Insurance costs soar 15pc despite drop in payouts

Insurance

19 October 2021

Overall insurance costs have shot up by 15pc since new guidelines on award levels were introduced, a survey of motorists, businesses and community groups has found.

Following the findings of the research, insurance companies have been accused of failing to pass on savings they are making from lower levels of awards.

The Alliance for Insurance Reform, which conducted the survey, said that the Government must act now to improve competition by getting additional underwriters into the market.

Last week the State’s Personal Injuries Assessment Board (PIAB) said there had been a collapse in the value of average awards it had made for personal injuries. Most claimants are now rejecting awards.

PIAB Award Rejected

Awards are one of the biggest costs faced by insurers.

The alliance ran the survey following the implementation of new judicial guidelines for personal injury awards that came into effect in April 2021.

The judges recommended that award levels for most personal injuries cases should fall by up to 50pc.

Some 450 businesses, voluntary and community groups responded to the survey.

It found their premiums have increased by 15pc on average on renewal a substan.

Motor renewals were the only ones to fall, with a 10pc drop recorded by the survey.

Homecare businesses are being hit by average increases on renewal of more than 122pc.

The survey found nursing homes are seeing average increases on renewal of 35pc. Hospitality premiums are up another 9pc, despite a significant drop in the level of activity in the sector.

And nearly half of charities, voluntary and community organisations have had increases of more than 10pc.

Eoin McCambridge, managing director of McCambridge’s of Galway and director of the alliance, quoted Central Bank figures that show the number of liability-related personal injury claims has reduced by 47pc in the 11 years to 2019.

He said there had been a further 16pc fall last year, according to the PIAB, which last week said there had been a 40pc reduction in average personal injury awards this year.

He added: “The Perjury Act has been commenced. The Garda Insurance Fraud Coordination Office has been opened. 

“Economic and social activity has been slashed for the last 19 months.

“And to further reduce future risk, insurers are excluding Covid-19 from many policies on renewal.

“The risk associated with each and every insurance premium has plummeted in the last year and a half.”

Peter Boland, director of the alliance, said incumbent insurers couldn’t be relied on to pass on savings.

“The Government must act now to improve competition by getting additional underwriters into the market as a matter of extreme urgency.”

Insurance Ireland said that competition law meant it was prohibited from commenting on future pricing.

But it said it believes “that meaningful reductions in award levels will lead to decreased volatility and increased competition in the market over time”.

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