Wednesday 22 November 2017

Nothing new about insurers whining about cost of claims

Personal injury fraud is not the reason for rising premiums

'While reports of large court awards tend to attract media attention, the reality is a lot more mundane' Stock photo: Depositphotos
'While reports of large court awards tend to attract media attention, the reality is a lot more mundane' Stock photo: Depositphotos

Stuart Gilhooly

We all know the ads. Emotive images showing what the insurers want you to believe is a culture of widespread personal-injury fraud. As a campaign, it is very effective, like the slick PR machine that the insurance industry employs to blame everybody but themselves for sharply-rising motor insurance premiums. It's time to debunk some of these myths.

Insurers are losing money, so they have to increase premiums

Like many of the excuses rolled out to explain hefty premium increases, they expect us to believe that the market is unprofitable.

Yet, the largest insurer, Aviva Ireland, has produced its best profits for five years, up 32pc to €91.2m, while continuing to put on the poor mouth.

Dorothea Dowling, ex-chair of the Injuries Board and of the Motor Insurance Advisory Board, has consistently asked the industry to provide evidence of the losses which they claim to have sustained on motor insurance. This would require disclosure and transparency. The silence has been deafening.

Court-awarded damages are increasing

This has no basis in fact and, indeed, it would appear that the opposite may be the case.

While reports of large court awards tend to attract media attention, the reality is a lot more mundane. The arrival of the Court of Appeal has had unexpected effect on awards in the High Court. In the last six months, four cases have been successfully appealed and resulted in plaintiff awards being effectively halved in each case.

While this may appear at first glance to be an indication that awards are too high, it actually has a deflationary effect in general terms. It is a signal that the new appellate court is being proactive in ensuring that compensation remains at a reasonable level.

The Setanta decision against MIBI is significant

Perhaps the most disingenuous claim of all. The Court of Appeal has determined that the Motor Insurance Bureau of Ireland (MIBI) is responsible for all 1,700 claims arising from the collapse of Setanta Insurance. While this has been appealed to the Supreme Court, it has not stopped hysterical claims of massive future premiums.

The Setanta claims will be paid for by either the MIBI (funded by all the insurers on a pro-rata basis), or the Insurance Compensation Fund (paid for by a 2pc State levy on all premiums). Either way, premiums go up, but only for this relatively small insolvency for which no one is responsible and will have a minimal effect on premiums. Depending on the Supreme Court ruling, if the MIBI lose, they just have to ask the Government to change the agreement to exclude future insolvencies and there is no reason for the State to refuse this request.

Whiplash damages are too high

Whiplash is a colloquial term often used in a pejorative sense to describe neck, shoulder and back injuries sustained in car accidents.

The condescending manner in which many commentators refer to what can often be a very debilitating injury is one of the more distasteful aspects of the debate.

Insurers whining about the cost of claims is cyclical. We were here in 2002 and their reward was the Injuries Board. Having got what they wanted, they are still not happy. Maybe this time, it is the consumer that should be casting a cynical eye on their exaggerated claims.

Stuart Gilhooly is senior VP of the Law Society and a litigation lawyer at HJ Ward & Co

Sunday Indo Business

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