Insurance industry must be fair if it wants fairness

25 July 2021

There is an old legal maxim that states: “He who comes to equity must come with clean hands.” In other words, anyone seeking justice in the form of equitable relief must act in good faith. 

The insurance industry in Ireland has been banging that drum for a long time, insisting that claimants act honestly and do not exaggerate any injury or loss. 

At the same time, they complain that legal and other costs put them at an unfair competitive disadvantage and is the reason why they charge sky-high insurance premiums. 

Yet, as a damning report by the Central Bank of Ireland reveals, many insurance companies are ripping off their most loyal customers.

For decades, we have been listening to complaints from insurance companies demanding to have their costs reduced in order to facilitate a cut in premiums to customers. 

They rarely admit the real reason, which is to enhance their profits. 

They have also sought, and been granted, legal changes designed to reduce legal costs; the most notable was the creation of the Personal Injuries Assessment Board in 2003. 

It provides independent assessment of personal injury compensation for victims of workplace, motor, and public liability accidents, without the need for many associated litigation costs.

Now, it appears that some of those same companies have been indulging in practices that are clearly discriminatory and unfair to their own customers.

The new Central Bank report reveals that long-term customers pay, on average, 14% more on private car insurance and 32% more on home insurance than the equivalent customer renewing for the first time. 

This practice is known in the industry as ‘price walking’ and the Central Bank now proposes to ban it outright.

The findings follow the charge made last month by EU competition regulators that the Irish insurers’ association Insurance Ireland was restricting access to a data sharing platform used in the country’s motor vehicle insurance market.

Another investigation at EU level is being undertaken by the Competition and Consumer Protection Commission (CCPC). 

The CCPC case involves an investigation into five insurers, an insurance broker, and an insurance industry trade association.

Preliminary findings indicate the parties involved engaged in ‘price signalling’ — a practice designed to reduce competition.

Sharp practices have been a feature of the Irish insurance market for decades, yet most reforms of the sector have been at the behest and to the benefit of the insurance companies.

The industry has also led a campaign to weed out insurance fraud and ensure that any customer or claimant who indulges in it will suffer the full penalty of the criminal justice system. 

The latest thrust of that campaign demands a special garda unit to deal with it. It has been claimed that up to 20% of personal injury claims may be fraudulent or exaggerated.

Where fraud is apparent it is only right and fair that there are legal consequences to act as a deterrent. 

But fairness is a two-way street. If insurance companies want fairness, they must act fairly. They must come with clean hands.

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