High insurance costs and difficulties obtaining cover for businesses operating in the tourism sector have the potential to seriously undermine Ireland's overall tourism offering, Fáilte Ireland has warned.
It has been over two years since the Government introduced an Action Plan for Insurance Reform, however businesses operating in the adventure tourism sector say they have not seen premiums decrease.
CEO of Ireland's Association for Adventure Tourism (IAAT) Brendan Kenny said many of its 250 members' businesses are threatened with closure due to high insurance premiums.
"We haven't seen an impact in terms of costs coming down around insurance," Mr Kenny said.
"Members have been facing the pressure of insurance since well before Covid, and it was a crisis that we'd hoped that we wouldn't have to come back to."
In November 2022, the Government published its third report on the implementation of the Action Plan for Insurance Reform, where it reported that 90% of it is complete, including personal injury award guidelines.
However, the IAAT said it has not seen premiums decrease in line with the reforms.
Mr Kenny said the costs of insurance for its members "are still well beyond what is sustainable for the sector".
"I would say it's something like four and a half times the cost of insurance in Ireland versus the UK and we're paying six to eight times the cost of what a business in Germany, for example, are paying," he said.
Mr Kenny said these rates have nothing to do with the level of claims associated with adventure tourism here or the level of risk involved.
"We have a world class safety record in Ireland and we've also endeavoured on a number of risk mitigation programmes," he said.
"There is no trend there that, that shows Ireland has been any riskier than other countries to do business whether that be adventure tours or anything else."
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Bill Cremin, managing director of Zipit Forest Adventure and Cool Runnings Events for ice skating, said insurance is an existential threat facing his business.
"We've never really had an existential threat like we've had with insurance, because without insurance, we can't exist," he said.
Mr Cremin thinks the problem in the Irish market is a lack of competition among providers.
"The companies that are offering cover basically can name their price," he added.
Mr Cremin said reforms by the Government have not made an impact on his liability insurance; he said the situation has actually become worse.
"We're paying around 12% of our turnover for insurance," he said.
"In Europe, businesses like ours typically pay between 1% and 2% of turnover.
"One of our German colleagues said recently that what we pay for insurance would cover the insurance costs of the entire sector (high ropes specifically) in Germany."
In a statement to RTÉ News, Fáilte Ireland said this has implications both in terms of negative impact of losing businesses, but also it said "it has the potential to seriously undermine Ireland's overall tourism offering".
"Our analysis shows that the insurance difficulties facing tourism SMEs in Ireland is unique to us," the statement said.
"Competitor destinations and their SMEs do not experience these challenges.
"Fáilte Ireland continues to engage with the Office to Promote Competition and industry stakeholders to keep tourism at the forefront of the insurance reform agenda."
President of the European Confederation of Outdoor Employers Jean Yves Lapeyère said this is a uniquely Irish problem.
"The issue of having to stop trading, because the insurance is too expensive is exclusive to Ireland," Mr Lapeyère said.
He said that "in no country do we hear of outdoor companies having to stop trading because their premium is too high."
"The problem at this level is Irish, 100% Irish," he added.
Mr Lapeyère acknowledged that this is a bigger problem for Ireland due to the popularity of adventure activities in our tourism offering.
He gave an example of a outdoor business in Portugal providing caving and trekking experiences, which pays €400 a year for its liability insurance and it has a €50,000 turnover.
In a statement, the Department of Finance said the Government is aware that adventure businesses are currently facing difficulty when it comes to availability and affordability of insurance.
It said Minister for Finance Michael McGrath met representatives of the insurance industry, where he outlined his expectation that it respond to Government reforms in terms of pricing and supply.
Peter Boland of the Alliance for Insurance Reform said Government reforms are not having any impact on the cost of liability insurance.
"In fact, our research would show that last year, 2022 liability premiums increased 14% on renewal despite all the reforms in place," Mr Boland said.
He said the issue is a "chronic lack of insurance competition in the liability sector".
The Alliance for Insurance Reform leader said: "We call on Government to apply intense pressure on the incumbent insurers because the reality is that with all the reforms in place very serious savings are being made, but the issue is that they're not accruing to policyholders and the only other direction they can be going in is into the back pocket of insurers, and that's precisely what's happening at the moment."
