The insurance industry will “always find another excuse” for failing to reduce premiums, even as awards plummet, according to a former President of the Law Society.
It comes after the last report from the Personal Injuries Assessment Board found that awards have fallen sharply since the new Judicial Council Guidelines were introduced.
The report found that awards have fallen by an average of 40% since the guidelines were brought in with nearly half of all claims now worth less than €10,000.
Despite the reductions, the cost of liability insurance for businesses has not followed suit – with many SMEs warning that their premiums have actually increased.
On The Hard Shoulder this evening, Stuart Gilhooley, Solicitor and Former President of the Law Society of Ireland said the money is going directly towards insurance company profits.
“The reality is with the insurance industry, there is always another excuse,” he said.
“There is always another reason why premiums won’t come down and every single time they get what they want, they say they need more – and there will always be more.”
Mr Gilhooley said that, even without the new guidelines, the number of claims against insurance companies has dropped by nearly one-quarter two years – with a further 30% expected this year.
“We haven’t seen anything back on that at all,” he said. “They are not paying anything out on those claims. They are still getting those premiums in, but they are not paying anything out on nearly one quarter of the number of claims.
“We haven’t seen anything back on that. No claims costs nothing.”
He said that between 2009 and 2019, there was a 9% drop in the cost of claims and a 35% increase in the cost of premiums.
Also on the show, the Insurance Ireland CEO Moyagh Murdock said that insurance company losses have gone up quite significantly in recent years.
“The insurers are not the ones making money here,” she said. “They are pulling out of the market.
“The competition is reducing so clearly this is not a viable business for many of them - that is why I am saying we have to all work together to bring down the cost of insurance.”
She said there are several other costs involved in every insurance claim – including legal fees, medical assessments and other administrative costs.
“I am telling you now that the insurers are not the ones benefiting from this,” she said. “We are seeing too many players exit the market. It is not a viable business for them.”
Mr Gilhooley said legal costs are included in the 9% drop in claims costs recorded between 2009 and 2019.
“The money has gone into the insurer’s profits,” he said. “We can see it in the profits.
“€200m was what the insurance industry made in the last year. They are making huge profits. It is just nonsense that they are not making profit. It just doesn’t stand up.”
Ms Murdock said while some areas of the insurance industry are profitable, companies are still losing money on employer liability and barely breaking even on public liability.
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