Thursday 9th June 2005.

INSURANCE PREMIUMS IN IRELAND STILL 50% HIGHER THAN UK

Tourism Chief Calls For Further Reform – Local Authority Charges a millstone around the necks of business

The Irish Hotel’s Federation (IHF) has warned the Government that insurance premiums in Ireland, despite reforms, remain 40% to 50% higher than in Britain. Speaking before the Joint Oireachtas Committee on Enterprise and Small Business, IHF Chief Executive John Power said that while there has been a number of positive steps in tackling insurance costs over the last two years (setting up of PIAB and enactment of Civil Liabilities and Courts Acts) further action was now necessary. The committee was told that a survey of tourism businesses ranked insurance as the second major business concern, with local government charges and rates being the top issue. The IHF urged the Committee to now address and analyse the massive increases in local authority rates and charges that are rising annually by multiple of inflation. It stated rates are a local authority tax being levied without any cognisance of the ability to pay or the profitability of businesses. Local authority charges are arbitrarily levied by monopolies without any regulatory control or have no relation to the cost of providing these services.

Mr. Power called on the Government to focus on the reasons why insurance premiums are higher here than those in Britain. Amongst the measures proposed by the IHF to redress this imbalance was a call for the Personal Injuries Assessment Board to review its of Book of Quantum – the standard guidance on the level of settlement for personal injuries claims and benchmark settlement guidelines, against those in Britain.

“In England and Wales, minor soft tissue injuries lasting up to 1 year can be settled at between STG£500-STG£1,000 (€750-€1,500) going up to STG£4,000 (€6,000) for injuries lasting over about 2 years. The book of quantum published by the Personal Injuries Assessment Board gives a guideline to soft tissue injury to thumbs or fingers where there has been substantial recovery, issues a guideline of up to €16,000 to €18,000. This is about 12 times those levels of the claim settlements in Britain. This is obviously impacting on premiums,” Mr. Power told the Committee. “A successful outcome of this exercise could result in our insurance premiums coming down very close to what they are in Britain today and place us on a level playing pitch regarding this particular cost of doing business.”

Mr. Power took the opportunity to outline to the Committee that whilst insurance remained a key issue for tourism businesses, it had now been overtaken by local authority charges as the biggest concern. He requested that the Joint Oireachtas Committee on Enterprise and Small Business now consider examining the crippling level of local authority charges and the impact that these are having on business.

“We now believe that a similar in-depth analysis of the impact of the massive increases in local government charges be they rates, water charges effluent discharge cost or even the cost of licences to erect finger post signs directing tourists to hotels and guesthouses are increasing by a multiple of inflation and the impact they are having on industry and small enterprises now warrants similar attention,” he said.

According to the IHF the current system of rates, rising at an average of 6% per annum, places an unfair burden on the commercial sector, with 40% of the €3.4 billion required by local authorities annually contributed by commercial businesses. “It is high time for Government to introduce a more equitable system of funding Local Authorities and stop penalising businesses by calculating contributions based not on the profitability of the business, but on the size of its property,” Mr. Power said.

In relation to insurance, the IHF called for the Government through the Irish Financial Services Regulatory Authority to implement the recommendations of the Competition Authority’s report on the operation of the non-life insurance market. In particular, the IHF called for the following to be adopted from that report:

• At least 8 Weeks notice of renewal terms for liability cover,
• Certified claims history being available,
• Surveys of costs of providing insurance in various sectors including the hotel sector
• Total transparency on both fees and over-riding commissions earned by brokers including how they are calculated
• Facilitation of the change of brokers

The IHF also noted the Government’s efforts in tackling the insurance problem to date has had some impact in that premiums had, in general, been reduced by 50% over the last two years.

-ENDS-

FOR INFORMATION:

Siobhan Molloy/Jimmy Healy Tel: (01) 676 0168
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