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THE BODY THAT represents Ireland’s hotel industry claims that new entrants are being effectively shut out from the sector because insurers won’t provide them with public liability coverage.
The president of the Irish Hotels Federation (IHF), Joe Dolan, said that hotel liability insurance has in the last two years become “a huge issue that’s getting bigger by the day”.
“There are so few players in the leisure insurance market,” he told Fora. ”There were 12 to 14 (providers). We’re now down to about three or four.”
He said prices for hotel liability insurance – which covers a hotel in the event of a guest injuring themselves on their premises – have “gone through the roof” since 2015.
Hotel liability insurance is compulsory. A hotelier cannot obtain or renew their trading licence unless they can provide evidence that they have adequate coverage.
Dolan added that many IHF members have seen their premiums increase 30% to 50% over the last two years. The CSO does not compile official figures for business insurance rates.
“I’m aware of one hotel that cannot get insurance, which effectively means they cannot trade,” he said. “It’s not because they have a bad record. They’re a new entrant and no one will touch them because they don’t have any track record.
“They’re automatically assumed to be high-risk. That’s the sort of issue we’re dealing with.”
‘Off-the-wall’ claims
Dolan said rising premiums have coincided with the increasing size of compensation awards.
According to industry body Insurance Ireland, the most recent ‘book of quantum’ – a reference guide for compensation payouts – saw a 55% increase in the payout for a fractured ankle.
Compensation for the injury rose from €35,300 to €54,700, while in the UK the group claims the equivalent award would be £10,000 (around €11,600).
Dolan said he believes many insurers are willing to pay out claims rather than defend them in court “regardless of how off-the-wall they are”.
“That in itself is driving a compo culture,” he said.
Doolan said there is “no question” that hoteliers have a duty of care to their guests, but added: “Just because someone simply has an accident in a hotel, there is not a foregone conclusion that they’re automatically entitled to compensation. That is the perception out there.
“I’m well aware of cases where someone has been coming down a stairs texting, or maybe there’s horseplay on a dance floor, where the people involved have injured themselves through no fault or lack of care on behalf of the hotel.”
He cited a number of high-profile payouts, such as a €20,000 award given to a woman who banged her knee against the leg of a table in the Mullingar Park Hotel restaurant.
“I see that time and time again, significant rewards being paid out,” Dolan said. “It’s just out of control and desperately, urgently needs to be addressed.”
He acknowledged that the issue surrounding public liability insurance was not unique to hotels, but said “we have a higher profile maybe than other workplaces”.
“We’re certainly getting the brunt of it, but it’s across the board.”
Room rates
Dolan said rising insurance costs have “eroded” the benefit of the hospitality sector’s prized 9% VAT rate.
“They’re just driving our costs up and they’re making us really uncompetitive,” he said. “At this time, particualrly with Brexit, there has never been a more compelling reason why we must be competitive.”
He said it was inevitable that insurance premiums would be reflected in room rates.
In a statement, Insurance Ireland said “there is understandable concern among business owners about rising cost of claims”. It did not specifically respond to the issue of new businesses being denied cover.
The group said total claims for public liability insurance were €414 million in 2015, up from €355 million the year before.
“It is already well-known that our personal injury awards are out of kilter with other jurisdictions,” the statement said, referring to the book of quantum.
“(We) welcome the recent announcement that the government’s cost of insurance working group will look at this area and Insurance Ireland will contribute to its work to help tackle rising claims costs and cost drivers like legal fees.”
Written by Conor McMahon and posted on Fora.ie
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It’s the same issue with car insurance…why the hell are insurance companies not investigating or challenging these claims? They simply pay out and then double premiums.
Say what you want about Quinn Insurance (And I’m no fan of them) but they drove down costs by investigating claims properly and challenging the dodgy ones in court
@León O’Keeffe: I think you may be wrong there about Quinn insurance…..
@León O’Keeffe: how about getting rid of no win, no fee system and legal aid for civil claims.
@cholly appleseed: How about prosecuting “expert” witnesses who blatantly perjure themselves. During the week we’d evidence given in a murder trial that depression could have been a factor and that the culprit was also autistic.
You’re so wrong it was their policy of settling claims that helped fuel this . Any business has an excess and they always made an offer equal to that to settle quickly . On the other hand Insurance companies settle quickly because the courts are a lottery and even if they win costs are very rarely awarded so it’s a no win situation . Legislation is needed but not a hope of this happening in the lifetime of this government.
@León O’Keeffe: cedcerdc
Because the Judges, solicitors and barristers are all benefiting from the high payouts, it’s called corruption
@Captain kirk: Yep, a lot of cultures in this country and we all pay for it. From banking, to compo and self serving politicians who do nothing about it every day!
