07/03/22

IRELAND: Call for super tax on insurers who are accused of turning jurisdiction into ‘treasure island’.

As published on independent.ie, Saturday 5 March, 2022.

Insurance companies have been accused of turning Ireland into “treasure island” with claims they are on course to make super-profits this year.

The Alliance for Insurance Reform called on the Government to do more to boost competition in the market.

And the chairman of the Consumers’ Association of Ireland, Michael Kilcoyne, said it might be time to consider a super tax on insurers after two of them raked in profits of €150m between them.

FBD reported higher-than-expected profits before tax of €110m for last year and said it would pay a dividend worth €35.3m to its investors.

Aviva saw its profits for homes and motor cover rise by 34pc to €43m last year.

It said it had reduced premiums in line with the new personal injury guidelines agreed by judges, with expected lower costs for minor injury claims.

This week Tánaiste Leo Varadkar said the average awards for personal injuries had fallen by 50pc since revised guidelines on the calculation of the awards were introduced.

The data was supplied by the Personal Injuries Assessment Board (PIAB) and represents a further decrease on the average 40pc reduction seen in the first five months after they came into effect last April.

Earlier this week, the general insurance unit of Aviva Insurance Ireland, which includes motor and home coverage, said its operating profit increased by 34.4pc to €43m.

One of the reasons given for this was reduced claims due to Covid-19.

Aviva Ireland chief executive Declan O’Rourke acknowledged PIAB awards had fallen due to the new judicial guidelines, but he said there was a decrease in acceptance rates for PIAB assessments and a reduction in direct settlements.

“This will ultimately lead to more claims going to court, which is the most expensive claims settlement channel,” he said.

“This will undermine the impact of reforms.”

But he welcomed the Government’s plan to strengthen the powers of the PIAB to compel early engagement between parties involved in claims and reduce the number of cases going to court.

Alliance for Insurance Reform director Peter Boland said his organisation was not surprised at the profit levels being announced by insurers at the moment.

“We have been flagging for two years now that a combination of ongoing insurance reforms and dramatically reduced economic and social activity during the pandemic would lead to super-profits for incumbent insurers who have continued to increase their liability premiums to voluntary groups and businesses and conceded only ridiculously low reductions to motorists,” he said.

“Ireland is a treasure island for the incumbent insurers.”

Mr Varadkar said the focus for the Government will be on legislative reforms in the area of occupier’s liability, competition enforcement and PIAB.