The legal profession was criticised yesterday by the chairman of the agricultural insurance group, FBD Holdings, for having "a self-serving stranglehold" on the country's "claims culture".
Speaking at the company's a.g.m., Mr Michael Berkery said the insurance industry had to take a stance on the problem of exaggerated claims which could only be dealt with effectively through legislation.
"Government must act to break the self-serving stranglehold exercised by the legal profession, in particular, in supporting Ireland's exaggerated claims culture," he said. FBD's pre-tax profits fell by 2.9 per cent in 1997 to £14.25 million due in part to underwriting losses on motor and liability insurance. "Stock market appreciation will not always be available to meet increasing claims costs," he said. Shareholder funds grew by 20 per cent in 1997.
The group's chief executive, Mr Paul O'Callaghan, said that 17 per cent of total claims costs, or of everyone's premiums, was going to the legal profession. In liability claims, it amounted to more than 25 per cent. Mr Berkery added that a codification system for claims was urgently needed if premiums were not to continue to increase.
He said that the adversarial court system where the best lawyer won the settlement and "where each case is prosecuted to the ultimate" was leading to "an adverse underwriting cycle". Under an agreed codified system, the court option would still be there.
"Until the present claims environment alters, premium increases will be the inevitable route taken," he said. FBD Insurance is now entering the market in the greater Dublin area, and introducing FBD-branded life and savings products, while the group's 31 per cent shareholder, the Belgian company, ABB, is assessing a merger with Irish Intercontinental Bank's parent company, Kredietbank, and Cero Bank, which would create the biggest bank-assurance group in Belgium, with a £10 billion market capitalisation. Kredietbank also has a subsidiary company, KB Financial Services, operating out of the IFSC. "The final entity will not be complete until July," Mr Berkery said.
At the meeting, the president of the IFA, Mr Tom Parlon, was elected to the FBD board as a non-executive director.
