“There are 190,000 uninsured drivers in Ireland and it’s other customers who are paying for that.”

“But it was okay – the father of a boy in his class was working with plastics and they were destroying the ocean. So it wasn’t that bad.”

In children’s minds, those who threaten the environment may be the worst offenders, but their parents might be more attuned to the barrage of criticism aimed at the insurance industry. Motor insurance in particular has garnered a lot of attention lately and has fueled conversations about ‘ripoff Ireland’.

In its 2022 results, Aviva reported that premiums were down 9 percent over the past year, down 40 percent from peak rates in 2016.

But campaigners have argued that extensive government efforts to reduce charges – particularly personal injury policies – should have had a bigger impact.

“I think it’s a brilliant industry. If you look at what we do, we pay people billions of dollars every year when terrible things happen,” says O’Rourke, referencing his son’s view of the business.

“In Aviva we are paying out 400 million euros [a year] in the event of injury, death, fire or natural disaster. I think that’s a really big contribution for people in this moment of crisis.”

According to O’Rourke, the level of court judgments remains at the heart of the problem. Big payouts mean other policyholders have to foot the bill.

“We have always been a very high jurisdiction for small claims infringement. Despite the fact that Britain bills itself as the whiplash capital of the world, we’re actually a lot worse.”

He says the lowest whiplash in the UK equates to a payout of £545 – versus €3,000 here.

Successive ministers have made efforts to lower costs for consumers. So surely they should do more at this stage?

“We’ve seen a lot of progress over the years trying to get the judges to set some sort of menu of accolades – the personal injury guidelines – that would replace the old book of quanta. So the judges set those, and then the independent body — the Personal Injuries Assessment Board (PIAB), a government agency — actually makes assessments of those awards.”

Aviva expects the guidelines would bring consistency to court rulings and assessments and would reduce the number of assessments rejected and challenged by the Personal Injuries Assessment Board (PIAB) to 51 percent. But it says the number of PIAB denials in litigation has actually increased — from 50 percent to 61 percent — for motor vehicle claims.

“We’ve had the most litigation on PIAB assessments since the PIAB started in 2003,” says O’Rourke.

​

One criticism often leveled against the industry has been the tendency to settle cases.

“We’re fighting all these cases and it’s costing us a lot of money. I think the problem is that we’ve had 16 cases now – and in every case the PIAB price has been beaten.”

So there remains a strong incentive for plaintiffs to go to court and seek higher compensation.

He also believes the legal profession has an incentive to take the legal route.

“The plaintiff’s attorney gets zero at PIAB – but he gets €16,000 once it comes out of PIAB.”

The legal profession would argue that they have an obligation to achieve the best outcome for clients.

“I can understand why they say that. It’s also very much in their interest to bring it in with legal fees and everything else,” he says.

As for the narrative that insurers are making record profits with high premiums, he says Ireland is not a particularly profitable market for the sector.

“Insurance is a very simple business. We cover our costs and aim for a margin of 6%. So our costs are the legal fees, the injury costs, the awards, and unfortunately the people who end up paying for it are the customers. We don’t want that. We want satisfied customers.”

​

O’Rourke (52) is originally from Thurles, Co. Tipperary. His father was a Garda and his mother a nurse. After school he went straight into accounting and studied at PwC. But traveling was his main interest at the time.

“As soon as I qualified I left Ireland and joined AIG where I worked in internal audit while traveling for a number of years. One of my favorite places was Beirut – I had Terry Waite’s old room at the hotel.”

(Waite was a hostage negotiator who was himself held hostage in Lebanon for four and a half years.)

He spent a few months working at each location.

“The Middle East was interesting, as was Argentina – I played a game of hurling there, which was great fun at the time.”

After a few years he settled temporarily in New York and spent seven years there before deciding to return to Ireland – a week before the 911 attacks – and start a family.

He first worked as Chief Financial Officer at AIG in Ireland, then moved into the underwriting side of the business before becoming Chief Executive for eight and a half years. Then two and a half years ago he joined Aviva as General Insurance CEO.

Insurance costs for young drivers is another big problem he encounters.

“In Ireland there are 190,000 uninsured drivers and if you look at countries like Scotland it’s 40,000. customers pay for it. There is no hidden pot in the insurance industry that can pay for such things – it has to be passed back to the customers.

“Even in the last few years we have had a number of claims in excess of 10 million euros,” he adds.

“Unfortunately, in these scenarios, the premiums of the many pay for the claims of the few.”

Recently, Aviva encouraged home insurance customers to reconsider the valuation of their homes, as it may affect the premium they pay.

“We’ve got a big campaign going at the moment to try to make people aware of underinsurance – we see big problems with that at the moment. People don’t realize how much rebuilding costs have increased – and they don’t insure their homes for the right amount.

“So we are contacting all our customers about this. But we are disappointed with the acceptance of people buying higher levels.”

More than half of Aviva’s business is now commercial, including professional liability insurance. And a new cybersecurity product has been launched.

Another new product is family policies for wealthy individuals who may own valuable cars, artwork, jewelry and vacation homes. You pay a little more for a flexible policy, O’Rourke says.

Aviva has also increasingly insured businesses in the leisure market, hotels, charities and the community sector.

He said premiums for many of these property types have “settled down,” although challenges remain.

“If you take a small club that has two claims of €40,000 each year – that’s €80,000 a year and that has to be funded by the members of the club. So groups that take those kinds of risks still have cover issues – but for most areas I think it’s settled down quite a bit.”

But he says liability insurance in Ireland has rarely made any money over the years. Higher-risk deals are difficult here, he adds, especially since Brexit.

These types of policies in Ireland could previously be grouped with similar ones in the UK – but this has become more difficult.

“One of the examples I give is when you have a mountaineering club that is facing a €5 million claim. There really aren’t enough other mountaineering organizations that will pay you for a requirement like that that it makes sense.”

Aviva is the third-biggest player in the market with a 12.5 percent market share – and he believes there are more opportunities.

“There is in car insurance. There are probably too many insurers in this market.

“You could say, ‘You would say that.’ But let’s say it’s a scaled business with certain fixed costs that every insurer has. The lower your fixed costs, the larger your scope, the cheaper it is for your customers. It’s as simple as that.

“But in commercial insurance, I think the market needs more specialist insurers and better access to the UK markets for high-risk areas.”

As for the frustration they have with the personal injury guidelines, O’Rourke hopes the government will take action to ensure alignment with the guidelines and court rulings.

“We want stability,” he says.

“It’s a dull industry in many ways — but shareholders want returns to be predictable, consistent and achievable each year.”

“And unfortunately the insurance cycle in Ireland has much higher peaks and troughs than any other area I know. There isn’t much consistency.”

CV