One of Ireland’s leading online general insurance brokers has criticised a possible introduction of a levy on insurers in the upcoming Budget warning they have “no doubt” that any such levy will hit consumers’ pockets.
Jonathan Hehir, Managing Director of the CFM Group, which is responsible for Insuremyhouse.ie, Insuremycars.ie, Insuremyholiday.ie, Insuremyvan.ie, Insuremyshop.ie and Coverinaclick.ie, said: “It has been mooted that the levy will be placed on the insurers with the largest profits and may deter them in some way from increasing premiums. It’s also been suggested that there would be some way of ensuring this levy is not passed on to consumers.
"Neither of these arguments hold water in my opinion. However, having spoken with those insurers that have withdrawn from the market and those that might consider entering the market, their reaction is universal and incredulous – this move will make the Irish insurance market even less attractive for insurers which will reduce competition and therefore increase rather than reduce prices. Every levy we’ve ever placed on insurance companies in this country, including those for PMPA, Quinn Insurance, Setanta Insurance - currently totalling 7%, has ultimately been funded by the consumer.”
CFM Group point to figures from Insurance Ireland which show that 17 general insurers in the market made combined operating profits of €227m in 2017. This comes on the back of gross premiums of €3,511m representing a profit margin of 6.5%.
The CFM Group contend that such a levy would have the adverse effect of deterring new players from entering the market at a time when, they say, “we need it most”,
“We need more competition not less! Competition in any fully functioning market drives down prices. So why would it be a good idea to dissuade new insurers from coming here to offer products that can compete on price and value?" said Mr Hehir.
"We currently have no providers of liability insurance in certain sectors of the market – this, and a myriad of other issues are pushing prices up for consumers and businesses – but none of these issues will be resolved by the simplistic ‘solution’ of another insurance levy."
CFM are calling for the Government to take a more informed and effective approach towards the handling of insurance issues in this country.
Mr Hehir advised, “There are several, relatively simple measures that have been set out by the Personal Injuries Commission that could be put in place to reduce premiums such as the establishment of a claims register. The Government has rowed back on this, they say, due to GDPR issues – but we’ve no doubt that the GDPR obstacles can be overcome if there was genuine support for reform. We also need a complete overhaul of the Book of Quantum which will only happen when the Judicial Council is established, so we are calling for a hastening of pace in this regard. We would also like to see the amendments to the Perjury Bill implemented to impose stricter penalties on those who commit insurance fraud.”