Mr. James Coghlan:

As Mr. McDonnell said, I am a former chair of ISME, a position I held in the period from 2015 until 2017. Knowing what we know, liability insurance began to ramp up from 2014-15, so I had many people approaching me at that time. I will share with the committee a couple of stories to illustrate this. The first story is illustrated on page 10 of our written submission and concerns an ISME member in the south west, a medium-sized manufacturer with a substantial multi-risk policy in six figures. The policy was with what I would call a multinational enterprise, MNE, a broker or an international brokerage firm. The policy was underwritten, so broker A was underwritten by underwriter B, both of which were multinationals.

At recent renewal, the member received off the record advice that underwriter B had paid broker A and a number of other major brokers a substantial commission to direct all their clients to underwriter B. Broker A would shortly advise the ISME member that the only underwriter who would accept his business for 2018 would be underwriter B and a 30% increase would apply. There would then be only one underwriter bidding for the business at a 30% premium. However, if the ISME member approached broker C, he could renew the book with underwriter B for the same price as before. Broker A duly quoted the premium plus 30% a few days later and the ISME member severed his relationship with broker A. The ISME member will not identify himself or the broker underwriter for fear of commercial retribution. I do not need to explain the implications of this to anybody here as they should be clear.

The second story is also in the submission. An ISME member in the east has tracked a policy for six years with respect to premiums, claims, losses, etc. The underwriter has made a surplus of €430,000 over these six years before reinsurance costs and overheads. This surplus of €430,000 represents an effective gross profit of 91%. The ISME member has had four claims over this six-year period, with a total value of €45,000. The premium income is €430,000 while the claim total over six years has been €45,000. I would love to see how the risk was priced over the six years as it effectively amounted to price gouging. Again, the ISME member will not identify himself for fear of commercial retribution. When there is only one underwriter bidding for the business, if the bidding party withdraws, the company will be left uninsured.

All brokers should be obliged to provide a five-year claims history at renewal. The insurance industry would say this adds to cost and it cannot be done but it is done anyway. The information must be produced for an actuary to be able to price the risk. Somebody may say this cannot be produced but it is already produced and there is no cost. At least with this approach, the client would be in a position to make a business decision by seeing the premiums and claims over a five-year period and deciding if it is an acceptable level of risk and price.

These are just two stories about members of the organisation but there are many others. The common thread seems to be that there is only one underwriter bidding for the business. Is that by accident or design? I do not know.