Mr. Donall O'Keeffe:

I would like to begin by thanking the Chairman and members for the invitation to speak to the committee on the important topic of the cost of business insurance. The Licensed Vintners Association, LVA, is the representative organisation for the publicans of Dublin. We have some 600 members which is over 80% of the pubs in our capital city. Collectively our members sell 30% of the alcohol in the Irish on-trade and employ 12,000 staff.

In simple terms there are three elements involved in business insurance; property cover, employer’s liability and public liability. The LVA’s concerns are entirely focused on the issue of public liability covering the premiums and the cost of claims, as we understand that such claims account for 89% of all liability claims in the licensed trade. To provide the committee with some flavour on the nature of public liability claims in our sector our analysis shows that some 71% of these claims are related to slips, trips and falls.

The LVA surveyed its members in September on their experience of the cost of insurance renewal over the past three years, 2014 to date. The figures are stark. Average premiums paid in 2014 were more than €16,670 per annum, rising to €20,463 per annum in 2015 and rising again to almost €25,000 per annum in 2016. This is an average annual increase of 21% and 22% in the previous two years. These figures disguise the huge range in premiums paid by pubs across Dublin with many of our suburban members paying €20,000 to €25,000 annually, which is a very high figure and increasing and increasing by 20% annually. That late bar scene, however, faces enormous insurance bills, with many of these businesses facing annual premiums in the €50,000 to €100,000 range. One of our members reported an insurance premium of €145,000, up from €80,000 two years previously. It is clear that insurance premiums are a very significant cost for the Dublin licensed trade and that premiums are escalating at an unsustainable pace. It is hampering the competitiveness of our industry and is threatening the viability of some pubs. We have had the shocking case with one of our members where a customer was awarded €90,000 for a dislocated thumb as a result of a fall on stairs. The impact of this claim was that the insurance premium doubled to €150,000 per annum, which is not sustainable or viable. The nightclub part of his business had to be closed with the loss of 15 full-time jobs.

The Dublin licensed trade has a particular concern with claimants having up to two years to lodge a claim. This is completely excessive as it makes it difficult for the business to prepare a defence as staff and/or customer witness statements cannot be obtained at that stage and CCTV footage would no longer be available.

On the availability of statistics, we understand around 20% of claims are settled by the PIAB and that a further 5% to 10% actually end up in court. This means that 70% to 75% of claims are settled directly between insurers and claimants. There is absolutely no information available on the majority of public liability claim settlements. This is simply unacceptable in a modern economy and a real deterrent for new entrants to the insurance market. The Government needs to conduct an independent economic analysis of the cost drivers of escalating public liability insurance premiums to bring greater transparency to the opaque insurance market and allow both regulators and the public to understand the factors and the extent to which they contribute to higher premiums. It is not possible to regulate for a better functioning insurance market without understanding and quantifying the cost drivers. For example, we note from the PIAB that the trends in the past three years, from 2013 to 2015, show a 6% increase in the number of public liability insurance claims to 8,906, with the average award being very stable at approximately €25,000. These figures do not support the view that higher claim costs are causing the hikes in premiums. Others point to legal costs as being a factor, but there is no such statistical evidence available. Absolute clarity on the cost drivers is, therefore, needed. The Government needs to legislate for the mandatory provision of statistical information on public liability insurance claims, to include the number of injury claims; the nature of these claims; the settlements paid; the legal, medical and other fees identified; and the duration from claim lodgment to settlement. There should be a publicly available national claims register to provide for transparency on awards, costs and claimant details to minimise the risk of repeated claims by individuals.

The Government should review the functioning of the PIAB to ensure that at least 75% of public liability insurance claims are settled by it without legal representation and oblige all claimants to notify the business concerned with full details of their claims with 30 days of an incident occurring. It should also review the book of quantum which include all settled claims data, not just PIAB awards, and benchmark awards intentionally to ensure competitiveness from a business perspective. It should also ensure the Judiciary consistently applies the book of quantum guidelines.

We welcome the committee's focus on this important issue and are available to answer questions members may have.