Insurance market reform 'on verge of collapse'
Reform of the insurance market is teetering on the brink of collapse, it was claimed today.
With premiums for liability cover dropping by 22% in the last year the Alliance for Insurance Reform called on the Government to keep pushing for lasting change or watch costs spiral out of control.
Barry English, director of the alliance, told the Joint Oireachtas Committee on Enterprise and Small Business that guaranteeing increased competition was the best way forward.
“We feel a new radical player has to be brought into the market,” he said.
“The business community will be subject to the same cyclical price increases from the insurance companies, simply because the opportunity to absolutely eradicate the problem was fudged.”
Mr English warned uncompetitive practices between insurance brokers and firms were continuing.
“The relationship should be reformed, if not totally severed. We feel that unless that is severed you will never get full competition in Ireland,” he said.
“It is fundamentally flawed. When someone is meant to be getting the best deal for you but is taking a percentage it will never work.”
Mr English revealed one third of the 1,800 businesses the alliance represented had experienced hikes in their insurance premiums over the last year.
“It comes back to the broker situation. Some members are pro-active and get two or three brokers to get a number of quotations,” he said.
“If insurance is not kept top of the agenda it will go back to where it was.”
The alliance also claimed the Government had yet to address misuse of the Book of Quantum – compiled to speed up claims and cut legal costs.
Mr English insisted quantums should only be used as a guide by the judiciary, and he warned the legal profession was battling to protect its own interests in personal liability litigation through the courts, with the Supreme Court due to rule on the role of lawyers acting on behalf of claimants.
He said it would be a disaster if the Supreme Court ruled claimants should have legal representation for cases decided by the Personal Injuries Assessment Board.
John Power, Irish Hotels Federation chief executive, told the cross-party committee a drop in premiums of up to 48% noted by the industry in April 2004 had continued over the last 12 months.
A survey carried out over the last month showed premiums had fallen by an average of 22% over the last year.
“But even at these reduced rates we are still very much out of competition with those of our nearest neighbour Britain, where our premiums are now 40 to 50% higher than those in Britain,” Mr Power said.
