Tuesday 10 December 2019

Charlie Weston: 'Policyholders finally have a reason to hope the crisis may ease'

Sinn Féin TD Pearse Doherty. Photo: Tom Burke
Sinn Féin TD Pearse Doherty. Photo: Tom Burke
Charlie Weston

Charlie Weston

The insurance crisis is wreaking havoc in this country, but at last there are some signs that matters are set to improve for consumers, community groups and businesses.

New rules will shift the balance in favour of policyholders and away from insurers. The new legislation coincides with judges looking at recalibrating award levels.

These two developments are the first breaks consumers have caught in ages. Drivers know only too well about the effect of surging premiums, with many feeling the hikes have been unjustified.

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And there is some validity to those arguments. Premiums shot up by 50pc between 2013 and 2017. Insurers blame high court awards for injuries and the prevalence of fraudulent and exaggerated claims.

However, it emerged recently in the Oireachtas Finance Committee that court awards and Personal Injuries Assessment Board awards were actually down 15pc over the same period.

And the number of motor claims went down 22pc, Insurance Ireland admitted to Sinn Féin TD Pearse Doherty.

When it comes to insurance for business and community groups, hardly a day goes by when the insurance crisis in this country does not claim a new victim. It has seen jobs being lost, leisure facilities are being forced to close and community groups are having to scale back their activities.

At the same time, insurers have returned to profit, although they argue they have had to endure many years of making losses. All this means the insured public has had to endure a torrid time. Add into the mix that insurance contracts are stacked heavily against consumers and businesses, according to the Law Reform Commission.

At last some of this is about to change. The Consumer Insurance Contracts Bill 2017, which is going through the Houses of the Oireachtas at the moment, is the most radical change to insurance legislation in centuries.

Most insurance contract law in this country was inherited from Britain. Much of it has changed little from the 18th century, and was designed to protect insurers covering sailing ships seeking out exotic cargo in far-flung lands.

The UK has since updated much of its law on insurance contracts, but the same has not happened here, until now.

The new legislation, which has been drafted by Mr Doherty and is now championed by Junior Finance Minister Michael D'Arcy, will make it much harder for insurers to wriggle out of paying valid claims.

It will also put a stop to insurers retaining large chunks of a settlement, and will force more transparency on the industry when it comes to paying third-party claims made against policyholders.

From next year the new legislation will put the onus on insurers to ask the right questions when a proposal form is being filled out.

In addition, the bill currently requires insurers to provide details of the claims paid out and premiums paid by policyholders over the last three years. This is to make it easier to shop around.

All this comes as judges are sitting down to discuss recalibrating the high level of court awards in personal injury actions - often seen as one of the key reasons for the elevated cost of insurance. If recommended award levels are lowered it could have a big impact on premiums.

The new legislation and the move by judges to look at award levels mean that at last policyholders have reason to hope the insurance crisis may ease some time soon.

Irish Independent

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