The Gazette 1987

SEPTEMBER 1987

GAZETTE

underwriting difficulties in other jurisdictions. Rates charged in Ireland are invariably based on Irish experience and consequently overseas results do not have a direct effect on Irish rates. The only exception I can think of to this general rule is professional indemnity insurance which traditionally has been placed in the London market, and therefore has been subject to the volatility, both favourable and unfavourable, of the world-wide results for this business. Why are insurance costs high in Ireland? In Ireland insurance costs are high for four main reasons: — the high number of accidents on our roads and in the workplace; — the high level of claims' consciousness in this country; — the excessive cost of settling claims under our present legal system; — the high level of uninsured driving in the case of motor insurance. The Irish Insurance Federation (the IIF) accepts that the cost of

insurance in this country is too high and is concerned that if immediate steps are not taken to reduce both the number and cost of claims, then there is every likelihood that more policyholders will be unable or unwilling to pay the premium levels required to fund the cost of claims. It is for this reason that the IIF recently made a detailed submission to Government on the steps that should be taken to reduce the frequency and cost of claims. Our present legal system is in- efficient, slow, cumbersome and in need of urgent reform. Legal fees and disbursements on average re- present 25% of total claims costs. A recent survey carried out by the IIF shows that solicitors' costs and outlay account for approximately 80% of insurance companies' legal fees bill, and that 69% of total solicitors' fees is profit costs and 11% is disbursements. These figures do not include solicitor and own client costs, payable directly by the client, which can, I understand, amount to a sum up to 10% of the damages awarded. Can such costs

be justified to the consumer in present harsh economic circum- stances? The increased level of claims' consciousness in recent years is a further important factor which has pushed up insurance premiums. The substantial increase in the number of claims for whip-lash injuries over the last five years or so is a good example of this phenomenon. One wonders to what extent the legal profession and, perhaps also the medical profession, has contributed to this increased claims' consciousness, which has also, I believe, led to an increase in spurious actions. Indeed Professor Bryan M. E. McMahon, of UCC, in his article in the April 1987 Gazette ("Uninsured Drivers — A Legal Submission") referred to the problem and I quote what he said because I feel it is very important: "It would be surprising if in a recessionary period insurance claims did not increase. I have no figures on this but suggest that in recent years this indeed has been the case. The public are becoming more conscious of

Your money deserves the Ansbacher interest

With Ansbacher your deposit enjoys a high interest rate, both at call and for fixed periods — with complete security. You are assured of personal attention and quality service at all times. Call in and see us. Or ring our dealers direct, at 760165, 766313, 766168 or 766267.

ANSBACHER BANKERS 52 Lower Leeson Street, Dublin 2

242