Insurance Ireland has broadly welcomed the Central Bank’s recent second report on the sector, saying it indicates that the industry is progressing in terms of reducing claims costs and legal fees, adding that it wants more action from government to strengthen this progress.

The findings of the bank’s second report on the Employers’ Liability, Public Liability and Commercial Property markets, it says, support the full implementation of the government’s Action Plan for Insurance Reform, including the strengthening of the powers of the Personal Injuries Assessment Board and updating the Occupiers Liability Act with reform of the duty of care laws.

Chief executive Moya Murdock said: “We welcome the second iteration of this report, which provides useful and informative insights into the Irish employers’ liability, public liability and commercial property insurance markets.

“The report found that the EL, PL and CP markets have been operating at a combined loss over the reporting period, which is concerning and also confirms the challenge in some sectors in retaining existing providers and attracting new entrants into Ireland.”

The report covers the period 2009 to 2020, and according to Murdock it “underlines the importance of progressing legislation, including the strengthening of the powers of the PIAB”.

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“The PIRB Bill (Personal Injuries Resolution Board Bill 2022) is an important piece of legislation that should pave the way for more claims being settled without the need for costly litigation.

“Successive NCID reports have consistently shown that PIAB awarded compensation is on a par with litigated settlements, but with litigated cases, legal fees are vastly greater, almost 16 times more costly in this report, than settling via PIAB.”

The organisation added that in 2020 insurers' operating results for employer’s and public liability sectors plus commercial property came to 11%, and pointed out that — even without the needed reforms — 9% of package policies now have premiums below €25,000, 92% of package policies have premiums that are below €5,000, and 57% package policies have premiums below €1,000.

The NCID report shows that:

• The average cost of an employer’s liability claim increased by 37%, and the average cost of a public liability claim increased by 24% between 2019 and 2020.
• The average earned premium for package policies (the majority of all policies, 84%) increased by 6% from €2,232 in 2009 to €2,356 in 2020.
• The loss ratio (claims as a % of premiums) averaged at 76% between 2009 and 2020.
• For claims less than €150,000, the average legal fees for claims settled via PIAB came to €1,273, while via litigation average legal fees jumped to €20,313, an almost 16-fold multiple.
• Settlement of personal injury claims via PIAB took on average 1.8 years, while litigated claims took 4.5 years.

Murdock added: “Swift enactment of proposed changes to the Occupiers’ Liability Act on the duty of care is also vitally important. A rebalancing of the standard, implemented quickly, is crucial to ensure sustainable cover is available to SMEs and consumers into the future.

“At present, the balance of responsibility is tilted against businesses and owners when it comes to commonplace injuries like slips, trips and falls. A common-sense approach is lacking in too many instances, with little onus on personal responsibility on the part of customers and members of the public.

“This is leading to insurers exiting the market and making Ireland an unattractive place to do business compared to many other jurisdictions.”