• Cyril McAree

IHF President Says Lawyers Can Play A Major Role In Bringing Down Premiums

Michael Lennon, President of the Irish Hotels Federation (IHF) today called on the legal profession to adopt a more reasonable approach to personal injury cases, saying the legal profession must shoulder some of the responsibility for the excessive cost of public liability insurance, which is threatening the viability of many businesses including some in the hotel sector.





Speaking at the IHF’s annual conference in Galway, Mr Lennon said that the legal costs associated with administering claims are so high they are having a hugely detrimental impact on the proper administration of justice.   Furthermore, he stated that the legal profession could do more to reduce the number of fraudulent and exaggerated claims coming before the court, which he said were also contributing to the high cost of insurance.


“The pace of insurance reform continues to be painfully slow. We welcome the establishment of the Personal Injuries Guidelines Committee and are hopeful that it will lead to more realistic awards for the future.  However, in the meantime, excessive insurance premiums are continuing to hurt many businesses with a significant number of hotels this year paying over €1,000 per room. For an industry that is so price-sensitive, this level of cost is completely unsustainable.”


“We have no issue whatsoever with genuine claims where guests are rightly and properly compensated, and everyone is entitled to be professionally represented. However, at present, the scales of justice are tipped firmly in favour of the plaintiff and this cannot continue. The exorbitant fees being charged by lawyers are deterring insurance companies from pursuing cases through the legal system.  According to figures from the Personal Injuries Assessment Board, only 1800 or 5% of personal injury claims were settled through the courts, whereas 24,700 or 74% were settled by insurers or abandoned.¹


Mr Lennon added: “It’s not unheard of for a plaintiff’s legal costs to be triple the amount awarded to them so not surprisingly insurers often prefer to settle a claim before it goes to court rather than risk running up a sizeable legal bill. But where is the justice for the defendant, who ultimately ends up with a significant hike in their insurance premium? We need to improve access to civil justice and to increase the scrutiny of insurance claims, which will help to deter fraudulent or exaggerated claims, to the benefit of society in general.”


Mr Lennon added that greater scrutiny of claims at an earlier stage in the legal process could also help to weed out the opportunistic and exaggerated claims that are still making their way to the courts. “Again, we have no issue at all with genuine claims. However, when a case collapses in court due to expert evidence showing injuries were exaggerated, one can’t help but wonder whether the plaintiff’s lawyer could have made a better effort at establishing the bone fides of a case before it went to court, saving time and money for the defendant and their insurance company, as well as freeing up the courts system.”


Referring to the recent General Election, Mr Lennon said that it was encouraging that all the main parties had finally recognised the negative impact of increased insurance costs on the viability of many businesses. “Fine Gael’s commitment to broadening the insurance market and making perjury a statutory offence was welcome as were Fianna Fáil and Sinn Fein’s pledges to establish a Garda Fraud Unit. With just one prosecution for insurance fraud under current legislation, which came into effect in 2004², there is plenty of room for improvement there.However, the real test is what we’ll see included in the eventual programme for government. The pace of reform must accelerate and in a timely enough manner to address the damage that is being done to the viability of businesses today.”

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