

Insurers have been insisting for years that claims drive insurance costs so if claims rise so do premiums. That seems logical but, by the same measure, the opposite should also apply — lower claims leading to lower premiums.

However, that hasn’t happened. It is now clear that it is the insurance industry that needs reform and if that was to involve legislation to limit profiteering, so be it.

Insurers will only have themselves to blame. 

A healthy and profitable insurance sector is important to a functioning economy. A greedy one that exploits its customers is not.