Business Personal Finance

Sunday 21 July 2019

Insurance is swallowing huge chunk of charities' expenditure

Kevin Thompson: Insurance Ireland boss denied a lack of transparency
Kevin Thompson: Insurance Ireland boss denied a lack of transparency
Charlie Weston

Charlie Weston

Charities are being forced to spend €1 out of every €10 they get on insurance, forcing many to curtail services.

The insurance crisis means charities are now seeing 10pc of annual expenditure swallowed up by the cost of cover.

Businesses and charities alike have seen their insurance premiums shoot up by 200pc over the last five years, a survey from the Alliance for Insurance Reform lobby group shows. The survey of firms and voluntary community groups found that the cost of public and employer liability insurance was now a threat to their survival.

Some 95pc of businesses and charities say the Government is not doing enough to address the insurance crisis.

Some voluntary groups are being hit with premium rises of up to 60pc, according to Ivan Cooper of The Wheel charities association. He said a survey carried out in conjunction with the Alliance for Insurance Reform shows that 22pc of voluntary groups said the cost of cover was threatening their future.

The groups get half of their funding over average from the State, but they are being forced to use around 10pc of their income for insurance.

The Association of Irish Festivals and Events (Aoife) said community functions were being put at risk by the surge in insurance costs, with many events struggling to get cover.

Aoife's executive director Colm Croffy said local authorities were now asking community groups to get their insurers to provide the county council with indemnity of up to €9.6m. This was up from €1.6m a few years ago.

Every €1m rise in the indemnity was costing festival organisers another €1,000.

Meanwhile, the survey also showed that nearly half of companies said the cost of cover was threatening their future. Insurance costs were also cited for inhibiting growth and stopping the hiring of more staff.

Director of the Alliance Peter Boland said companies and charities cannot afford any further delays to proposed Government reforms in this area.

"Even if the long-awaited Judicial Council Bill, intended to address sky-high damages for minor injuries among other things, is enacted as scheduled by the third week in July, we are still looking at no reform of the Book of Quantum before Christmas," he said.

His comments come after the Irish Independent revealed profits of general insurers have jumped by 1,300pc, despite the country being gripped by an insurance crisis.

Figures from the industry show 17 general insurers in this market made combined operating profits of €227m in 2017, the latest date for overall data on the sector. These profits were up from €16m in 2016, according to Insurance Ireland - a rise of 1,318pc.

Motor cover proved hugely profitable in 2017. The 17 domestic non-life insurers made combined profits of €125m from private and commercial motorists.

Chairman of the Consumers Association Michael Kilcoyne branded the situation a "rip-off" for customers.

"It is time they started sharing the profits with the rest of us," he said. "They have a captive market in motors and they charge what they like."

However, insurers made losses on liability insurance, which is what covers businesses when they are sued. Few insurers in this market are prepared to cover public liability and employer liability, forcing firms and charities to seek cover from the UK.

Mr Boland claimed insurers were making even higher profits than the industry was admitting. But chief executive of Insurance Ireland Kevin Thompson denied there was a lack of transparency. Insurers had opened their books up to the Government a number of times and the Insurance Factfile report has just been published for 2017, he said.

Irish Independent

Also in Business