Central Bank analysis shows society being held to ransom by lawyers and insurers

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Alliance calls on Government to accelerate reforms in face of crisis fuelled by greed

  • 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 making 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 record low in 2019

The Alliance for Insurance Reform has reacted with anger to new data that shines a light on what is going on in the liability insurance market in Ireland, as the first National Claims Information Database (NCID) liability insurance report is published by the Central Bank.

Peter Boland, director of the Alliance said “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 & voluntary groups, sport and cultural organisations and SMEs struggling to make ends meet.

“The sheer scale of the fees being made by lawyers is reflected in these figures, as it was in the NCID’s motor insurance reports. 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. For example, on public liability claims for minor injuries (<€150,000) between 2015 and 2019, the average PIAB assessment was €26,760. Whereas an average minor injury award via litigation was €25,088, 6% less.  But lawyers creamed off the equivalent of 74% of the litigation award, with fees of €18,680, compared to fees of €1,705 via PIAB. It is clear that personal injury litigation is the mother lode of many Irish solicitors’ income, at the expense of plaintiffs, policyholders and society.

“Meanwhile insurers have been insisting for years now that claims drive insurance costs but what 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. 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 said “The crisis policyholders have been going through is fuelled by greed. This report clearly illustrates the extent to which Irish society is being held to ransom by lawyers and insurers. 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. As a matter of extreme urgency, the promised reform of PIAB must now be fast-tracked. But the scale and impact of legal fees can no longer be swept under the carpet. Government must act quickly and decisively to cap legal fees in the Circuit and High Courts. And finally, the duty of care must be rebalanced so that it ceases to impose an unbearable burden on policyholders.“  

Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and director of the Alliance said “It is difficult to overstate the importance of this data for Irish charities, voluntary & community groups, sports & cultural organisations and SMEs which have long suffered from unsustainably high insurance costs. This is particularly true of the sectors worst-affected by insurance hikes, which have been identified in the report. It is now up to Government to ensure that insurance costs are reduced to affordable levels and kept that way, because we cannot recover from Covid-19 as an economy or a society unless insurance is sorted.”

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