Thought Leadership

The human factor. Thoughts and observations.

The life-blood of any organisation is its people; the success of every system, in every organisation is determined by human factors. We are seeking a deep understanding of these human factors; these are some of our thoughts and observations.

KEY SUMMARY ON INSURANCE ISSUES IN IRISH BUSINESS

KEY SUMMARY ON INSURANCE ISSUES IN IRISH BUSINESS

There are 4 key variables leading to the problems with rising Insurance costs in Ireland today:

Worrying Claims Culture trend is growing in Ireland

  • # EL claims have increased by 29% in the last 5 years (PIAB data)
  • € EL awards have increased by 8% in the last 5 years – avg. = €32,000 (PIAB data)
  • # PL claims have increased by 5% in the last 5 years (PIAB data)
  • € PL awards have increased by 12% in the last 5 years – avg. = €28,500 (PIAB data)
  • 82% of Irish people agree there is a ‘Compensation Culture’ in this country (PIAB survey)
  • 62% of Irish people agree that a ‘Reform is Needed’ (PIAB Survey)

KEY CORRECTIVE: People must take responsibility and ownership for their behaviour and understand that making bogus claims adds to a chronic problem that is putting local businesses out of business!

Serious problems with our legal system and its current structure

  • Ireland is one of the most litigious countries in the EU, with claim frequency + costs rising year-on-year
  • We pay 3-4 times more in awards in comparison to the UK and other EU countries
  • There is a huge variability in awards and judgements
  • An existing loophole that is not being addressed means claimants can avoid the Injuries Board and claim through private solicitors, thereby dramatically increasing costs for insurers and directly impacting insurance premium cost (it is estimated that 50k+ claims are made each year of which 30k go through PIAB)

KEY CORRECTIVE: The legal system needs to be reformed to limit our growing claim culture

Insurance stakeholders can be more transparent and proactive in their client engagement

  • The insurance sector is in a ‘hard-cycle’ (because of claims increases, low competition, increased rates, Brexit)
  • Insurance premium costs have increased 30% year on year from 2016 in high footfall sectors
  • Insurance costs are the second highest costs after wages in high footfall sectors
  • Insurers have and should more often define costing models (e.g. insurance facilities) based on proactive risk management
  • This means quarterly claims reviews and transparent communication between the client, insurance partners and risk management partners
  • Insurers need to be willing to defend their clients if adequate evidence is supplied (e.g. CCTV, training records)

KEY CORRECTIVE: Insurers need to promote sustainable client engagement models through endorsing proactive risk mgt.

Businesses can manage ‘controllable risk’ much more proactively

  • There has been a 28% increase in reported accidents to the HSA in the last 5 years (things are getting worse)
  • It is in a business’s interest to stop this trend – the average cost of a workplace accident is approx. €6,000 for a business with 20 staff
  • 85% of all accident are behaviour-based (after a 5-why analysis) but business don’t address behaviour, they focus on simply ‘ticking a box which is not good enough’
  • High footfall businesses are among the most exposed in this regard because they have a very dynamic risk profile with high traffic and varying hazards
  • 2018 EL Claims: STF is responsible for 23% with MH at 21%. Highest frequency manufacturing (35%), retail (12%) and hospitality (9%) sectors – 70% of EL Claims are made by men
  • 2018 PL Claims: STF is responsible for 76% of PL claims. Highest frequency in retail (19%), hospitality (17%) and sport + leisure (5%) sectors – 66% of PL Claims are made by women
  • Most business think most claims are fraudulent but this is not the case – we conducted a claims analysis in the retail sector and found that:
  1. 15% were suspicious
  2. 30% were uncontrollable incidents (e.g. a fall because of footwear)
  3. 55% were as a direct result of hazards not being addressed (e.g. the grape on the floor, dog-eared matting, wet surfaces etc.)
  • It is possible for businesses to ‘buck the trend’ and actually reduce their insurance costs and we have the case-studies to prove it – but they can only ‘separate themselves from the herd’ by taking these key steps:
  • Manage controllable risk proactively and ensure Safety is a high level KPI in your business
  • Don’t simply ‘tick the compliance box’ when unsafe behaviours are the real core problem
  • Tackle the main risks in your sector (e.g. high footfall: STF, Manual Handling)
  • Seek out insurance partners that value proactive risk management
  • Engage in quarterly review meetings with your insurance partners
  1. Manage controllable risk proactively and ensure Safety is a high level KPI in your business
  2. Don’t simply ‘tick the compliance box’ when unsafe behaviours are the real core problem
  3. Tackle the main risks in your sector (e.g. high footfall: STF, Manual Handling)
  4. Seek out insurance partners that value proactive risk management
  5. Engage in quarterly review meetings with your insurance partners

KEY CORRECTIVE: Take control of what you can control and ‘separate yourself from the herd’

Dr. Paul Cummins (SeaChange Ltd. Managing Director)


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