25 Jan 2018 | 05.14 pm
Working Group Concludes Insurance Probe
Why does Employer and Public Liability insurance cost so much?
25 Jan 2018 | 05.14 pm
The government has approved a report on employer and public liability insurance in which the Cost of Insurance Working Group attacked the insurance sector for what it calls “stark deficiencies in the availability of useable data across the whole sector”.
The Working Group, chaired by financial service minister Michael D’Arcy, described the unavailability of full and transparent data as “a major, and increasingly frustrating, obstacle impeding the Group in its attempts to initiate strong proposals to positively impact upon insurance costs”.
The report makes four proposals for the development of collection processes to ensure sets of reliable data, and for their dissemination.
Two of the four recommendations seek to directly link with data initiatives arising from the ‘Report on the Cost of Motor Insurance’. The first proposes that the Central Bank considers the merits and feasibility of extending the scope of the National Claims Information Database to incorporate a liability insurance element. The second proposes that the timing of this should be tailored to the need to get the motor insurance element of the database up and running.
The other two recommendations call on the CSO and the Courts Service to look at the most effective method to provide better quality information in respect of the cost of insurance for business, and more granular data on personal injury awards, respectively.
The report states: “The quantity and quality of information which will become available upon the full implementation of these recommendations should greatly enhance the general understanding of the liability insurance sector and, in turn, the effectiveness of insurance policy overall.”
Beyond that, the majority of recommendations in the report concern the personal injury claims environment and seek to introduce measures to enhance processes and procedures during litigation. Ultimately, the basic aim is to ensure claimants receive a reasonable and just level of compensation in respect of their injuries as speedily as possible, while at the same time providing defendants with a fair opportunity to properly challenge a claim in appropriate instances.
The report says that many potential defendants, whether employers or insurers, are not being promptly informed that an incident, where it is alleged that they have been negligent, has taken place. It proposes to remedy this by amendments to the Civil Liability and Courts Act 2004 to ensure that defendants are informed within one month of an incident occurring, and that a failure to do so without reasonable cause will lead to some inference being made in court.
Two other related recommendations seek to codify the section 8 notification requirements within Court Rules and to ensure a greater general awareness of the notification obligations, respectively.
The report contains an action plan which identifies responsible bodies and timelines for delivery, and is similar to the analogous action plan for motor insurance.
“The Working Group believes that one of the key indicators of the success of the recommendations in this Report will be a greater level of consistency in award levels. This should in turn result in an increase in the number of PIAB cases being accepted by claimants, as the need to litigate diminishes,” the report states.
Alliance for Insurance Reform spokesman Peter Bourke said the Working Group report is an embarrassment to a government that claims to be on the side of small business owners.
“Its main recommendations call for more reports and analysis while asking kindly for the insurance industry and legal profession to co-operate. The only Republic of Opportunity we see is the one exploited by the insurance industry and legal profession as Irish businesses and charities are bled dry.
“It is clear that the vested interests profiting off the backs of Irish organisations have no interest in reforming a system that is driving big increases in profits for their shareholders. The government needs to show backbone in taking on these sectors to protect jobs and services across the country.”
“The vast majority of the actions outlined in today’s report involve the production of feasibility studies, proposals, reports, options or detailed analyses. It gives the overall impression of being a holding document to avoid actual action,” Boland added. “It has been over 18 months since the Government first established their working group on insurance costs and no tangible progress has been made in reducing premiums.”
Fianna Fail finance spokesman Michael McGrath commented: “While the report is welcome, implementation is vital. It is essential that the timelines outlined in the report are met. We cannot afford to allow the current issues in the insurance market to continue for years to come.
“Transparency is clearly a major issue as there is currently no objective way to ascertain the trend in prices for both employer and public liability insurance. We also have the situation whereby policyholders are not informed fully when claims are made against them. This situation has to change.
“We also need a far more aggressive strategy to tackle insurance fraud and exaggerated claims. It is clear that this is a major driver in the cost of all types of insurance in this country. It is not fair on law-abiding individuals and businesses to incur the cost of a few people who are taking advantage of the current system.”
Photo: Minister Michael D’Arcy (right) with finance minister Paschal Donohoe. (Pix: Rollingnews.ie)