The Premium Problem

Nikki Murran, Excel Recruitment's Director of Grocery Retail Recruitment

Excel’s Director of Grocery Retail Nikki Murran reflects on one of our clients’ biggest headaches, spiralling insurance costs and asks what can be done about them?

One of my favourite parts of my jobs is catching up with our retailers. The last 9 months have been particularly enjoyable as there seems to be so much optimism across the grocery retail sector at the moment. A lot of clients are investing in their stores while others are opening brand new sites. I was invited out to the new store opening of Dunnes Stores and James Whelan’s Butchers in Naas a while back and it was such a treat to see grocery retailing at it’s best and the excitement that comes with new store openings!

However, despite the overall pattern of optimism, there is one issue looming heavy on the minds of retailers: rising insurance costs. It is not only smaller independent retailers being crippled, spiralling insurance rates are also having a heavy impact on all retailers across the country.

The Response from Retailers

Retailers are reacting; many have invested in staff training, improved store layouts and incident reporting policies, which have led to a decrease in the number of claims made in stores. Despite this work, the average insurance premium has seen a rise of between 5% and 10% a year! This is a substantial cost to any retailer – especially when they are actively doing everything in their power to reduce the risk.

These increases are the burden of the retailers, not because they are at fault or have failed to act, but because of a wider culture of claims which despite media coverage and public outcry, is growing. Compounding this culture of blaming and claiming, there exist no clear judicial guidelines for compensation and worst of all – a lack of resources to follow up an insurance fraud. Since the legislation around this was enacted in 2004 to tackle the issue there has been ONE – yes only one – prosecution for insurance fraud! How is that possible?

The Numbers

Ireland’s average whiplash injury compensation in €17,338, vs the UK’s average of €3,798 or Canada’s of €2,215. Australia and Sweden are unlikely to offer any compensation at all for the same soft tissue injury. Such dramatic differences surely raise serious questions about how we are coming up with these monetary values for awards? It is the premiums of ordinary people and the premiums of retailers up and down the country that are paying for these bloated, inconsistent pay-outs!

In an article by Charlie Weston earlier this year he states that “Retailers estimate that on average, for every €1 allocated to an insurance claim, a business must make €100 in sales to recoup this outlay.” (The Irish Independent, May 2019) That is an incredible burden to put on any retailer!

So, what can we do?

The Alliance for Insurance reform have some excellent resources available to tackle this epidemic on their website – https://insurancereform.ie/what-we-want/

They are striving for:

Prevention of exaggerated claims

Consistency in the calculation of awards

Transparency in how premiums are calculated

And really, the most shocking part of this mandate is that these measures are not in place already.

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