Compo culture has to change, leisure sector firms maintain

Photo shows, Pat Whelehan of Derrymore Springs Water Adventure Centre in Killucan with his daughter Annie.

Mullingar businessman Derek Sheridan’s bouncy castle firm hasn’t had an insurance claim made against it for seven years, but that didn’t stop his insurance premium going up by 80 percent last year.

Although his premium almost doubled, Mr Sheridan, whose firm ABC operates across the midlands and east coast, says that he was “lucky enough” as he had just renewed his policy weeks before Axa XL, the underwriter of Leisure Insure, his UK based insurance company, announced it was leaving the Irish market. AXA XL said that following a strategic review, it decided to leave Ireland due to the current “market dynamics”, which is believed refers to the high payouts made to claimants.

Mr Sheridan is a member of the Irish Inflatable Hirers Federation (IIHF), a lobby group for the sector’s most reputable operators. The group is currently working to get another insurer to come into the country. Mr Sheridan has 10 months left on his insurance cover, and if the IIHF is unsuccessful, then his firm and many others in the sector face uncertain futures. He says that Ireland’s compensation culture and the big payouts to claimants, inside and outside court, is affecting businesses across the leisure sector whose premiums have increased by 500 percent in some cases in the last decade.

Speaking to the Westmeath Examiner in the week that one of the country’s biggest inflatable hire companies, Pelican Promotions from Dundalk, announced that it was forced to close as it could not find a new insurer, Mr Sheridan says that it is “worrying times” for those involved in the sector.

“It [the lack of an insurer for bouncy castle hirers] has the potential to put people out of business. The problem is whether any other firm want to come in. They see that the only company that was operating is leaving because of the massive claim culture and the fact that insurers are paying out on any little claim rather than going to court.”

Mr Sheridan says that in the 18 years since he went into business by himself, he has only once had an insurance claim made against ABC. The person claimed that he had been left with debilitating back pain and erectile dysfunction after he was struck by one of Mr Sheridan’s bouncy castles, which had become untethered in wind after it had been moved by the group that had rented it.

“I found him on Facebook and discovered that he was still doing combat sports and was big into rock climbing. I passed on the information to the insurance company and thought they would get a private investigator on it,” Mr Sheridan said.

However, rather than look into whether the frame was fraudulent, he subsequently found out that his insurer had paid the man an out of court settlement of €70,000. To make matters worse, when Mr Sheridan refused to pay the excess charge of €1,300 “out of principle”, he was informed that he would be taken to court.

From stiffer penalties for those who are found to make fraudulent claims to the compensation payments may to claimants that are among the highest in the world, Mr Sheridan says that the “whole culture needs to change”.

“This is my business. I have four small children to put food on the table for. I worked in a bank for 10 years but left to grow my own businesses. I am now one of the largest bouncy castle operators in the country and can show people my insurance cert but what happens if nothing is solved come June next year?”

A manager of a Westmeath firm involved in the leisure sector (who asked that neither he nor the company he works for be identified), revealed that in the last decade its insurance premium has risen from €6,500 to €50,000 this year.

He believes that a new garda unit dedicated to investigating fraudulent insurance claims needs to be established to deter people from making bogus claims or for exaggerating injuries for accidents that are not down to a firm’s negligence.

He also says that the there needs to be greater transparency from insurance providers about how claims are handled and that the book of quantum [the general guide for insurance payouts] “needs to be recalibrated”.

“In Ireland payouts are four times what they are in the UK for the same type of injury. Something needs to be done. It’s a big problem, payouts are too high and encourage people to make fraudulent claims.”

Representatives from the leisure sector have met politicians to encourage them to tackle rising insurance costs, which it says are threatening businesses. The issue has also been debated in the Dáil.

The manager says insurance payouts in Ireland need to brought down in line with those in the UK and mainland Europe.

“They need to go down. In some countries, whiplash isn’t even categorised as an injury but here you can get tens of thousands for it,” he said.

While members of the public are entitled to compensation if they have been involved in an accident caused by a firm’s neglect, he says that many successful claims are for minor accidents that “could happen in someone’s back garden”.

Unless politicians tackle rising insurance costs and the compensation culture, more and more insurers are going to leave the market, a development that will make it increasingly harder for businesses in a range of sectors to remain open, he added.

Tommy Whelehan, proprietor of the Derrymore Water Adventure Centre in Killucan, most be one of the few businesspeople in the leisure sector that saw their insurance premium go down this year.

He says, however, that he is “still very concerned” about the effects that rising insurance costs and Ireland’s litigious culture is having on the wider sector.

If the water adventure centre was hit with the sort of premium increases that other firms have experienced, Mr Whelehan says that it would place it “under serious financial pressure”.

In addition to those that engage in making fraudulent or exaggerated claims, Mr Whelehan says the legal profession needs to have a look at its role in perpetuating compensation culture. He also believes politicians have been slow to address the problem in the same way their counterparts in the UK and the continent have. “The legals here have had free rein and the government are to blame for not regulating the insurance industry, that’s why we have this problem here,” he said.