Government Report Provides a Framework for Addressing Embedded Claims Costs – Insurance Ireland
Report supports assessment of claims costs, both paid and not yet settled, as the defining issue in the market
Ministerial oversight and assignment of responsibility for swift implementation of recommendations is key
“Report alone does not reduce costs in the market but implementing the right policies will” – Kevin Thompson
10th January 2017. Insurance Ireland has welcomed the publication of the Government’s Cost of Insurance Working Group report but stressed that priority must be given to policies that remove embedded costs in the system.
For over 18 months, Insurance Ireland has been calling for policy responses to address rising cost of claims and its effect on the Irish motor insurance market. Specifically, Insurance Ireland has called for consistency in personal injury awards; measures to tackle whiplash as our average award is three times that of the UK (€15,000 vs €5,000); increased powers for The Injuries Board to handle more claims; internationally benchmarking our high personal injury awards; addressing the liability for Setanta insurance and measures to review legal costs, among others.
Kevin Thompson, CEO of Insurance Ireland stated “Insurance Ireland has consistently said that while there are many influencing factors, the cost of claims is the defining issue in the Irish motor insurance market and this report supports our assessment.”
“Premiums are a function of claims costs and the impact of rising costs is clear with gross incurred claims increasing by a total of 44% from 2012-2015. This is the true effect of a volatile claims environment and the context in which the report’s recommendations must be viewed and acted upon.”
“Insurers want predictable claims costs at a level society can afford and the priority must be the swift implementation of the report’s recommendations on the cost of claims through Ministerial oversight and assignment of responsibility. These recommendations include a Personal Injuries Commission to review award levels, a review of the impact of legal fees, giving increased powers to the Injuries Board, examining international award levels and new initiatives to tackle insurance fraud. A Further recommendation is for a national claims database to provide enhanced transparency around claims settlement in the market.”
“These policy responses broadly reflect Insurance Ireland’s priorities and, as with our extensive engagements to date with the Minister’s Working Group, Insurance Ireland will engage fully on the implementation of the report.”
Kevin Thompson concluded “It is clear from the report that there are many stakeholders in the claims settlement process and all must fully support efforts to reduce the costs that are ultimately borne by motorists. This report alone does not reduce the risk and costs in the market but implementing the right policies can bring much needed stability and certainty for motorists.”