Insurers warned to cut their premiums within two months

Consumer groups and business organisations have accused the industry of “a gross injustice” for what they say is a failure to cut premiums despite reforms being delivered for the sector that have reduced the cost of claims.

Insurers had repeatedly told the Oireachtas Finance Committee they would reduce premiums if they got key reforms, such as judicial guidelines, which have substantially reduced award levels. But motor premiums have risen for eight months in a row, with home insurance also increasing.

Businesses say they are being hit by higher premiums – with strict restrictions imposed on what they are covered for if they have to claim – and are being forced to accept high excesses.

Neale Richmond, the new junior minister with responsibility for Financial Services, Credit Unions and Insurance, called the heads of all main general insurers and the industry lobby group, Insurance Ireland, to his office over the past few weeks to question why they had not reduced premiums.

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He said they would be summoned to a second meeting in two months, by which time they will be expected to have taken action to reduce claims costs for customers and businesses.

Asked what would be done if there was a perception then that premiums had not fallen sufficiently, he said he and Finance Minister Michael McGrath would consider options to force more premium reductions. Mr Richmond said: “We have done all the reforms. We have done everything they have asked for.”

He said insurers at the recent meeting were asked what efforts they were making to bring down premiums. He also met Brokers Ireland and the Law Society.

Mr Richmond dismissed claims that meeting industry representatives of the retail trade proved ineffective when he was in a previous department. ​

Chairman of the Consumers’ Association Michael Kilcoyne said insurers were being unfair to policyholders.

“They are certainly not passing on the benefits they have received from reforms to consumers. The amount being paid out on claims is substantially down but their profits are up. They are being unfair to people,” he said.

In a written Dáil answer, Mr McGrath said a recent Injuries Resolution Board report showed the volume of claims submitted to the board fell from 31,072 in 2019 to 18,453 in 2022.

He listed the reforms delivered, including guidelines on lower levels of awards, enhancements to the Injuries Resolution Board and a rebalancing of the duty of care for businesses.

Mr McGrath said: “The Government’s focus is now firmly on ensuring that the savings generated by the entire reform programme are realised, for the benefit of consumers, businesses and community and voluntary groups.”

The Alliance for Insurance Reform CEO Brian Hanley said: “Insurers told us reforms were necessary for premiums to come down.

“The reforms were introduced and instead we are seeing record-breaking insurance company profits, while premiums continue to rise.”

He called on the Government “to stand up to insurers on our behalf and do more to address this gross injustice”.

Insurance Ireland, the lobby group for the industry, acknowledged that it and its member companies had met Mr Richmond.

Asked whether the industry had broken its promises that it would lower premiums if reforms were delivered, Insurance Ireland said: “As Minister McGrath said in the Dáil, the Government’s insurance reforms have had a positive impact on motor insurance premiums with the CSO highlighting a 40pc reduction since 2016.”

Insurance Ireland said the average insurance premium in the Republic was now €670 compared with €1,100 in Northern Ireland and the UK.

“This is demonstrable progress for consumers in Ireland, and Insurance Ireland will continue to work constructively with Government to ensure that future cost savings deliver more benefits for consumers,” he said.