Claims Crisis - Major Insurer pulls out saying claims culture and awards a joke

Jurgen The German wrote: »

The current state of the insurance industry cannot be blamed on one root cause, it's a massively complex issue.

We have reached this point due to a couple of major issues.

1) Pricing : about 10 years ago the likes of 123 and Setanta entered the market with unsustainable pricing levels in an effort to win market share. To combat this, the established insurers like Aviva, Allianz, Axa etc began to dramatically cut their rates in an effort to retain their customers and thus a race to the bottom in terms of price point began. The issue was that on average the same level of claims were coming through however the amount of money there to cover the claims was significantly reduced due to the lower pricing.

2) The global financial crash : Up to the GFC, insurers had been able to make decent returns on their investments which resulted in them being able to absorb the claims costs that should have been covered by the premium income from policies sold. Following the GFC, interest rates were basically wiped out, property investments became worthless so that meant their claims reserves were being depleted faster than they were being recouped.

3) Legislative Change : a couple of years ago Solvency II was introduced by the ECB. In simple terms it related to legal requirements on insurers to have a minimum amount of cash available to cover the cost of claims. Iirc it's a minimum of 200% of the claim reserves which means if an insurer has €100m outstanding claims they have to have at last €200m cash in hand available to cover these. This was partly introduced to avoid another Quinn / Setanta style collapse. Massive fines can be given to insurers that fall below the minimum requirements. A couple of years ago the rules were also changed and the department of social welfare are now entitled to claim back any payments made to successful claimants that received sickness benefit while out of work, from insurers. Its another hidden cost people aren't aware of.

4) Claims : historically in recessionary times, the number of claims increase. People are out of work and making a claim is still seen by a huge amount of people as being a victimless crime. Insurers are in the business of risk and are aware claims will occur, it's the nature of the business and these are accepted as "attritional" claims however with lower income and increased claims, both genuine and fraudulent, that puts additional pressure on their finances.

5) Claims awards - Ireland is massively out of whack with the UK and Eueope in terms of awards for claims. "Soft tissue" awards here are 4 or 5 times higher on average than our European neighbor's. Our laws allow people to not only make claims for virtually anything but often times get paid out for even the most frivolous of incidents. Up til now the courts would usually side with the claimant. The book of quantum really screwed the pooch as it gave judges with zero knowledge of injuries a template to award tens of thousands of euro for the most minor of injuries.

6) the legal system : the injuries board was introduced specifically to remove solicitors from the claims process due to the length of time claims were taking to settle (more money to be paid in legal fees) and the associated but today, something in the region of 90% of injuries board cases are represented by solicitors so all it is is more red tape.


They are imo some of the major reasons for the current mire, there are others of course but as I said in my opening, it's a massively complex issue.

Boggles wrote: »

So basically the insurance industry fúcked the market through bad management and gambling.

Boggles wrote: »

That's not clear.

Anyway solicitors don't issue medical reports.

20k for legal fees for a case of this nature is bullshít.

The entire thing has been fabricated IMO.

Boggles wrote: »

Break down the 20k so.

Go.

markodaly wrote: »

The way you carry yourself on this forum with your constant passive-aggressiveness will win you no arguments or debates.

Jurgen The German wrote: »

Partly, yes, that's never been up for debate however you and others seem wholly incapable of seeing anything else as being a problem and are laying the blame solely at the feet of insurers.

The number of personal injury cases taken in the State was down slightly last year while the average award made at High Court level dropped by 29 per cent, according to figures in the latest annual report from the Courts Service.

PIAB awards down in value for third consecutive year....This is the third consecutive year that claim values have fallen, from €315.13 million in 2016, to €315.04 million in 2017, and €298.55 million last year

Deleted User wrote: »

Am I any warmer in that you always wear your tinfoil hat boggles?

Hope its not too much a personal question

Jurgen The German wrote: »

Motor premiums have been reducing since 2018 for average drivers and continue to reduce which would correlate with a reduction in reported claims.

Jurgen The German wrote: »

A 70% increase on a premium that is way way under priced is not an increase in real terms, it is simply the premium returning to its correct base level.

Despite recent research from the CSO indicating that the cost of motor insurance has dropped by 12.8% in the past year, many motorists are seeing premiums rise at the time of renewal, according to AA Ireland.

In a survey of more than 4,000 Irish motorists, more than half (54.06%) said they saw a significant increase in their insurance costs at the time of their last renewal. A further 23.35% said they had seen their insurance costs continue to rise year on year.

Tony EH wrote: »

This is why the industry gets a portion of the blame. They don't even bother fighting bogus claims, they just recoup the hit from the punters by upping insurance costs.