Appearing before the committee were representatives of FBD Insurance, Zurich, and Aviva, who were there to answer questions on the new guidelines and their effect on premium levels; business-interruption insurance for businesses that had remained closed during the pandemic; and reports that people were being denied mortgage-protection policies due to COVID.
Pocketing the benefits
Doherty asked why insurance costs had not yet been reduced, given that the guidelines now meant that payouts had reduced by up to 60%. The public wanted to see significant reductions in the cost of premiums, he said.
Now that the Judicial Council had approved the guidelines, Doherty said that he was concerned that the insurance industry would “pocket much of the benefit from it”.
Figures from the National Claims Information Database (NCID) show that, over the past decade, the cost of claims has reduced by 9% and the number of claims by 45%, but that premiums had risen by 35%, he said.
Insurance-industry representatives had been “begging and screaming” for this reduction, but had not, over the past three weeks, delivered reductions in the cost of renewal premiums.
Mr Doherty cited as evidence a number of cases of flat or increased cover costs.
Declan O’Rourke (Aviva) responded: “Insurance is not a ‘three-week game’. We are committed to passing on the savings and, in our view, we have passed on a lot of that already.”
Doherty asked the industry representatives when premiums would actually reduce, given the pledge to do so.
“I have to be very careful about using numbers here today,” Anthony Brennan (Zurich) told the committee, adding that answering clearly about planned reductions could be seen as ‘signalling’ to the market.
He said that Zurich was working to reduce costs for all its customers. Brennan said that percentages drawn from the NCID in 2019 would still apply on motor claims, but said he could not signal to the market the actual level of reductions.
On liability insurance, the same level of savings was not coming through, he said, because the types of injury that fed into employers’ and public-liability insurance were of a moderate to severe level and did not have the same level of reduction.
Under the new guidelines, in some cases, this was down by less than 50%, he said.
Mr Doherty challenged the Zurich executive, saying that he was “changing the tune, after the fact”, given that payouts for minor soft-tissue injuries had now reduced by 60%.
The TD said that he had surveyed 1,000 people and, of those, only 20% had seen a reduction in premiums, 60% had experienced increases, while 20% were broadly the same as the previous year.
Brennan responded that he was surprised at these figures, since Zurich had imposed a 4% reduction in premium costs during the first quarter, compared with the same period last year.
The TD said that insurance firms were pocketing huge amounts of money as a result of premiums being written in the last three weeks, as they know “damn well” that the claims or awards paid out will be significantly reduced.
“When are you and your company going to pass on these reductions to policyholders?” Doherty pressed.
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