Insurance companies have “serious questions” to answer over their failure to reduce premiums, according to a former President of the Law Society.
Campaigners had expected the change to lead to a significant drop in motor and liability insurance premiums; however, the Alliance For Insurance Reform has said there is no evidence insurers are passing the savings on to customers.
On Lunchtime Live this afternoon, solicitor Stuart Gilhooly premiums should already have been cut.
“If there is a 50% cut in damages, there has to be a corresponding cut in premiums – certainly of the nature of around 30%,” he said.
“If we are not seeing that sort of level there has to be serious question marks as to why we are not seeing that.”
He said the fall in pay-outs may actually be higher than 50%.
“Some of the awards seem to be about 70% down so there has been a massive drop in the level of awards which is what we expected given that the guidelines did certainly indicate that when we saw them last March,” he said.
“We knew this was going to happen straight off and also the insurance industry knew this was going to happen and they should already be reducing premiums as a result of this because this was utterly inevitable.”
Speaking in the Dáil this afternoon, the Tánaiste Leo Varadkar said Government would demand answers from the insurance industry if premiums did not fall in the coming months.
“There would want to be a good reason as to why premiums don’t fall if they don’t fall and it can’t be because they are taking larger profits,” he said.
“We do acknowledge though that the insurance industry is a big employer in Ireland and we want to have a successful vibrant, competitive, profitable insurance industry but many of the reforms we have introduced now are ones they called for – and called for on the promise that, if they were done, insurance would become more available.”
He said officials would meet with insurance providers to tell them that Government expects savings to be passed on to customers.
"Excuse after excuse"
Mr Gilhooly told Andrea Gilligan he was not surprised at the insurance industry’s failure to act.
“We have a situation where the insurance industry has known for quite some time that they were going to get this reduction,” he said.
“They are able to factor this into their future projections and they have known since March what the levels were going to be.
“They should be in a position where they are able to produce lower premiums right now.
“Unfortunately, over the years we have seen the insurance industry giving promise after promise and excuse after excuse – there is always another reason why they don’t reduce insurance premiums.”