Mr. Brian Hanley:

I thank the Cathaoirleach, Deputies and Senators for the invitation to attend the committee. The Alliance for Insurance Reform brings together 48 civic and business organisations across Ireland to highlight the negative impact of persistently high liability insurance premiums. Collectively, our members represent over 55,000 organisations, 700,000 employees, in excess of 600,000 volunteers and 300,000 students. Recent reforms have delivered benefits, with award levels reduced, claims volumes down and greater transparency introduced. These are important achievements. However, premiums have not come down as they should in response to these changes. In fact, they continue to increase for most businesses. This trend undermines competitiveness and adds to the cost of doing business.

The previous action plan for insurance reform, which ran from 2020 to 2024, delivered a substantial package of reforms, from the introduction of the personal injury guidelines to amendments to occupiers' liability around the duty of care. These measures were presented by insurers as the necessary precursors to a lowering of insurance premiums, but the evidence shows they have not been lowered. According to the Injuries Resolution Board, claims volumes fell by 40% between 2019 and 2023. Median awards are down by around a third. Despite this, the Central Bank of Ireland 2023 report on liability shows premiums increased by 17% between 2020 and 2023. Insurers reported a profit margin of 13% in 2023 alone and this is more than double international norms. Our own survey of 775 organisations this year found 74% faced premium increases in the last two years, whereas only 14% saw reductions; 20% had only one insurer willing to cover them; almost three quarters reported higher excesses or new exclusions, which essentially dilutes the cover despite the fact they are now paying more for it; and 90% said they had not benefited from the reforms to date.

The lived experience is stark. A midlands watersports activity centre is paying liability premiums equivalent to about one tenth of turnover despite having no claims. It essentially has a premium 40% above British and European averages. A small seasonal hotel in Donegal faced a 43% rise over two years. A restaurant in the south east is trying to absorb a 23% increase despite zero claims and stable turnover. Sectoral data point the same way. A recent poll of its members by the Association of Visitor Experiences and Attractions found average liability premiums had risen by about 12% per year for the last two years. Case after case shows small businesses paying more for less cover despite safer practices and fewer claims. These costs are damaging competitiveness, investment and services across the country. The gap between reform and reality must now be closed.

On the key issues we see as driving these costs, we need to look at the personal injury guidelines. The guidelines were designed to ensure consistency and bring awards more into line with those of other countries, which they have clearly helped to do. However, as we have seen this year, the process for reviewing them is flawed. We support recommendations to amend the Judicial Council Act 2019 to extend the review cycle, introduce international benchmarking and mandate proper consultation with the Injuries Resolution Board. We also believe amendments are required to afford greater legislative discretion to amend or reject recommendations and that the Oireachtas finance committee should be required to consider any future recommendations before the Government makes a decision.

Looking then to competition, the liability insurance market has seen no new entrants in over a decade. Too many businesses report being effectively captive to one or two underwriters. The Office to Promote Competition in the Insurance Market must be properly and additionally resourced, given KPIs and have a published strategy. The Competition and Consumer Protection Commission should review barriers to entry and the impact of broker consolidation. Without real competition, premiums will not come down.

We need faster and fuller publication of national claims information reports. This should take place within 12 months of year-end. Fortunately, there is some progress being made on this particular issue. Additional information is also required regarding insurer practices when it comes to reserving, reinsurance and remittances. The proposed transparency code in the new action plan for insurance reform should apply to liability as well as motor and must be independently validated given the ongoing concerns about insurers’ role in its design.

Some two thirds of liability claims are still settled through litigation, even though the average awards for claimants are broadly the same whether they settle at the Injuries Resolution Board or through the courts. The only major difference is cost. Average legal fees are under €1,000 for cases settled at the injuries board, but average over €23,000 when settled in litigation. These often unnecessary costs add years of delay and tens of thousands of euro to the final bill, which is ultimately borne by businesses and voluntary groups across the country. We want to see a far greater number of cases settled at the injuries board and fee scales introduced to control legal costs. Transforming the board into a decision-making body, similar to the Residential Tenancies Board, for example, should be examined.

Despite a 40% fall in overall claim volumes, businesses with strong safety records are not being rewarded through lower premiums. The absence of meaningful risk-based pricing undermines incentives for continued investment in health and safety measures and represents a direct disincentive to proactive risk management.

In conclusion, Irish businesses continue to experience unaffordable and unjustifiable insurance costs despite the wide-ranging reforms delivered under the previous action plan. Evidence from the injuries board, the Central Bank and the alliance’s survey shows claim volumes and award levels are falling, but premiums continue to increase for most businesses. Excessive insurance costs are not just an overhead but a brake on competitiveness, recruitment, and investment. By supporting targeted, cost-of-doing-business-focused measures in competition, claims resolution, transparency and legal reform, the committee can ensure the action plan for insurance reform translates into real, measurable reductions in premiums and improved access to cover. I thank members and look forward to their questions.