Warning insurance hikes will now shut humble family grocery stores
FAMILY grocery stores are facing job losses and will have to push up prices, with others forced to close because of the squeeze on them from the insurance crisis.
Community shops have seen premiums rise by an average 73pc in the last five years, a specialist in retail insurance has said.
This is pushing many of them to the brink of closure, according to Gerry Monks of brokerage JDM insurance.
He said staged accidents in shops are a major problem. Shops are particularly vulnerable because of the throughput of people using them.
"The number of claims has increased and there has been a shift from property claims to personal injury claims and a more recent emerging trend of defamation cases."
Mr Monks explained that fraudsters contrive a situation where they make retail staff think they have stolen goods from the shop, when confronted they produce a receipt and then claim to have been defamed.
He said the insurance and the claims system was broken and needed major reform.
Mr Monks looked at the premiums being paid by 29 of his retail clients. He found they have been hit with average rises of 73pc in the past five years. This is despite the fact that 15 of them have been claims-free over that period.
Only two UK-based underwriters are prepared to cover retail outlets here, with one having pulled out recently.
"They are cherry picking the best risks and if there is a claim then they don't want the business," he said.
"If things do not change quickly there will be a loss of jobs, the closure of family business, increased prices for consumers and the loss of choice and convenience for consumers," Mr Monks said.
Convenience Stores and Newsagents Association (CSNA) CEO Vincent Jennings said the 1,500 members of the representative body were being hit with huge hikes in premiums and that this was pushing many to the brink of closure. "Retailers can't live with these kinds of increases. And they are unforeseen. You get a few days' notices of a premium increase. You can't plan for it or shop around," said Mr Jennings.
He said that if a shop owner is hit with a claim the insurer sets aside a huge reserve on the policy and hikes the premium. But if the case fails there is no return of the higher premium charge over a period that can be up to six years. "The system continues to benefit and it is seriously unfair," he said.
CSNA represents family-owned groceries, SuperValu stores, Centras and independent retailers. "We have no problem with genuine claims but so many of them are fraudulent," Mr Jennings said.
Head of Insurance Ireland Kevin Thompson said insurers are losing money on public liability cover.
He said €1.12 is paid out in claims for every €1 in premium payments for public liability cover.