Retailers forced to self-insure as premium costs surge
SURGING insurance premium costs and frequent claims are forcing large numbers of retailers to self-insure.
The premium hikes are unjustified, according to Retail Ireland.
It said the cost of public and employer liability cover was an unnecessary burden that was now limiting the ability of the sector to grow, create jobs and deliver value to consumers.
Retail Ireland said its members have to achieve sales of €100 for every €1 allocated to an insurance claim.
Most claims in a retail outlet cost between €20,000 and €30,000, and take more than nine months to settle, according to Retail Ireland, a division of employer body Ibec.
Firms were also being hit by rises of up to 30pc in the cost of commercial motor insurance, with little evidence to support these rises, a new report from Retail Ireland states.
Frustrated retailers were being forced into a situation where they are virtually self-insuring.
This was because they have to accept an excess that is so high on their public and employer liability cover that it is akin to having no insurance.
"By doing so, they not only keep their annual insurance premiums down, but they also have more say on whether to contest a questionable claim," the report states.
Committing to self-insurance can be very risky for retailers, especially small retailers who must ensure they have sufficient reserves to cover any claims.
Reserving cash for self-insurance diverts decreases a retailer's ability to create new jobs.
"Rising insurance premiums, fraudulent claims and general inefficiencies in our insurance market have become a major competitiveness issue for retailers in recent years," said Retail Ireland director Thomas Burke.
Retail Ireland wants the Government's Cost of Insurance Working Group's Report on the Cost of Motor Insurance and Employer and Public Liability Insurance fully implemented.
Meanwhile, insurer RSA reported a return to profits in this country.
The company, which was hit by a massive accounting scandal in 2013, generated profits of £9m (€10.18m) last year. It had made a loss of £49m (€55.4m) in the previous year.