Its not compo culture, its a scam with judges, solicitors and barristers, were people are encouraged to lie, because no matter how blatant the lie or how tenuous the negligence the judges will throw the money at you, after all its not theirs and it will ensure them and their buddies will be rolling in it.
Holland has a system where under Law maxima are set for each type of accident eg broken finger, broken leg etc. Great system their insurance system is properly regulated to prevent mis-use.
@gregory: they also are big believers in cop on… fall on a broken step? Look where you’re going.
@Fake Avast: our benefit system says otherwise
@Fake Avast: Yeah deffo, a country with Calvinism and Reformation at it’s foundation, a founding member of NATO and once running a trade empire rivaling the British Empire is a bulwark of socialism. Catch on to yourself. They may be a bit over pc these days but they do accountability and personal and civic responsibility a damn sight better than Ireland ever has or will.
@Fake Avast: So you advocate a free market, such as we currently have for insurance, and if a company does not reserve for claims properly and charges low premiums (Quinn, Setanta, ICI, Independant) it goes to the wall.
Lawyers and claimants are free to seek higher awards,
Valid point but a little regulation is not the Bolshevik dawn..
Given that every hotel in Dublin gouge prices everytime there’s a match/concert/bank holiday it’s a bit difficult to feel sorry for them when they don’t like their own medicine.
@Paul Horgan: every industry tries to maximise their profits, and its the plebs who will pick up the tab. The compo gravy trim is just another industry.
@joe o hare: looks like the insurance company is just “maximising profits” so then.
@Paul Horgan: when the rumours that springsteen was coming in may last year. All the hotels blocked certain dates. And when the concerts were announced. The rooms had gone up in price by 300% per night. Me being a bruce fan swallowed my pride to attend the gospel according to bruce!!
@Paul Horgan: Fair enough, but it doesn’t mask the fact that we have a compo culture in this country, and a judiciary that makes the most ridiculous of awards for cases that should never have seen the inside of a courtroom.
My 91 year old grandmother fell and hit her head in Cork city on some crappy footpaths. Did she sue? ‘my own fault I wasn’t looking where I was going’. The attitude of entitlement is unbelievable in this country. I 100% blame the solicitors.
@Ivana tinkle: I 100% blame the snowflake generation.
Time for this shambles of a country to open its doors to European insurance companies & everything else that should go with being in Europe. God knows we are paying enough for the privilege & despite the benefits to the country, it’s doesn’t trickle down to the man on the st. Open markets my ho|e.
@Willie the kid:
You really have no idea what you are talking about
@Willie the kid: Yes the likes of Allianz or AXA would sort it out…or not
Ah good old insurance companies once again. They will be telling us they have no profits next…..
Insurance companies pay out because they are usually in a loose loose situation. Even If they win and are awarded costs the plantive more than liteley will or can not pay out. No foal no fee solicitors cost anyone who pays insurance 100s of euro annually and encourage fraud
Its not just hotels that can’t get insurance. I set up a welding business last year and couldn’t get public liability cover until I went to a broker who got me cover through a northern Irish company. No insurance company in Ireland would cover me .
@Adrian Connolly: Sorry to hear that; welding did and does carry a reasonably high risk of property damage due to the hot works but it shouldnt be impossible. One thing I would double check is whether your NI Insurer actually has your risk stated correctly. If it is Thomond, you’ll be ok as they have the experience of the ROI market but others not so much….
This is a massive problem here. If a person as much as gets served a bowl of very hot soup its court time!! A court clerk should be given the power to see what cases make it into the courtroom!
Good job you have such a low rate of VAT to offset against insurance payments. I wish I only had to pay a max of 9% VAT, then I might be able to afford luxuries like health and home insurance.
@DaisyChainsaw: vat is sales tax. You do know that? They add 9% to the bill and hand it to revenue.
@kevin: Yes, and then increase the cost of his business products/ services by 9%, which may make him uncompetitive, you do know that?
Is this another way to yet increase hotel charges…for customers
You can thank the parasitic establishment for the insurance debacle. Lawyers enriching themselves and their political buddies ensuring the continuity of their blood sucking.
Our judges are the most generous in Europe and don’t seem to understand how the insurance business works….High awards lead to high premiums…..Nothing can be done however zero political will to reform the judicial system and impose limits on awards….Cant see any minister of justice taking them on….
This is just the culture of corrupt courts giving people’s off the wall claims time. If they shut these nuisance claims down then the insurance companies wouldn’t have a leg to stand on! Or a scapegoat to feed their greed.
Excitable interview on newstalk business this morning about all the new bedrooms coming on stream in 2018, slight contradiction here, we are told hotels can’t get insurance and yet they extend and additional hotels being built? Confused! The compo culture effects little the hotel sector, more B@$OX from the IHF I’m afraid
Do people realise that an Average Clause has been discretely slipped into the fine print in some property policies? It can halve your claim though the premium remains the same.
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