IIF chief executive Mr Michael Kemp said yesterday insurance companies would probably see savings of between 5 and 10 per cent in cases where motor-related claims were dealt with by the mooted PIAB. But he added there was "no guarantee" that premiums would go down by a corresponding amount.
There is no guarantee that savings realised by insurance firms under the proposed personal injury assessment board (PIAB) will be passed on to consumers, according to the Irish Insurance Federation (IIF).
The insurance industry has consistently argued that the rising cost of premiums has been driven by the rising cost of claims. The sector has always maintained that if the cost of claims could be controlled or reduced then premiums would stabilise or come down.
Mr Kemp said that, while a portion of the savings under the PIAB will be passed on to consumers in the shape of cheaper insurance cover, companies will not be in a position to pass on all savings.
"The costs for business will be fixed regardless of the PIAB. . . things like staff costs and premises," he said.
"So while, say, 4 per cent or so of a 5 per cent saving would be passed on. . . it is not simply a case of being able to pass on the entire saving."
He said the PIAB will only result in savings if there is consistency in the level of awards and frequency of claims. If court judgments are made that affect other cases across the board or if other "variables come out of left field to upset the apple cart" then savings may not be assured, he added.
The IIF, along with other significant players in the sector, has maintained in recent years that premiums have increased partly because insurance firms have been hit by a reduction in returns on investments.
Investment returns have slipped by almost 3 per cent in the past five years to below 5 per cent at present, Mr Kemp said. He added there was no indication that yields were set to improve and cutting the cost of claims was the only major factor that would lower the cost of insurance cover.
