A new Central Bank report shows the Insurance crisis has been driven by the greed of lawyers and insurers, according to the Alliance for Insurance Reform.

The report finds that the average cost of liability and commercial property insurance rose by 24% between 2013 and 2019.

Meanwhile, premiums in the arts, entertainment and recreation sector increased by 101% between 2014 and 2019.

On Newstalk Breakfast this morning, the Director of the Alliance for Insurance Reform, Peter Boland said premiums should have begun to fall as soon as new guidelines directing judges to slash personal injury pay-outs were introduced.

   

Personal injury claims have fallen by 50% since the new judicial guidelines came into effect in April.

Campaigners had expected the change to lead to a significant drop in premiums; however, there is no evidence insurers are passing the savings on to customers.

Mr Boland said there are “two sides to the coin” when it comes to sky-high premiums – lawyers and insurers.

He said the changes to personal injury pay-outs should have seen premiums fall “straight away.”

“There is a very good reason for that because the risk associated with every claim made in this country has dropped by an average of 50% since April 24th,” he said.

“That is not being passed on and insurers really have questions to answer here because for all the talk about the losses they made since 2018 - which were used to justify the massive increases many sectors have seen - it turns out from this data that the losses were not created by claims.

“The losses were due to poor investment performance, increased broker commission, increased reinsurance cost and increased reserves.”

"Nowhere to hide"

He said insurers now have “nowhere to hide” on sky-high premiums.

“Really now, at this stage, it is clear that the key is for Government get really stuck in on this,” he said.

“This is not an issue for next year, this is an issue for this year.”

Court claims

Mr Boland also hit out at personal injury lawyers, suggesting they are convincing their clients to go to court instead of the Personal Injuries Assessment Board (PIAB) – even when it will not increase their award.

He said the data shows that people actually get “slightly more through PIAB than they do through litigation.”

“You would have to ask the question, why would anybody go onward into litigation and spend another, on average, 2.7 years pursuing a claim when they are actually going to get less money,” he said.

“The answer is in the legal fees because for example, on employer liability claims – so accidents in the workplace – the legal fees yielded by a PIAB claim are €902.

“If you manage to get your client to reject that and move on to litigation, they won’t make any more – but lawyers make €22,792 on it.”

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