As you would have noticed this year, Insurance Costs are increasing for all businesses as Insurers are applying general rate increases in an attempt to offset overall underwriting losses caused mainly by:
- Significant increases in the volume and cost of Liability Claims (see below)
- Similar increases in motor accident claims frequency and costs
- Severe weather events and lack of attention to property risk management
Increase in number and cost of Liability Claims
Several factors have led to rate increases and a reduction in insurer capacity:
- Between 2012 and 2014, the average cost of claims in Motor Insurance rose by 8%, for Employers Liability it rose by 27% and for public liability it rose by 8%.
- As for the frequency of claims, the Injuries Board has reported a 36% increase in the claims submitted since 2008
- The cost of claims in Ireland is too high e.g. the average cost of whiplash in Ireland is €15,000 (while the average cost in the UK is €5,000, or €3,000 in Spain/Italy)
- Circuit Court Jurisdiction increased from €38,000 to €60,000 and 21 new Circuit Court judges appointed, leading to the average award in the Circuit Court increasing by 21.2% in 2015, following a 13.5% increase in 2014.
- When the Setanta Insurer collapsed, the remaining insurers are now being asked to price a product to factor in the cost of a competitor failing. Would this happen in any other sector? (for example, Dunnes Stores would not be expected to bail out Tesco if such a default occurred). Quinn and Enterprise Insurances failures are also adding to your insurance premiums.
- In summation, the average personal injury awards in the High Court & Circuit Court continue to increase – see table below (from Insurance Ireland);
For businesses, it is paramount to note that the excessive levels of award in Ireland are increasing the incentives to commit insurance fraud. So what can you do? At a recent PWC/Willis Tower Watson event in Cork, effective Claims Management was advised as a vital component i.e.
Robust claims reporting and investigation
Invest in CCTV and data recording (including photos and witness statements)
Early detailed investigation enables informed decision making to (a) settle/defend, (b) engage with Injuries Board, (c) pay expenses/earnings etc.
Review procedures regularly and learn from experience