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

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

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.

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

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

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

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.

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