Insurers ‘pocketing benefits’ of insurance reforms, says Alliance for Insurance Reform

Insurers are “pocketing the benefits” of the Government’s insurance reform plan and are taking it and policyholders “for a ride”, according to the Alliance for Insurance Reform (AIR).

Alliance director Peter Boland welcomed more progress in the Government’s plan for reform as outlined in a report issued on Monday, but said key reforms still needed to be implemented, including legislation to rebalance occupiers’ duty of care and for reform of the Personal Injuries Assessment Board (PIAB).

Insurance Ireland chief executive Moyagh Murdock said it supports insurance reform and remains committed to passing on the benefits to consumers, as evidenced from recent CSO data showing motor insurance premiums have fallen 43 per cent since 2016 and by 10 per cent year-on-year.

The action plan, published in December 2020, sets out 66 actions to make Ireland’s insurance sector “more competitive and consumer-friendly”. According to the latest report, some 90 per cent of actions are completed or are ongoing.

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Completed actions include the coming into effect of guidelines for the slashing of awards of general damages for mainly minor personal injuries approved by judges in April 2021.

According to Minister for Justice Helen McEntee, average general damages awards have fallen from €21,850 to €11,853.

Other completed actions include legislation to strengthen the law on perjury and the establishment of an office to promote competition and an insurance fraud co-ordination office. By the end of this year the Government says it intends to complete reform of legislation concerning the duty of care owed by occupiers and reform of the PIAB.

Tánaiste Leo Varadkar said that while there had been good progress in implementing the action plan its success would be measured by whether the reforms would result in reduced premiums and increased available of insurance. “While we have seen some evidence of improvement of availability of insurance, we have only seen premiums decrease for motorists to date.”

Noting that “a lag time” between implementing the reform and people seeing the benefits was expected, he said the insurance reform sub-group would actively review developments in the sector, monitor price changes and actively engage with stakeholders to resolve issues in the market.

Mr Boland, whose organisation represents 48 community and business groups, noted that there have been “serious” reductions in the total number of personal injury claims over the past five years and more recently in average personal injury awards and numbers of claimants heading to litigation.

However, since the implementation of the new guidelines, liability renewals have actually increased by 16 per cent, he said.

“Liability insurers are pocketing the benefits of the reforms and it is up to Government to get serious with them to ensure that the benefits are passed on in premium reductions to SMEs, voluntary and community groups, charities and sports and cultural organisations struggling with the costs of staying open,” said Mr Boland.

Eoin McCambridge, another director of AIR, said insurers “are taking liability policyholders and the Government for a ride”, and damaging the credibility of the reform programme.

Ms Murdock said the reform progress made so far should be underpinned by the pending legislation on PIAB, rebalancing of the duty of care and increased competition in the market, particularly in the area of business insurance.

It is “crucial” that PIAB’s ability to settle cases is strengthened so that fewer cases go to the courts “where the legal costs add so much to the overall cost of settling claims”, she said. The proportion of claimants using the PIAB system is “worryingly low” despite claimants receiving roughly the same level of award whether opting for litigation or PIAB.