Public liability insurance
The CCPC was asked to conduct a market study on the public liability insurance market under Section 10 (4) of the Competition and Consumer Protection Act 2014 in July 2019.
The CCPC’s report examines the public liability market from a competition perspective. The report was informed by extensive stakeholder engagement and research which maximised the information available for analysis given the absence of independent data on the sector. The CCPC undertook market research amongst a large sample of public liability insurance buyers and used its statutory power under Section 18(1)(d) of the Competition and Consumer Protection Act 2014 to send requests for information to industry bodies. This approach has allowed the CCPC to identify the relevant competition issues in the market and make evidence-based policy recommendations.
The market study found that high percentage premium increases for public liability insurance are an issue across all sectors of the economy. Respondents to the CCPC’s market research experienced premium increases of on average 15-20% in the past three years. In addition, reduced availability of public liability insurance seems to be primarily impacting certain sectors such as community and sports groups. The market study found that a lack of independent, public data on the insurance market as well as a lack of open access to claims history information may be acting as barriers to market entry.
The experiences of buyers of public liability insurance policies is highlighted in the study. A quarter of buyers switched their insurer in the last five years, primarily for price related reasons. Of the organisations that did not switch their insurer in the last five years, around half had shopped around for an alternative provider over the same period. Around one third of organisations did not switch due to a real or perceived barrier to switching such as lack of alternatives, time or complexity. The CCPC’s market research found however that the level of engagement by buyers in the market is relatively low. While most organisations felt they understood their insurance either very well or fairly well, they did not always comprehend key distinctions in the market, and a significant number of them could not identify what their annual premium was.
Rising premiums in the market have been widely attributed to the costs associated with the claims process though sufficient data is not yet available to understand the driver of cost increases. The CCPC reviewed the available data on cost inflation in the claims environment to understand the degree to which these costs are having an adverse effect on competition. Industry stakeholders suggested that the level and uncertainty of awards have contributed to reduced competition in the market. The reports of the National Claims Information Database on private motor insurance have demonstrated that settling a claim through litigation, rather than through the non-adversarial Personal Injuries Assessment Board (PIAB) process, can involve considerably higher costs but with similar amounts being awarded to the claimant.
CCPC Recommendations
Data Availability
To ensure enhanced access to data and facilitate new market participation in the public liability market, the CCPC recommends:
- That the Central Bank of Ireland (CBI) publish National Claims Information Database (NCID) information at insurer level.
- That the CBI develop its data collection exercise to provide aggregated information at subsector level, in future iterations of the NCID reports.
- That access to the Insurance Link database be provided to all insurers in the market and that Insurance Link be managed by an independent body.
Develop supports for buyers
To allow for greater support for public liability insurance buyers, the CCPC recommends:
- That the State should assist public liability buyers to become more engaged in the market by:
- Providing information to organisations on active public liability insurance providers;
- Assisting organisations in profiling their risk and identify possible options to reduce it, including the full suite of potential supply options in the market (the exact nature of the support here would need to be carefully considered so as not to encroach on the commercial activities of brokers), and;
- Improving choice for organisations by supporting greater market entry through the development of an international outreach programme to build confidence in the Irish market.
- That the CBI review the approach used by insurers when implementing and communicating premium increases to ensure insurers are in compliance with their obligations.
- That the Department of Finance and CBI consider how to facilitate entry to the market through ‘InsurTech’ and the potential development of ‘Open Insurance’.
Personal Injuries Assessment Board
In order to promote the development of a more stable and lower cost claims environment the CCPC recommends:
- That the role of the Personal Injuries Assessment Board be expanded and enhanced to provide for it to become the main personal injury settlement channel in the State.
| RESPONSES TO THE PUBLIC CONSULTATION ON THE PUBLIC LIABILITY INSURANCE MARKET | ||
| Alliance for Insurance Reform | Aviva | Brokers Ireland |
| Insurance Ireland | Irish Hotels Federation | PIAB |
Attachments
CCPC Public Liability Insurance Market StudyReturn to Market Studies
