‘Central Bank analysis shows society being held to ransom by lawyers and insurers’: AIR
Alliance for Insurance Reform calls on government to accelerate reforms in face of crisis "fuelled by greed"
20 July 2021 | 0
The Alliance for Insurance Reform has reacted with anger to new data that shines a light on the liability insurance market in Ireland, as the first National Claims Information Database (NCID) liability insurance report is published by the Central Bank.
“This report lays bare the scale of the greed that has driven the current insurance crisis, enriching underwriters, brokers and lawyers at the expense of Irish charities, community and voluntary groups, sport and cultural organisations and SMEs struggling to make ends meet,” says Peter Boland, director of the alliance.
The figures reflect “sheer scale of the fees being made by lawyers,” he continues. “But what is extraordinary here is that lawyers’ pursuit of fees is actually costing their clients when minor injury public liability (PL) or employer liability (EL) claims are taken to litigation. Claims for minor injuries cost up to 25 times more in legal fees than settlements via PIAB, take 2.7 years longer to settle and yield less for the claimant than PIAB awards.”
He highlights that while public liability claims for minor injuries were <€150,000 between 2015 and 2019, the average PIAB assessment was €26,760. Meanwhile, an average minor injury award via litigation was €25,088, 6% less.
“On employer’s liability claims, lawyers creamed off average fees of €22,792 in fees,” Boland notes; “25 times more than the legal fees via the Personal Injuries Assessment Board, where a higher average award for the plaintiff cost only €902 to deliver. It is clear that personal injury litigation is the mother lode of many Irish solicitors’ income, at the expense of plaintiffs, policyholders and society.”
While insurers have consistently said for years that claims drive insurance costs, Boland says it “is clear from the 11 years of data produced in this report is that it has been costs within the control of insurers that have driven their losses.
“Dramatically reduced investment income, increased commission levels paid to brokers and big increases in reinsurance costs and reserves for future settlements have driven recent losses,” he adds. “Meanwhile insurers’ loss ratio (ultimate claims costs to earned premiums) has dropped dramatically since 2015, the year liability premiums started to rocket. The loss ratio was at a record low of 56% in 2019.”
Eoin McCambridge, managing director of McCambridge’s of Galway and director of the Alliance adds that the insurance crisis is “fuelled by greed”.
“This report clearly illustrates the extent to which Irish society is being held to ransom by lawyers and insurers,” says McCambridge.
“Government must now accelerate their reform programme, moving swiftly to get more competition into the Irish insurance market as the incumbents are not serving Ireland well. Equally, the cost of litigation must be addressed.”
McCambridge also believes that the promised reform of PIAB should be fast-tracked “as a matter of extreme urgency”.
“Government must act quickly and decisively to cap legal fees in the Circuit and High Courts,” he adds. “And finally, the duty of care must be rebalanced so that it ceases to impose an unbearable burden on policyholders.”
AT A GLANCE: Alliance for Insurance Reform’s summary of findings
- Lawyers “gouge” clients as litigated claims for minor injuries cost up to 25 times more in legal fees, takes 2.7 years longer to settle and yield less for claimants than PIAB awards
- Lawyers make an average of €22,792 in fees on employer liability claims for minor injuries
- Insurers’ losses due to poor investment performance, increased broker commissions, increased reinsurance costs and increased reserves – not claims costs
- Claims costs have been dropping since 2015, at a record low in 2019