Note of Meeting with Minister Bruton and AXA Insurance, Thursday 8 October 2015
DJEL, Kildare St
Attendance:
AXA Insurance: John O Neill CEO AXA Insurance and Phil Bradley
Executive Director AXA Insurance
DJEL: Minister Bruton, Breda Power, Assistant Secretary, Derval Monahan AP PIAB
Liaison Unit and John Maher AP Strategic Policy Division.
Mr O Neill explained to Minister Bruton that he has been CEO at AXA Insurance for the past
16 years and will be retiring at the end of the year, Mr Phil Bradley will then be taking up the
CEO position.
AXA Insurance outlined to the Minister the difficulties experienced by the insurance sector
with the increased cost of insurance over the last year. According to CSO data, there has been
a 27% increase in the cost of motor insurance premia so far this year. AXA Insurance
referred to media reports where FBD have had to borrow €8m for their reserve position while
RSA’s parent company has put money into RSA for their reserves.
AXA Insurance explained that they have had the practice of putting aside a certain level of
reserves for any future inflation in personal injuries claims and that generally a claim takes
approximately 5 years from beginning to end so you have to plan ahead.
‘There was some discussion on the statistics on the number of personal injuries cases from the
Courts Service Annual Reports for 2014 and 2013 and the average level of Court awards.
AXA said that the Courts were making high awards. The Minister pointed out that medical
negligence cases were outside the remit of the Personal Injuries Assessment Board (PAB)
process so you would have to exclude these cases which often tended to be larger awards,
when making any comparisons.
Looking at the statistics for applications to the PIAB, Minister Bruton said that the number of
cases to the PIAB has increased slightly over the years from roughly 27,000 in 2010 to just
over 31,500 for 2014 . The level of awards accepted as a percentage of assessments made is
fairly consistent at approximately 60% during the period 2010-2014, Only roughly 3% of.
PIAB applications end up before the Courts. In terms of the level of awards, Minister Bruton
pointed out that the majority of the PIAB awards in respect of motor liability claims are under
€20,000. The Minister pointed out that consumer prices have increased by an average of
1.8% in the period 2011-2014, however insurance prices as measured by the Consumer Price
Index have increased by 25% since 2011
‘There was some discussion about the large number of untracked cases which aren’t resolved
in the PIAB process or before the Courts and they would appear to be settled by the parties
involved and their insurance companies. The Minister said that it would be very helpful ifthe Insurance Sector could supply information on these cases so that we have the full picture
of all personal injury claims to assess the possible reasons for the increases in the cost of
insurance,
‘The Department referred to work undertaken by the National Competitiveness Council
(NCC) earlier this year when it looked at the commercial insurance market in Ireland as part
of its 2015 Costs of Doing Business in Ireland report. The Council found that in general
insurance costs account for a relatively low proportion of the overall enterprise cost base,
however, the issue of greatest concern to businesses is the cost they pay for the cover they
receive. The Council's analysis did not focus on motor cost insurance in great detail.
Overall, the Council’s analysis found that the Irish commercial non-life market is competitive
but not particularly attractive to new entrants given relatively low levels of profitability. The
Department reiterated the point raised by the Minister that consumer prices have increased by
‘an average of 1.8% in the period 2011-2014, however insurance prices as measured by the
Consumer Price Index have increased by 25% since 2011. The absence of data means it is
difficult to ascertain the reasons for price increases. The absence of data was the key issue for
the NCC,
‘The Department cited Central Bank data regarding the domestic non-life insurance sector in
2014. It shows that Premium income from Irish-risk business rose by 5.3 per cent compared
to 2013, as both rates and volume of business increased, in addition the costs of claims
incurred has fallen. It was acknowledged that the cost of claims incurred is greater than
eared premium income for 3 firms. Taking the market as a whole, there has been a net
underwriting loss in the private motor class in four of the last five years. The Department
asked if there were reasons for this. AXA cited the roll-over nature of claims which meant
‘that annual data might not reflect actual costs incurred as costs might roll into another year.
‘The Department stated that while there is a need to comprehensively benchmark commercial
non-life insurance costs in Ireland. Ideally, data would be collected from both the industry
(using standard definitions etc. of insurance classes across countries) from customers, and
should be coordinated by the Central Bank. AXA stated that they supplied voluminous data
in their retums to the Central Bank but agreed with the thrust of the point regarding the
importance of data and added they would raise this with Insurance Ireland.
AXA Insurance referred to four newspaper reports of Court cases in 2015 where the Court
awarded sums in excess of the amount that the insurance industry would have valued the
cases at. AXA Insurance stated that they were not the insurer in any of the cases mentioned.
The first case involved Limerick High Court sitting in Ennis in June 2015. The injury was a
soft tissue injury with some alleged level of restriction of function and back strain. The
insurance industry valued the case at approx. €50,000-€60,000. The plaintiff lawyer was
looking for €150,000 before the case started and the defendant lawyer offered €30,000 before
the case started. The total award by the Court was €508,000 plus legal costs of €220,000.
The insurance industry expected the legel costs to be approx. €71,025. The other three cases
also involved the Court awarding more than the insurance industry estimated. AXA
Insurance gave copies of reports of the four cases to the Minister.AXA Insurance suggested that a revised Book of Quantum is urgently required and they felt
that if there was an agreed Book of Quantum (BOQ) that the PIAB, lawyers and judiciary
would use, this would assist in alleviating some of the issues driving the cost of insurance in
the industry. Minister Bruton said that he will be meeting Mr Justice Keams President of the
High Court shortly. ‘The Department said that PIAB are working on a new Book of Quantum
and have been working with Insurance Ireland and other stakeholders in obtaining data on
insurance claims and settlements.
AXA agreed to work with Insurance Ireland with a view to supplying data to the Department
on cases that are settled outside of the PIAB and Court processes.
D Monahan
PIAB Liaison Unit
20/10/15