The reform of the Irish Insurance industry has, at last, began to take some shape. Campaigners have long been calling for the cost of motor and liability insurance renewals to be lowered. As well as the cost of insurance premiums being paid by customers being a cause for concern, so too has been the amounts awarded to personal injury claimants, with many saying the amounts being given out currently are much too high.
On Saturday, 24th April, the use of the Personal Injuries Guidelines commenced. The new guidelines from the Judicial Council change the amount of General Damages to be awarded by the Courts and by PIAB (Personal Injuries Assessment Board). It aims to see around a 50% reduction in minor injury damages.
Analysis from the Central Bank of Ireland has shown that 42% of the average motor policy cost comes from compensation payments. When you factor in legal costs, broker commissions and reinsurance costs, the Alliance for Insurance Reform believes there is potential room for a reduction of greater than 20%.
According to Insurance Ireland, “The new Guidelines, which we note are mandatory, should ultimately result in personal injury claims being processed more efficiently and consistently.” They also added that ‘’the need for expensive litigation will diminish over time and as a result will unclog the Courts as the Personal Injuries Assessment Board will also operate under these new guidelines.”
While it is a significant step in the right direction and progressive that these new guidelines have been implemented, it will take time for the benefits or results to actually be seen amongst the general public, and while they will be used by PIAB when assessing claims, if they will have a significant effect on how the insurance industry is currently operating on a more general note.
One area which severely needs to see a reduction in insurance costs is that of engineering. Insurance costs have risen over recent years, plus dangerous building rooms which have caught public attention have also shone the sector in a negative light. According to the Irish Examiner, fire engineers, in particular, are being refused Professional Indemnity insurance, and when or if they do get cover, it often includes an exclusion clause.
If this issue isn’t rectified, it could have a major negative impact on the future of major projects and housing construction. Similar situations in the UK have resulted in the UK government partially underwriting the insurance industry, a move that would cause serious controversy here.
Finally, so far during the pandemic, business interruption insurance claims are expected to amount to up to €430 million, according to Insurance Ireland. The organisation went on to outline that the pandemic had brought to the forefront some “uncomfortable gaps between what people expected to be covered for and what their policy was designed for”. What kind of impact this may have, remains to be seen…