Two in five businesses borrowed to pay insurance, survey finds

TWO out of five companies had to borrow to pay spiralling insurance premiums last year and more than one in ten fired staff to divert cash to insurance costs, it emerged yesterday.

The Alliance for Insurance Reform (AIR) yesterday met with the Joint Oireachtas Committee for Enterprise and Small Business where they presented the results of their business survey into insurance costs and advocated solutions to ease the insurance crisis.

The AIR survey of 173 companies employing 16,000 people found almost 18% of companies suffered premium increases of over 100% in 2002, compared to 9% of firms the previous year.

The survey also indicated that 38% of companies borrowed to pay their premiums this year, and 14% were forced to reduce their staff in order to make ends meet.

Alliance chairman Pat McDonagh of Supermac’s and alliance members, Gerry McCaughey of Century Homes and Mark Whitaker of Avis Rent-a-Car met with the Joint Oireachtas Committee and discussed the impact of insurance on the business community, as illustrated by the survey results.

Mr McDonagh said: “These figures demonstrate how Irish business is suffering from reduced investment and job losses. The rise in insurance premiums is a serious impediment to profitability and competition in the Irish market place. The Irish economy will continue to slow down if more jobs are lost and businesses shut their doors due to insurance premium hikes.”

Mr McDonagh argued that Ireland is already in danger of losing business to low cost economies which can undercut our costs in a number of ways.

“We do not need to further blunt our competitive edge by ignoring the detrimental effect that insurance costs are having on our economy,” he said.

AIR outlined a number of key areas which they say are contributing to the insurance crisis.

They suggested four solutions:

Legislation to make the act of fraudulent or exaggerated claims a crime.

Swift completion of the legislation to bring the interim board of the Personal Injuries Assessment Board to a statutory basis.

Guidelines on personal injury award levels to be drafted based on European award levels.

The Government must actively seek new entrants to the Irish insurance market to increase competition.