I was dealing on the last occasion with the situation in regard to the insurance of property and I referred to the complaint that property, particularly in the inner city, is almost uninsurable. This is because of the very high incidence of crime, burglary and vandalism, and the incidence is so high that it is almost impossible to insure it. An insurance company will always quote some price but in fact the premium would be so high that it would be unacceptable to any businessman or owner of property. I want to point out that this of course is not an insurance problem. It is a problem of law and order; the fact that crime is so frequent and so serious is something for the State to deal with and it is no longer a situation with which insurance can deal because insurance is a matter of risks and in these areas at the moment it is no longer a question of risk; crime of one kind or another, burglary and so on, seem to be almost inevitable and that is why it is difficult if not impossible to insure. It is a matter for the State to try to do something about the high incidence of crime in these areas. The State which should be taking some responsibility for this situation is not only not doing so in an adequate way but the only move it has made from the legislation point of view is to abolish the malicious damages legislation. This means that they are not prepared to take any of the consequences or bear any of the burden of the damage that is done in these areas.
This makes the situation there even worse. It seems quite obvious that the State recognises that the probability of damage in these areas is so high that it is no longer willing to accept the cost of compensating people for damage done in these areas. In these circumstances it is somewhat surprising that insurance companies should be asked to bear the burden of a situation for which the State is primarily responsible — trying to curb the crime in these areas — and no longer even takes the burden of dealing with it under the malicious injuries legislation.
Regarding the other categories to which I referred earlier, employers' liability, and public liability, the report deals in a number of cases with the complaints by small businesses of the very serious escalation of premiums for business for employers' and public liability. There are a number of reasons why this is taking place. Some of the more dramatic examples given were due to the fact that the last premium quoted in some of these cases was the premium quoted by the Insurance Corporation of Ireland which has since collapsed. It was well known before they finally did collapse that they were quoting completely unrealistic premiums that the other insurance companies could not possibley match. They were far too low and this led to the Insurance Corporation in the end not being able to carry on. What has happened now is that when these small businesses asked for a new quotation from another company the difference between the old quotation and the new one was very big because the former premium was quite unrealistic.
That is one reason many businesses may have complained and found it difficult to understand the very big difference between their former premium and their new premium. In addition to that there is the increasing number of claims. The report deals with this; and there is an increasing number of high awards by juries, who are normally sympathetic to claims and give high awards which naturally lead to higher premiums in the following year. It must be realised that damages in this country are substantially higher than in the United Kingdom and most other countries. Because they are substantially higher inevitably premiums are going to be substantially higher. There is no way of avoiding this as long as the present damages continue at the present level.
The legal system has been referred to in the report and blamed for the high cost. It is a system which has been there for hundreds of years. It is a system which does need some reforming. There are improvements possible and necessary and I believe that they will take place.
Legal costs cannot be blamed in any serious way because they are very marginal to the cost of insurance. The report points out that only 4 per cent of claims reached the stage of legal proceedings.
Of this number that do reach legal proceedings only one in 20 reaches the court and is decided by a jury. The position is that about 99.8 per cent of claims are settled out of court. For that reason, whatever one may say about the legal system to the extent that some of the complaints are justified, it is not a major factor in the picture painted in the report as the essential problem of the high cost of insurance.
The report acknowledges that there are many factors contributing to the high cost. It sets out some very interesting conclusions. It is a very interesting report. It combines a lot of essential information and it makes its recommendations. Insurance companies as well as small businesses would welcome a determined effort to address the problems which are leading to high insurance and they would be very glad to co-operate in every way possible.
