Saturday 19 October 2019

Charlie Weston: 'Industry must stop whingeing and start to cut our premiums'


Car Insurance
Car Insurance
Charlie Weston

Charlie Weston

What the devil is going on in the insurance industry in this country? The question is prompted now that it has emerged general insurance firms are back making profits, fat profits.

This is at the same time as businesses are closing due to unsustainable insurance costs, festivals are being cancelled and many private motorists are still being hit with huge premiums.

Not a day goes by without some form of insurance crisis story. Last week it emerged special schools told the Department of Education they are facing soaring insurance costs that threaten them with closure. Some are facing premiums of up to €60,000.

Reform is a key topic for politicians, especially due to the personal injuries claims taken by Fine TDs Maria Bailey (since withdrawn) and Alan Farrell.

All this means the Government has been bounced into taking real action to tackle the compo culture driving up insurance costs, and is set to publish the Judicial Council Bill any day now. This will allow a panel of judges to recalibrate payouts for injury claims.

All the while insurers have kept their counsel, happy to see reforms coming that will benefit them.

Not so fast. Insurers will now need to do some explaining. How come they keep whingeing about claims costs but only now do they tell us they are back making profits?

Yes, we need to reform the compensation system as we pay out too much, and lawyers are probably benefiting to the tune of €350m a year in fees from the compo gravy train.

But general insurers now need explain how they have become so profitable again so soon after crying wolf.

General insurers refers to the firms that cover homes, business premises, motorists and companies. Combined profits rose by a mind-blowing 1,300pc in 2017 to €227m, the most recent Insurance Ireland figures show.

Remember, too, that insurers in this country are the subject of an anti-trust investigation from the powerful competition directorate of the European Commission. It is probing representative body Insurance Ireland over claims there is a cartel operating in this country.

Insurers argue it is only recently they have started to return to making profits. General insurers had underwriting losses in motor and liability of more than €1.1bn in the five years to 2017, Insurance Ireland insists. It says the returns they are making are small considering the size of the insurance market.

They argue there was an underwriting loss of €47m in 2017 in liability insurance, the type of cover that is crippling businesses and charities. True, but the rest of the general insurance market is profitable again.

Yes, we need reform of our over-generous compo system but the industry would be wise to react to this by radically cutting premiums. Stretched consumers, businesses and charities deserve nothing less now that insurance profits are back.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss