Tuesday 22 January 2019

Firms in fresh bid to reform insurance industry

Supermac's founder Pat McDonagh
Supermac's founder Pat McDonagh

Charlie Weston Personal Finance Editor

BUSINESSES are to revive the Alliance for Insurance Reform a decade and a half after it was successful in bringing about huge changes.

Supermac's owner Pat McDonagh said the spiralling cost of cover meant it was time to bring the pressure group back into operation.

A resurgence of fake accident claims has prompted business people to revive the pressure group, he said.

The alliance was instrumental in pushing for changes in the legal and administrative infrastructure around insurance when Mary Harney was Minister for Jobs and Enterprise.

The changes led to the setting up of the Injuries Board, and the introduction of laws to make it an offence to lie in court in a personal injuries case, and other insurance reforms - including road safety laws and court reforms to increase competition and lower premiums.

Mr McDonagh told the Irish Independent: "It is time to bring back the Alliance for Insurance Reform. Its actions helped to relieve a lot of pressure on insurance premiums and led to the setting up of the Injuries Board."

The Injuries Board was put in place to offer a quicker and cheaper form of compensation to those injured in work or road accidents. It does not pay legal costs, in most cases.

The Department of Finance said recently legal and other costs for personal injury claims can typically represent over 42pc of the actual compensation amount paid to claimants.

Read more: 'This is one for YouTube' - Supermacs founder Pat McDonagh on fraudulent claims and Ireland's compo-culture

Motor insurance premiums have shot up by a combined 70pc in the past three years, according to Department of Finance figures - and the cost of public liability and other forms of insurance have also surged, hitting businesses hard. Mr McDonagh added: "The legal people have got to know ways to get around claims being decided by the Injuries Board. They tell their clients: 'We will get you more - take it to court.'

"But that is really about ensuring the lawyers get fees."

He said he will not head up the alliance this time, with a figurehead yet to be chosen.

Mr McDonagh warned that due to several factors, including increased liability payouts by the courts, the compo-culture is costing businesses millions of euro. Insurance is a major cost for firms that continues to go up every year and must be tackled.

"That is affecting jobs," he said, adding many transport fleets can no longer compete due to insurance.

A large number of businesses were interested in reconstituting the pressure group, and meetings are expected to be arranged from next month.

Mr McDonagh has just advertised for a claims manager for his fast-food chain.

There are around 35 claims a year in the 120 Supermac's outlets in this country. That is up 20pc in the last two years.

He said he is again considering the option for his business of self-insurance. He said insurers were too anxious to settle spurious claims instead of standing up to serial claimants.

After motor insurance providers were raided earlier in the summer by agents from the European Competition Directorate as part of a probe into allegations of anti-competitive practices, he asked: "Why has it taken the EU authorities to come in and investigate insurance companies and brokers? That raises a very big question."

The Competition and Consumer Protection Commission has been probing insurers for possible price-fixing for a year now, but has yet to issue any findings.

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