90% of SME’s say government not addressing insurance costs

Despite a fall of 9% in the cost of Motor Insurance renewals since the 24th of April last year, Liability Insurance renewals have seen another increase in premia costs - this time 16%.

 

 

These were the findings of a major new survey of its members by the Alliance for Insurance Reform. The Alliance represents 47 civic and business organisations from across Ireland with over 55,000 members, 700,000 employees, 622,000 volunteers and 374,000 students.

In marking the first anniversary of the implementation of the Judicial Guidelines for personal injury awards the AIR published the results of its survey which show that:

• 42% of organisations say that insurance premia are threatening their future
• 90% say that the Government is not doing enough to address the issue of insurance costs.

“Personal injury damages are by far the biggest component of the cost of insurance and the Judicial Guidelines implemented on 24^th April 2021 introduced significant reductions in the level of damages for minor injuries,” said Peter Boland, Director of the Alliance, “So it’s worth reflecting on the impact of those reductions one year on.

“While they’re having an impact on motor premiums, they’re clearly not having an impact on the liability premiums paid by businesses, voluntary and community groups, sports and cultural organisations and charities. Our ongoing research shows liability insurance renewals trending at +16% and the research we carried out over the last three weeks shows that 73% of organisations have also had additional excesses or exclusions imposed on their policies since 2019.

“Insurers are simply not passing on the benefits of recent reforms to liability insurance policyholders. Equally, other reforms that would impact on liability premiums are not happening fast enough.”

The AIR survey revealed that since 2019 some 28% of respondents had been subject to increased excesses while 24% had had new exclusions added to their policy and 29% had been subject to both.

27% reported being subject to neither.

With 36% stating that the spiralling cost of insurance is inhibiting their ability to grow and 31% stating that it prevents them from providing certain services, Eoin McCambridge, Managing Director of McCambridge’s of Galway and a Director of the Alliance explained, “As a result of the continuing spiral in liability premiums, 90% in our survey say that Government is not doing enough to address the issue of insurance costs.

“To restore policyholder faith in the process, Government must do everything in their power to make sure incumbent insurers pass on the benefits of reforms. They must move quicker on getting additional competition into the market. They must speed up promised reforms. In particular, they must now deliver very quickly on the delayed rebalancing of the duty of care and the delayed reform of the Personal Injuries Assessment Board.  Ultimately they must get liability insurance premiums down to affordable levels with reforms that keep them that way.”

Timelines have been repeatedly missed by Government.

In terms of the key reforms required to address insurance costs, AIR highlighted the following updates:

• The implementation of the judicial Guidelines on 24^th April 2021 has seen the value of assessments by the Personal Injuries Assessment Board tumble by 42% compared to those using the old Book of Quantum. However, the acceptance rate of these assessments has reduced from 50% to 37% as more claimants move to litigation. So the attitude of insurers who settle the vast majority of litigated liability claims before they get to court and the approach of the judiciary once such claims finally get to court, will be extremely influential on the success or otherwise of the Guidelines. The AIR does not have any data on settlements via either of these channels and is unlikely to have any until the publication of the Central Bank’s next NCID Private Motor Insurance Report in October. Additionally, the Judicial Guidelines have been hit by multiple constitutional challenges as lawyers attempt to derail them. The AIR awaits the judgement on the first lead challenge from the High Court, possibly in June.
• Rebalancing duty of care obligations, which often places an unfair absolute responsibility on occupiers while exempting claimants of any responsibility for their own safety, was committed to in the Cabinet Sub-Group on Insurance Reform Action Plan of December 2020. A deadline of June 2021 was put in place for “proposals to Government to implement any changes deemed necessary”. However, these proposals have still not been submitted to Government.
• Legislation to reform PIAB is moving slowly through pre-legislative scrutiny. While the Alliance welcomes much of the content of the draft legislation, an “enhanced role” for PIAB was scheduled for June 2021 by the Cabinet Sub-Group on Insurance Reform, so this initiative is now well behind schedule.
• An office within Government to encourage greater competition in the insurance market was established in December 2020 but has still not announced any additional market entries.

Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and a Director of the Alliance said, “Of all the major challenges facing Ireland right now, insurance is the one that Government can fix quickest. But reforms are not moving fast enough and policyholders cannot wait much longer for them to be put in place”.

The latest survey was carried out among AIR members between the 5^th and the 20^th April 2022 and garnered 954 responses. Just under four in 10 respondents were involved in the Hospitality industry.

The Alliance’s ongoing survey of insurance premium renewals has been running since May 2021.