The Government has warned it will hold the insurance industry to account if the costs on motor and business cover do not reduce following the introduction of new personal injury guidelines.
The Cabinet on Wednesday approved the guidelines which have been introduced to reduce high insurance claims.
The new guidelines will come into effect next month and will set out the level of damages that may be awarded for personal injuries.
The guidelines has replaced the Book of Quantum.
Leo Varadkar needs to stop repeating insurance industry spin. Awards for future claims are dropping by over 50% and those reductions should be passed on to customers immediately! – @PearseDoherty #EndTheRipOff pic.twitter.com/B8TYtfNo11
— Sinn Féin (@sinnfeinireland) March 11, 2021
Tánaiste Leo Varadkar said that, while there will be a reduction in premiums, there will be a lag time between now and the reduction of costs.
“What I would anticipate, and I will be looking out for renewals in the next couple of months or next year to see whether they’re coming down or not, and we’ll be holding insurance industry to account on that,” Mr Varadkar told the Dáil.
The insurance industry has previously stated that a reduction in awards would lead to a drop in premiums.
Sinn Féin’s Pearse Doherty said there should be an immediate cut in insurance costs for motorists and businesses.
Mr Doherty told the Dáil that the new guidelines go beyond the 50 per cent cut in costs that had been suggested by the industry.
“There are real premiums reductions that motorists should be experiencing today and tomorrow, next week or next month, and including business renewals,” Mr Doherty added.
Mr Doherty accused the insurance industry of attempting to move away from previous statements.
“We passed the legislation, the judiciary has cut awards, but the industry is trying to swindle and get out of the commitment that it has made,” Mr Doherty added.
“The insurance industry will see the expected costs of claims significantly reduced, from today the money that they will have to pay out on award will be significantly reduced from what was previous.
“So therefore, we should see an immediate reduction in premiums that are taken out, or that are being charged at from this point on.
“The industry, in my view, have no where left to hide, they must commit to major reductions and insurance premiums for motorists and for businesses.”
However, Mr Varadkar said there will be a lag in the reduction of costs.
“The objective of the action plan is to make insurance more available for people and for businesses and reduce the cost of premiums for people and businesses,” he added.
“If you look at the pie chart of insurance costs, the biggest single part of that is the payouts paid to people who’ve been injured.
“Other things like legal costs, the cost of the insurance companies, their profits are all in around 10%, whereas the payouts are 40 or 50 per cent of the cost of insurance.
“Therefore reducing payouts should, we expect and anticipate, will result in a cost of payments for people.
“The new guidelines don’t take effect immediately, the new guidelines don’t apply to claims that have already been assessed by the Personal Injuries Board.
“They don’t apply to cases that are already before the courts.
“I do believe that will result in premiums coming down, but there will be a lag time between now and that happening.”