Rabbitte critical of insurance firms

A sense of anger characterises the average citizen's dealings with the insurance industry and customers feel that they are being severely exploited, the leader of the Labour Party, Mr Pat Rabbitte, said yesterday.

Addressing a seminar organised by the Society of Actuaries in Ireland, Mr Rabbitte said there was a perception that the regulators had let the public down and were on the side of the insurers as opposed to consumers.

The seminar was also addressed by Ms Dorothea Dowling, chairwoman of the Motor Insurance Advisory Board, who said that if the State required insurance to be compulsory, it had to ensure that insurance was charged at a fair price.

Contributors to the seminar included the Government's actuary, Mr Jimmy Joyce, of the Department of Enterprise, Trade and Employment; Mr David O'Connor, of Allianz Insurance; and Mr Hugh Mohan SC, who spoke as a member of the Law Library.

Accusing the insurance industry of being "in the broadest sense a cosy cartel", Mr Rabbitte said: "The scale of ill-will, of frustration, anger and desperation, the sense of being trapped and exploited, is enormous."

He said that people were being put out of business and losing jobs because of the "insurance crisis".

Mr Rabbitte said that the problem with motor cover and accident rates was well-known. Factors contributing to the high insurance rates included the state of our roads, delays in the courts, the cost of going to law, fraudulent claims and the "compo culture".

Criticising what he said was the "failure over the last five years in particular to implement any meaningful reforms", he added that it would most likely be the end of 2003 before any real benefits of reform would be experienced.

The establishment of the Personal Injuries Assessment Board was not going to "dramatically affect the cost of cover for motorists or address the problems of young motorists in respect of getting affordable cover".

Ms Dowling, while agreeing that the current legal system was cumbersome, maintained that the establishment of the PIAB would "help to solve many of the problems of the motor insurance industry".

She said that referral of a case to the PIAB, under legislation now being introduced, would be mandatory in the future. Most cases could be dealt with there, but if a case involved issues of legal liability, it would get a release certificate from the PIAB and would go to the courts in the usual way.

Defending the legal profession, Mr Mohan warned that the PIAB should not be seen as the panacea of all the ills of the present system. "There has been too much focus on legal costs as being the main cause of the problem of high motor insurance costs, where any examination of the system would in fact disclose that the greater problem lies with the management of the insurance industry," he said.

Mr David O'Connor, risk management director with Allianz, said that there was little cause for optimism on the cost of motor insurance in the short term. "The core issues behind expensive Irish motor insurance, the number and cost of accidents, remain as apparently intractable problems", he concluded.