New Judicial guidelines were published recently which are set to control the amount of damages awarded for personal injury insurance claims and as a consequence the cost of insurance premiums should go down. Well, that’s the theory anyway. Policyholders have had their hopes raised before. People are naturally sceptical but not until they see premiums reduced will they believe true reform has arrived. Members of the Coach Tourism & Transport Council of Ireland (CTTC) are certainly sceptical. Last week in a statement, it said that the new insurance guidelines do not go far enough. The CTTC claims the new guidelines will do nothing to stop fraudulent claims or drive down insurance premiums.
Everybody has an opinion on how to fix the insurance crisis, so have I. The insurance industry must take responsibility of the matter and solve it themselves – Call for help from regulators and others, but the buck is with them. Try this as a starting point, as a policy holder, ask yourself this question, “Am I treated by my Insurer like a customer should be? Do they make it easy for me to deal with? Is the pricing of their products transparent? If something goes wrong, is it easy to contact them and get things resolved?” Well, my experience is that the answer to these questions is generally no! Insurance is a service that you buy, hoping not to need, but if you do, the service you get is more often than not, tedious, laborious and frustrating. Customer care is a concept that insurance companies do not understand. Certainly, not in the way that the retail market or motor dealers do.
Sometimes an added confusion is where an Insurance Broker is involved – Do the insurers regard the Broker or the insured as the customer? In my opinion customer care is the crux of where most the insurance industry problems lie. A supermarket would never blame everybody in their supply chain or the regulatory authorities for service that fell short of their customers’ expectations or any trading difficulties experienced. True they might comment on their difficulties. Generally though they continue to deal with and solve the issues and strive to improve the service provided to customers. You could also be forgiven for thinking that some insurer’s behaviour has some feature that are borderline cartel.
So what is insurance if you try to define it as a product? It is a simple concept, collect a fee from a group of people so that if one of them have a bit of tough luck, the fund created will reimburse them for their loss. Any risk needs to be accessed and an extra premium added, in the event of a loss. Some investigation and adjudication will be required and finally to maximise the fund some prudent investments should be made. Simple. The problem is that very little of this “simple” process is transparent to the policy holders.
One of the reasons that we may not have solved the “insurance problem” is outrageous premium fluctuations, in that the blame moves around. As an example, an announcement of job losses made because of a significant premium hike for a particular company, will attract huge media attention. The media may focus on the legal profession, the Government, even the general public because of excessive and spurious claims, Once the blame is spread around and diluted the pressure often comes off the insurance industry, unfortunately insurers jump on this bandwagon and help and assist in shifting blame.
So what has changed in the latest development? Well, the Judiciary has, in my opinion given a clear indication that claims will come down, by reducing awards. This is more assistance from the State to insurance companies. They have been receiving backing for years.
Road safety policy has come a long way since driving became a regular activity in Ireland. It is hard to believe that a driving licence when introduced first was something bought, without needing a test. People only had to take a road test since the mid 1960s. A general speed limit was introduced to the country in the 1970s, compulsory seatbelts in cars came next, followed by compulsory wearing of seatbelts firstly for front seat passengers and then for rear seat passengers.
Introducing the National Car Test (NCT) regime and then the introduction gave insurers another avenue to reward safe drivers and penalise careless drivers. Gardaí are issuing members on the beat with hand held devises that would be equipped with software that would help detect insurance fraud. Of course, it would not be possible to detect all fraud, but it would certainly detect most of it. It is not clear how successful this has been yet. Over the years the insurance industry have been handed many tools by Government to help identify dangerous driving and improve road safety, but unfortunately these tools have been used against motorists. I see no evidence of any reward for safe driving. I remember asking an insurance executive if penalty free driving and general careful motoring was likely to be rewarded with a more competitive premium… his answer – “well, emm ….., no, not really”. But as most drivers know, incur a few penalty points, and your premium rates rise.
So now we are giving a leg up to the insurance companies, it is really a form of State assistance. Any sign of a reduction in premiums for safer and more careful drivers, is not noticeable yet. Just more guff about fraud and the amount of uninsured drivers on the road. Interestingly one insurer gave the impression that if drivers installed dashcams they may get a reduction in premiums. I put it to the test and asked my insurer through a broker for guidance as to how to avail of the reduction, here is the answer paraphrased. “Well …. em, it is something we are thinking about and if we see any reduction of claims we will look seriously at it then”.
No further on therefore, it seems insurance companies have no desire to either engage with their customers or develop their product. Up and down the country truck and bus operators have engaged in all types of risk assessment and management. Most commercial vehicles have dash cams fitted. Professional drivers have been corralled into a CPC (Certificate of Professional Competence) regime that they were never keen on, nevertheless, they did participate. All this engagement, with no sign of anything reciprocal from insurance underwriters.
Government have a role to play here, when they reduced the VAT rate for hotels, they gave them a clear warning. “If we do not see results for customers from these measures, we will take back the benefit to you”. Maybe it is time for the Government to deliver some clear messages to insurance companies.
As mentioned before we have seen some of this leadership from the Government Benches in the past, unfortunately it was a brief departure from the norm of the Courts acting as ATM’s for bogus claimants. Of course it is unfair to blame Judges alone, it is difficult to believe that a solicitor would not be dubious, or even curious about the robustness of some of the evidence that they headed for Court with.
I hope the leadership we have seen will be reciprocated this time by insurance companies, they have been crying wolf, forever and the Government and sometimes the mainstream media facilitate this tune. It’s time for them to give service and value to their customers.