:: Expert’s warning as insurance underwriters pull out of Ireland
Hundreds of businesses are facing closure unless the insurance sector and Government address the “perfect storm” created by Brexit and the pandemic, a leading broker has warned.
Charities, leisure, sporting and entertainment businesses are all struggling to secure affordable cover.
Stephen O’Connor, chairman of The Underwriting Exchange, a specialist broker which provides access to the London market for Irish-based risks, warned: “This crisis is only starting.”
He told the Irish Independent: “The broader insurance community are not talking about it and are not prepared to admit the level of the problem, and I also don’t think the Government realise how serious it is.”
Mr O’Connor said “between 10 and 15” UK underwriters have quit the Irish market since Brexit, many of which provided specialist cover for niche areas.
“It is currently easier for UK underwriters to do business in America and Australia than it is in Ireland,” he said.
“We need to consider allowing UK insurers to come in here on a non-admitted basis as we’re really feeling the consequences of Brexit making it an unattractive market.”
Non-admitted insurers usually provide higher-risk coverage, but are not subject to state rules. This type of insurance is not allowed in Ireland unless the insurer is licensed in the European Economic Area, which the UK is no longer part of.
“There has to be dispensation to encourage insurers to come here,” he said.
Mr O’Connor is a high-profile figure in showjumping and has sponsored the Irish showjumping team through The Underwriting Exchange.
He is also involved in horse racing, where the insurance crisis is making its mark too. He predicts that point-to-point, where hunting horses and amateur riders race over fences, will be an area that will struggle for cover.
“That in turn will have a knock-on effect on rural Ireland,” he said.
He has previously called for the introduction of legislation that would remove responsibility from governing bodies of sporting organisations and leisure centres for participation risk, referring to the Latin phrase ‘volenti non fit injuria’, meaning ‘to a willing person, injury is not done’.
“Insurance should cover negligence for things outside the participant’s control, not if you crash a car on a go-kart track or injure yourself falling from a horse. There has to be some responsibility on the part of the participant,” Mr O’Connor said.
“That’s another problem. Ireland is one of the only places in the EU where public liability and employer liability insurance is an issue.”
Before Brexit, Ireland had relied heavily on UK underwriters for public and employer liability cover – but with many quitting the market, firms have struggled to find affordable insurance. Or, in some cases, any cover at all.
It was anticipated that insurers would re-enter the market after new personal injury guidelines were published earlier this year, but that hasn’t yet proved to be the case.
“I think reforms are working in motor insurance, but not in other areas that are viewed as more volatile,” he said.
He also highlighted how the Covid-19 pandemic has exacerbated the insurance crisis and issues caused by Brexit, with many businesses struggling to get cover after reopening.
“The main problem is after lockdown everyone was opening up at the one time and were all looking for insurance at the same time,” he said.
“Insurers will spread their risk across a portfolio of business and no insurer is going to write 100pc of their business in a certain area, which is why we’re seeing some businesses unable to get insurance now.
“It’s a bit like when restaurants were giving out about not having enough time to prepare for reopening, as now all businesses are piling into the insurance sector at the one time. Now you have concerts, ice-skating rinks and play areas all looking to get back up and running.
"These sectors are seen as being volatile in the eyes of insurers and naturally they’re going to pick the more lucrative and profitable areas.”
Mr O’Connor yesterday met with the Department of Finance to flag the issue.
“There is still time to react, but if nothing is done we’re looking at a serious situation by January. Some insurers are reluctant to talk about it,” he said.
“The Government needs to intervene, but I fear this crisis is going to get worse before it gets better.”