The Gazette 1987

GAZETTE

SEPTEMBER 1987

Insurance Premiums — How can they be reduced?

I n t he r ecent past a number of articles have been pub l i shed in the Law Society Gaze t te concern i ng t he high cost of mo t or and liability i nsur ance in this coun t r y. In t he most r ecent article (Gazette, June 1 9 8 7 : " An Acc i dent Compensa t i on Act — The N e w Ze a l and So l u t i on for an Irish P r o b l em", by M i c h a e l P. Cogh l an, M . A . , So l i c i tor ), M i c h a el P. Cogh l an c omme n ts on this ma t t er and a rgues in f avour of a no - f au lt sys t em of compens a t i on similar to t hat cur rent ly in use in N ew Zea l and. I will deal later w i th the question of fault versus no - f au lt libaility but first I wo u l d like to cor r ect a f ew i naccur ac i es in M r . Cogh l an 's ar t i c l e. Mr. Coghlan states that " t he to suggest that the public are right

companies to the Department of Industry & Comme r ce. Even though price control was abolished in 1985, insurers have voluntarily agreed to continue providing the Department with advance notice of proposed premium increases and the relevant statistics to justify same. On the broader question of secrecy, I wonder if Mr. Coghlan has ever had the opportunity to read the Summary of Statements of Assurance Business (more commonly known as the "Blue Book") which is published every year by the Department of Industry & Commerce. The Blue Book con- tains detailed financial information on the performance of each com- pany, including Revenue Accounts showing premium income, claims paid and provisions for outstanding claims, commission and manage- ment expenses, for each of the main classes of business. I can think of no other industry where so much detailed information is avail- able publicly on a company by company basis. The last inaccuracy I would like to correct in Mr. Coghlan's article is the suggestion that premium rates in Ireland are influenced by these effective Agencies and to place the hand of centralized ad- ministration over the entire area of the Public Service. Cuts in Public Service spending must involve fewer civil servants working with much greater pro- ductivity, not the concentration of all activities under the immediate control of a Department. It is de- pressing to find that the fresh winds which had been blowing through Irish society, partly as a result of the freeing up of activities such as those of the Health Education Bureau and An Foras Forbartha, are apparently to be stilled. •

insurance industry has used the legal system and other local factors to disguise its own inherent incapacity to offer reasonable cover and reasonable compen- sation to Irish workers and road users". This is a somewhat sur- prising s t a t emen t. It is now generally accepted, I would have thought, that compensation levels in Ireland are much more generous than our nearest neighbour, the U.K. and, indeed, than most other European countries. Insurance companies have consistently pro- vided cover to Irish motorists and emp l oyers even when on occasions pure commercial con- siderations would, in normal cir- cumstances, force a company to decline cover. The insurance in- dus t ry operates a vo l un t a ry agreement with the Minister for Industry & Commerce under which insurance companies have under- taken to provide motor insurance to all persons licensed to drive a vehicle, except where to do so wou ld be contrary to public interest. Reference is made by Mr. Coghlan to the secretiveness of the insurance industry and the unavail- ability of cogent information to justify the high premium rates for motor and property insurance. Indeed Mr. Coghlan goes back over 35 years to 1st December 1951 to quote an example of a decision taken to increase motor premiums which the then Government decid- ed was unjustified. Mr. Coghlan then uses this 35-year-old example

to be sceptical about and hostile towards the insurance industry.

by A I D AN CASSELLS, Irish Insurance Federation Secretary I suspect that the reason Mr. Coghlan had to go back to 1951 to find an example of an unjustified (SIC) premium increase was that he had difficulty in turning up any more recent examples. This is not surprising because since the early 1970's insurers have been subject to strict price control and all decisions to increase premiums must be individually justified by V I EWPO I NT fcontd. from p.239) administrative actions, delays or inaction which adversely affect persons in their dealings with Government Departments and offices. It is difficult to avoid coming to the conclusion that his effectiveness in pursuing com- plaints has been a factor in the decision to reduce his funding, when it might well have been argued that, in view of the number of functions being reassigned to various Government Departments, there would have been an even greater need for the Ombudsman. It is difficult not to see in these trends an attempt by the Civil Service Departments to reel in

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