Insurers to defy calls for price cuts in wake of awards reforms
Minister wants to see reductions, but industry claims it will take time
INSURERS have poured cold water on the prospect of immediate significant reductions in insurance premiums – despite major cuts to awards being approved by judges.
Payouts for whiplash will be more than halved and many other awards for less serious and mid-range injuries will be cut even further.
Despite the changes, Insurance Ireland has warned that premium reductions would only happen “over time”.
Its chief executive Moyagh Murdock also said that although the industry was “committed to passing on savings”, customers could have expected greater reductions if new judicial guidelines had been more radical.
“Our initial view is that the new guidelines do not go far enough to address the high cost of claims in Ireland,” she said.
The failure to commit to substantial immediate reductions drew criticism from insurance reform campaigners, who now want the Government to act.
Junior Minister Sean Fleming is due to meet with insurance companies today.
“I am expecting a significant decrease given the single biggest element that makes up the cost of claims has now been reduced,” he said.
INSURERS have poured cold water on the prospect of immediate significant reductions in insurance premiums – despite major cuts to awards being approved by judges.
Pay-outs for whiplash will be more than halved and many other awards for less serious and middling injuries will be cut even further.
Despite the changes, Insurance Ireland has warned premium reductions would only happen “over time”.
Its chief executive Moyagh Murdock also said that although the industry was “committed to passing on savings”, customers could have expected greater reductions had new judicial guidelines been more radical.
She claimed Ireland would remain a major outlier in Europe in terms of soft-tissue injury award levels and insurance premiums. “Our initial view is that the new guidelines do not go far enough to address the high cost of claims in Ireland,” she said.
The failure to commit to substantial immediate reductions drew criticism from insurance reform campaigners, who now want the Government to act.
Sean Fleming, the junior minister responsible for the area, is due to speak to insurance companies today.
“I am expecting a significant decrease given the single biggest element that makes up the cost of claims has now been reduced,” he said.
But he said he did not expect insurers to start sending rebate cheques to policyholders. Instead, reductions should be seen when policies were being renewed, he said.
Insurance Ireland has previously said whiplash accounts for up to 80pc of motor claims.
The current Book of Quantum allows awards of up to
€19,400 for whiplash injuries where a full recovery is expected. But under guidelines approved by the Judicial Council on Saturday, awards will drop to between €3,000 and €6,000 where injuries are recovered from in less than a year and to between €6,000 and €12,000 where recovery takes place within two years.
The Alliance for Insurance Reform said the guidelines fell well short of the 80pc reduction it sought and it now wants the Government to cap damages. But it is also seeking action to force insurers to cut premiums swiftly.
“We expect a robust approach from the Government towards insurers,” spokesman Peter Boland said.
“While we are disappointed with the level of reductions and we want further intervention from Government, in the meantime we would expect insurers to deliver the full range of reductions the new judicial guidelines permit.”
Personal injuries solicitor and former Law Society president Stuart Gilhooly said the new guidelines represented “a bonanza” for insurers.
“In many cases, damages will be cut by 50pc. Those cuts will result in stratospheric profits but I think insurers will only throw crumbs from the table to consumers,” he said.
In a statement, Ms Murdock said Insurance Ireland believed that while the guidelines would help reduce premiums “over time”, reductions “could have been much greater” if the guidelines were “more radical and sought to bring Ireland more into line with the UK and other European countries”.
She said the interpretation of “substantial recovery” would have a significant bearing on awards, claiming there was still a risk of judges making widely varying awards in respect of comparable injuries.