The Irish Government has urged insurance companies to pass on savings garnered by Government reforms in the area of insurance and claims to policyholders. However, the insurance industry defends price rises.
Junior minister with responsibility for Financial Services, Credit Unions, and Insurance, Neale Richmond, has met with insurance body representatives twice since the summer and reiterated the need to pass on savings generated by insurance reforms to consumers in Ireland emphasizing the need to reduce premiums and expand risk appetite.
Rising premiums
Despite a series of reforms, which have benefited insurers, motor insurance premiums have increased by 11% in the year to October, with home insurance and health insurance premiums also increasing steeply.
Insurers cite the increase in damages-related claims and higher costs of settling these claims through litigation as a cause for increasing insurance premiums. This is despite soaring profits made by insurance companies, such as AXA Insurance DAC whose after tax profits quadrupled in Ireland in 2023 and have remained high in 2024.
Price increases
Reforms arising from the Government’s Action Plan for Insurance Reform, published in October 2020, aim to make the insurance sector more competitive and consumer friendly in order to support enterprise and job creation.
The aim is to alleviate the difficulties of businesses, especially small businesses, in certain sectors to obtain affordable insurance cover as well as stem the tide of premium increases for consumers.
Reforms
Recently introduced Personal Injuries Guidelines, used by the IRB and the courts in personal injury claims, as well as a strengthening of the role of the Injuries Resolution Board, aim to resolve personal injuries claims without litigation and thus reduce the associated costs.
Despite this, a Central Bank report on motor insurance has shown that legal costs make up half of the cost of claims and Insurance Ireland has called on the Government to tackle this issue.
The group also said that there has been an increase in fatal and serious collisions on Irish roads in the last three years which, alongside the cost to families and communities, impacts on premium prices for motor insurance.
Greater competition
Reporting in the Dail on the meetings with Insurance Ireland, Finance Minister Jack Chambers expressed that new insurers had come into the Irish market to provide heightened competition such as OUTsurance, Revolut, and Fastnet.
Minister Chambers expressed that it is hoped that increased competition will lead to more competitive premiums for individual consumers and businesses and compared Irish insurance prices favourably with other European countries in recent times.
How this affects consumers and businesses
Many businesses, especially smaller businesses, are finding it a real challenge to get affordable insurance cover. This can especially be seen in businesses that have a lot of footfall and contact with the public, such as hospitality and leisure businesses, for example.
For individuals purchasing personal insurance, such as motor insurance and home insurance, price increases are felt when it comes to renewal time and in their monthly premiums.
Affordable insurance is a key component of viable businesses and is also necessary for motorists and home owners who rely on affordable protection where events such as collisions or storms occur.
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