'People are being fleeced and gouged,' insurance companies told as they deny ripping off consumers and businesses
Leading insurance companies have denied ripping off consumers and businesses by making big profits.
It comes after Justice Minister Charlie Flanagan accused insurers of profiteering, while Junior Finance Minister Michael D’Arcy referred to “significant profits” being made in the industry.
Minister Flanagan said the insurance industry was “profiteering” and demanded that it be “upfront and transparent” about significant premium increases seen by consumers.
If the cost of claims in Ireland falls, insurance premiums will fall. Chief executive of Allianz Sean McGrath
And it was revealed last month that profits jumped by 1,300pc in 2017, despite the country being gripped by an insurance crisis.
Industry figures 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 - equal to a rise of 1,318pc.
Motor cover proved hugely profitable in 2017.
But, speaking at the Oireachtas Finance Committee, Axa Ireland chief executive Philip Bradley denied “excessive profitability” was a feature of the market.
Mr Bradley told committee chairman John McGuinness the Irish market is small, very competitive with 30 insurers and there are high and volatile claims costs.
Industry players lost €1.1bn between 2013 and 2017 on motor and liability insurance, he said, with the industry paying out €1,1bn more than it collected in premiums.
But he admitted that Axa is profitable.
You are in here with your big profits. People are being fleeced and gouged, and you point at the consumers and say it is all about fraud. Sinn Féin finance spokesman Pearse Doherty
“Currently we are profitable. But by its nature insurance is a long-term business and we measure our performance over cycles of years rather than months.
“Over those horizons we have had good years and poor years, on average we have made profits adequate to justify the significant investment which our parent company has made in this market,” he told the TDs and senators.
He said premiums would come down if there was reform of the pay-out levels for whiplash and soft-tissue injuries.
Mr Bradley said premiums would be lower if the Personal Injuries Assessment Board, the State body that assesses claims without the need to use a lawyer, was not being “undermined” by lawyers.
And he said premiums would come down if more was done to contain fraud.
Fraudsters and those who exaggerate claims can walk away from a case with no consequences.
FBD boss Fiona Muldoon said 40pc of the cost of litigation goes on legal fees.
Chief executive of Allianz Sean McGrath said: “If the cost of claims in Ireland falls, insurance premiums will fall.”
Getting the “disproportionately” high level of injury awards under control was the biggest issue for insurers.
“Meaningful reform of the claims environment will ensure a stable and sustainable cost of insurance for Irish businesses and consumers,” Mr McGrath said.
However, Sinn Féin finance spokesman Pearse Doherty alleged the industry was using the issue of exaggerated claims as an excuse to push up premiums.
He told FBD’s Ms Muldoon: “The industry is completely exaggerating fraud to justify the type of premiums you are charging and the increases.”
Mr Doherty said there were just 19 fraudulent cases reported to the gardaí by insurers between last October and March.
This was despite the three insurance companies earlier claiming that one in five claims they receive are exaggerated or fraudulent.
He told the bosses of the three insurers: “You are in here with your big profits. People are being fleeced and gouged, and you point at the consumers and say it is all about fraud.”
Mr Doherty acknowledged there is a problem with fraud and exaggerated claims but said the issue was being over-played by the industry.