Opinion Piece on Insurance costs and the impact of the claim culture in Ireland

by Paul Hackett, CEO and Co-Founder of Click&Go

It’s true that we have a great sense of humour in this country – it’s how we deal with things – but, all jokes aside, the fallout of the “Maria Bailey Swing in the Dean” incident is very, very serious.

Paul Hackett 2018

Let me put that into context, Click&Go paid €49.5k for insurance cover in 2017, then €200k in 2018 and now €400k in 2019.  So, in 2 years, we have gone from €49.5k to €400k for insurance cover that’s an 800% increase in 2 years.

The Travel Industry joins the list including festivals and events (recently, Oktoberfest announced they could not bring the festival back to Dublin this year due to high insurance costs and the compo culture in Ireland), crèches, play centres, hotels and pubs that are being massively impacted by insurance premium increases and the Maria Bailey incident highlights just one of the causes behind the increase in insurance costs.

Pat Dawson, CEO of the Irish Travel Agents Association, backs this by saying “our members across the country are seeing premium hikes that are excessive and will result in business closures and subsequent loss of jobs”.

In simple terms, there are a range of things causing the massive hike in insurance premiums, but they can be summarised as the following:

• The scale of awards in the Irish courts

• Excessive legal fees accounting for an average of 45% on top of awards

• Fraudulent and Exaggerated claims

• Facilitation of dubious claims – people don’t draft proceedings, solicitors do

• The ineffectiveness of the Personal Injuries Assessment Board (PIAB)

• The Book of Quantum (a guideline for awards for the judiciary) is in fact a book of fiction as it is constantly ignored by the Judiciary

• Lack of real action from Minister Michael D’Arcy over the years to implement changes to address concerns around the hike in insurance premium.

• Lack of competition in the insurance market

The “Compo Culture” that exists in this country goes to the heart of this issue. The enablers, intentional or otherwise, are the legal profession, insurance companies and the government.

The legal profession is very much centre stage in the issue of rising insurance costs – legal fees account for an average of 45% on top of all settlements so there is an absolute vested interest in keeping awards as high as possible.

Where do the judges think the money for the awards comes from? It is not some pot at the end of the rainbow, it is paid by people paying their insurance premium. The pay-out may come from the insurance company, but it’s the businesses and citizens of this state who are financing the pay-outs through increased premiums.

Maria Bailey didn’t draft the proceedings for her case. Whoever advised Maria Bailey from a legal perspective and drafted the proceedings knowing what we now know should be ashamed of themselves. Trying to attach negligence to the hotel in these circumstances was questionable to say the least.

In a previous claim that made the headlines, a woman was awarded €550k for falling off a Luas tram while tram surfing. Who in their right mind thinks someone should get over half a million Euro for this act of carelessness!?

How many times have we heard the line “that it all depends on the judge on the day”? How can that be tolerated? It should not be down to personal judgment or bias. I appreciate the Judiciary are independent of the Executive but there is a massive difference between being independent and being out of touch with the consequences of their actions.

The Alliance for Insurance Reform, led by Peter Boland, has been looking for the following:

– Establishment of a The Garda Insurance Fraud unit 

– Reduction in general damages for minor injuries 

– Data on liability insurance 

These are the key asks from an organisation representing businesses and voluntary groups across the state dealing with the issue of increased insurance costs. None of this has been delivered by the minister with responsibility for insurance, Mr Michael D’Arcy. We’ll all benefit if the requests for changes from the Insurance Reform Alliance are acted upon and it should free up the courts for more pertinent cases.

Taoiseach Leo Varadkar needs to understand there is more at stake than just losing one Dáil seat in Dun Laoghaire-Rathdown. Despite the impact of the insurance crisis on our business, and others, the government stand idly by and appear to be doing nothing. Where is the accountability and responsibility? Have they no regard for the cost and lack of competitiveness in the Irish economy and the reputational damage to Ireland on the back of this “Compo Culture”? How are they not acting to address it?

Additionally, it seems that our business is the wrong size. We’re an SME and this government appears only interested in large multinationals who don’t even pay the current low rates of corporation tax.

This government is very much image and no substance, all promise and no action, can they please stop making excuses and start acting. That is what we are paying them to do. That is what government should do and strong governments tend to get re-elected.

This and other governments rely on stories moving on and moving out of the spotlight. Maria Bailey has shone a very bright light on insurance and “Compo culture”. The story was somewhat remote when it was impacting creches, hotels, pubs, events and festivals, now it is top of everyone’s agenda. Thank you, Maria.