Insurance costs forcing firms out of country

BUSINESSES are moving out of the country at an alarming rate as bogus compensation claims drive up the price of insurance.

Hundreds of jobs have been lost as firms decide to expand their businesses abroad because of insurance price hikes of up to 1,000%.

Supermacs boss Pat McDonagh, whose fast-food chain employs hundreds of people, yesterday, said he was planning to focus on business in the US because the cost of premia was crippling his business. Century Homes has also decided to transfer the construction of a major new manufacturing plant to Northern Ireland, while Kildare-based West End Knitwear has moved one of its businesses to the Baltics with the loss of 45 Irish jobs. The owners of Blarney Castle have had to raise entrance fees after paying an extra 250,000 in insurance this summer.

Mr McDonagh, a member of the newly formed Alliance for Insurance Reform, said thousands of more jobs would be placed at risk unless the Government took swift action to stamp out the nation’s compensation culture.

“It’s at crisis point now - it’s killing off any incentive to set up a business. Insurance in Britain is around one-tenth of the cost it is here,” Mr McDonagh said.

Insurance for many Supermacs’ franchises has jumped from 10,790 three years ago to 76,184 this year.

JF Engineering’s costs soared by a staggering 1,575% from 2,540 to 27,500 in the space of two years, while Monaghan-based Century Homes saw an 85% increase in its insurance premia over the last year.

Mr McDonagh said the rises was due largely to “legal terrorists” in the profession who were offering clients guaranteed sums of compensation for bogus personal injury claims.

“These people are degrading the legal profession. If you look through the telephone directories you see them. There’s one solicitor’s firm which is giving away money up front for claimants to take an action. That’s the stage it’s reaching,” he said.

The Alliance for Insurance Reform met with Justice Minister Michael McDowell last week, who told them the Government would act swiftly to tackle the situation. These plans are expected to include tough penalties on fraudsters who make bogus claims, advertising restrictions for ambulance-chasing

solicitors and cheaper alternatives to costly court battles.

The Alliance has put forward a five-point plan, which goes further and calls on the Government to freeze new legislation which will increase payment limits for personal injury claims.

The Irish Insurance Federation (IIF) is also supportive of change in the industry, but has blamed the rise in legal costs as the main reason for premia increases.

However, the Law Society, which represents solicitors, says litigation costs have not increased that dramatically and laid the blame on the

insurance industry.