‘Dramatic increase in insurance premiums threatens survival of marts’
Local livestock marts in Co. Donegal are being placed under significant pressure due to rising insurance premiums, according to Sinn Fein TD Pearse Doherty.
Doherty was speaking in the Dail on Tuesday, June 4; the same day that it was revealed the Competition and Consumer Protection Commission (CCPC) carried out a series of raids on insurance companies and brokers and their representative body, Insurance Ireland.
The raids were reportedly part of an ongoing investigation into the existence of price signalling or price fixing within the insurance sector in Ireland, Doherty said.
The Sinn Fein TD told the Dail that local livestock marts are coming under “increasing financial pressures as a direct result of what is fast becoming the cross-sectoral problem of insurance costs”.
Demands from insurers
Doherty said: “Marts are reporting to me that they are coming under heightened demands from their insurers – demands with which they complied in the past and that are still there.
“Those demands are to introduce costly, structural adaptations and changes to existing practice, which it is claimed will help keep the cost of cover down.
However, even though some marts have already carried out those works, they are seeing dramatic increases in their premiums.
“Even though they are open for fewer hours than previously, they are seeing the premiums increase year-on-year.”
Rising insurance premiums
In one instance in Co. Donegal, Doherty explained, a mart saw its insurance premium rise from €8,000 in 2015 to a “whopping €15,000” for the period 2017 to 2018.
This was an increase of nearly 100% in 24 months and occurred after the mart had spent over €12,000 on introducing changes to its facility to reduce the risk of injury, the Sinn Fein TD said.
That is not sustainable for a mart in a rural area. This is a business which is important and which supports an agricultural sector.
“Another mart has advised that the costs of its renewal is now a staggering €30,000. This cost is among its biggest overheads for the year and the figure is now unsustainable.
“It is telling us that it is unsustainable. It has scaled back its operating times and cannot scale back any further. The next step is whether to close the mart.
“This is particularly the case for smaller marts and co-operatives, which operate on only a limited number of days,” he added.
‘Livestock marts have significant exposure to injuries’
Responding to Doherty, the Minister of State at the Department of Finance, Michael D’Arcy, said that he has been advised by Insurance Ireland that livestock marts have significant exposure to injuries to employees and members of the public.
D’Arcy said: “This has resulted in claims occurring with a level of frequency which has led to a reduction in market capacity due to the hazardous nature of the risk.
In response, insurers have developed active, risk-management programmes in order to try to reduce the level of accidents and injuries.
“In addition, I understand that insurers have been working with marts with a view to implementing improvements in management practices and facilities to reduce claims – as this is the key area in terms of managing claim costs.”
The Fine Gael TD also said that Insurance Ireland had advised him that it is not aware of any recent major increases in the cost of insurance for agricultural mart owners.
Are rising insurance premiums a widespread problem for marts?
However, Minister D’Arcy told the Dail that he had rang two marts in his local area – Co. Wexford – to enquire about the cost of their insurance premiums.
He said: “The cost for one of the largest marts in the country is approximately €12,500 and its owner said its premium had not increased.
I anticipated the question would be about why premiums had increased. The owner said its premium had not increased because he had not had a claim for 12 years. That is the primary issue I see.
“When I pushed him about his knowledge of other marts, he said from what he has been told, the cost to insure a moderate-sized mart is between €20,000 to €25,000.”
But Minister D’Arcy did acknowledge Doherty’s assertion that there is probably a bigger issue where premiums for smaller marts, which operate on a smaller number of days and which have a smaller turnover, go from €8,000 to €15,000 – thus experiencing a “really significant jump“.
He continued: “It is concerning in the extreme if they have done the work required to ensure there are no claims, or where they have done the work if there were issues to be resolved. I have a real problem with that.”
Minister D’Arcy promised to pursue the matter if Doherty supplies him with the details.
I will also take it to the next phase of insurance analysis. The marts are crucial and are an essential part of rural Ireland in terms of trade.
“It is not just the marts because there are shops and other services attached to them. I am from rural Ireland and an agricultural background, and I do not want to see any further slippage in this sector.”