When insurance costs go up, premiums go up. When insurance costs go down, premiums go down. No they don't. More often than not the industry finds a convenient excuse to maintain the status quo. Claims are too high, payouts are too generous, doing business in Ireland is too expensive. Like a suave salesman, the industry has a number of set-pieces. In marriage guidance parlance, we have what's described as an asymmetrical relationship with our insurance overlords. If you had any doubt about this, surely the business interruption debacle of the past year has crystallised it for you.
Even though thousands of businesses paid to insure their operations against the very eventuality that ensued, they found they hadn’t, or had laboured under a misapprehension – namely that a nationwide lockdown triggered by a global pandemic somehow didn’t meet the criteria of business interruption. That was until the courts stepped in and made the insurers read their own small print.
Another bone of contention is the paltry or non-existent rebates being handed out to motorists who have had their cars off the road for much of the last 12 months. The industry is expected to save hundreds of millions of euro in reduced claims as a result – up to €290 million for 2020 alone, according to one estimate.
To date, customers have been offered a €30-€40 voucher in compensation, and only by six of the biggest eight insurers – a derisory token gesture agreed last April to cover the first eight weeks of lockdown. Two firms, Aviva and AIG, didn't even sign it up to it. The phrase "blood from a stone" comes to mind.
And there’s been nothing else since, even though we’ve had an additional 22 weeks of lockdown. It is estimated the reduction in traffic volumes could cut underwriting costs for the industry by 20 per cent or more. This is on the back of a bumper 2019, which saw profits on motor coverage lines surge by 9 per cent to €142 million.
And does anyone believe the overhaul of personal injury payouts backed by the country’s judges last week will translate into reduced premiums for customers? The industry is adamant it won’t.
* This article was amended on 10th March, 2021
