Monday 21 October 2019

Charlie Weston: 'Compo gravy train rolls on as vested interests just have too much to lose'


(Stock image)
(Stock image)
Charlie Weston

Charlie Weston

The insurance compo crisis is getting worse. Motorists are paying elevated premiums in what has amounted to a back-door bailout for insurers that mismanaged their businesses by failing to put enough funds aside to pay claims.

Granted, motor premiums have fallen lately after years of rates rocketing, but large numbers of drivers are still finding that they are being hit with higher costs for cover.

Lately the rate-hiking focus has shifted to businesses and voluntary organisations. So bad has the situation become, businesses are now closing with others struggling to survive as insurance cover gets prohibitively expensive, with many insurers even no longer offering cover in this market.

When firms and festivals are threatened with closure there is an urgent need for action.

There is no downside to taking a false or exaggerated claim. You might win a lump of money and if you lose the chances are you will not even be pursed for costs, never mind prosecuted for lying.

Reform has come to a standstill because insurers are digging their heels in instead of agreeing to Government attempts to get them to make changes.

A case in point is insurers are refusing to change their rules to inform motorists when there is a claim made against them before it is settled.

The measure was one of the recommendations of a Department of Finance report on insurance reform. But the latest update by the Cost of Insurance Working Group says it will be delayed.

This comes at a time when insurance companies are back making big profits.

Revelations in the Irish Independent that three major insurers made a combined profit of more than €200m last year, when businesses were seeing premiums shoot up, were mentioned repeatedly in the Dáil last week.

Insurers based here seem to have decided there is no percentage for them agreeing to reforms that will cost them, if insurers from the likes of the UK and Gibraltar are free to operate here and escape implementing new measures.

And nothing has changed to stop claimants and their lawyers continuing to exploit the soft courts system by securing large pay outs for often frivolous injuries.

Why wouldn't they when you could get tens of thousands of euro simply for tripping and falling on a pavement?

Then there are the cases of questionable honesty.

A mushroom picker withdrew a High Court claim for a back injury she said she suffered due to not being provided with the proper equipment for her job after footage was played in court showing her cycling. She had claimed she was unable to cycle or walk because of the accident.

Honest policyholders pay for this farce, which is infuriating for them given that motor cover is a legal requirement.

Two things would stop much of this - a dedicated Garda insurance fraud unit, and a recalibration of awards by judges. Just do not expect any action any time soon.

Insurers are back making profits, so they can prosper in our dysfunctional compensation system. And the legal fraternity is making too much easy money, and has too much to lose, to allow anyone to halt the compo gravy train.

Irish Independent

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