Insurance chiefs promise Donohoe that premium costs will fall

by Charlie Weston for

January 04 2022

Insurance companies have promised the finance minister that they will pass on savings to consumers from reforms in the sector.

Finance Minister Paschal Donohoe said he had met with the chief executives of major insurers here and they are committed to lowering premiums.

This is in response to a cut, agreed by judges, in recommended pay-outs for personal injuries claims.

It comes at a time when premiums here for consumers, businesses, community groups and charities continue to be among the highest in Europe.

Many firms are unable to get cover or have to pay inflated premiums as a number of insurers will no longer quote for liability insurance cover.

Some businesses said they have been forced to close because they could not find affordable cover.

Mr Donohoe said in a recent Dáil reply that insurance companies are now looking at providing cover in under-served sectors in light of the recent reforms.

But insurance reform campaigners have responded with scepticism to the minister’s comments.

Peter Boland of the Alliance for Insurance Reform said: “Left to their own devices, it is unlikely that insurers will reduce insurance premiums this year for the sectors worst hit by the current crisis.”

He said there is not enough competition in the market to compel them to do so.

“It will take a massive effort from Government, in terms of attracting additional capacity into the market, while putting significant pressure on incumbent insurers to share the benefits of the reforms implemented so far, to get any benefits for the voluntary groups and SMEs really struggling right now.”

Last year the judges in the State agreed to new personal injury guidelines which reduced the amount of money judges could award for minor claims such as whiplash or soft tissue damage.

However, the guidelines are set to be tested later this year after a number of challenges were lodged in the High Court.

Figures released by the State’s Personal Injuries Assessment Board last year showed that pay-outs had fallen sharply after the new rules were introduced, but there has been little change in premiums.

Minister Donohoe said in response to a Dáil question from a number of backbench Fianna Fail TDs that insurance companies had promised him they would pass on savings to customers.

“In recent weeks, as part of this work I met with the CEOs of the major insurance providers in Ireland. They have confirmed that they are committed to passing on savings from the guidelines, and other reforms, to customers,” he said.

He also said they “reiterated” their support for the reform agenda and that they are adhering to the guidelines in direct settlements with their clients.

Mr Donohoe said that he also made clear to the companies the need to expand their “risk appetite” for sectors that are experiencing issues with availability and affordability of cover.

High-risk businesses in the leisure sector are finding it particularly difficult to get affordable insurance cover, forcing some to close down.

He said some insurers had indicated to him that they were “actively considering” growing their business in certain areas.

The finance minister also hinted that a new player may enter the market this year.

“Separately, I also recently met with a leading international insurance brokerage firm, and discussed both the question of supply and the Irish market in general,” he said.

The finance minister said the Government would continue to implement the action plan for the sector to bring more choice to the market.