Deputy Bernard Allen has been given permission to raise on the Adjournment the question of the refusal of insurance companies to insure the contents of flats and apartments. Deputy Allen has eight minutes and the Minister has four minutes.
Adjournment Debate. - Flats and Apartments Insurance.
I raise this serious matter tonight because of the inability of thousands of flat and apartment dwellers to obtain insurance cover for the contents of their flats and apartments. The situation has been brought about because of the refusal of insurance companies to accept such business on the grounds that it is a bad risk. I raised this matter in April 1984, and the Minister stated in his reply that he had taken the problem up with the companies concerned and they had indicated to him that each application for house insurance or any other type of insurance is examined on an individual basis based on the information given on the proposal form. He said he could not compel insurers to underwrite particular risks and that it must be left to their own commercial judgment. Unfortunately, the situation has continued to exist since then, and a number of people whom I know personally have suffered serious financial loss as a result of fires and storm damage because they were unable to obtain insurance cover for the contents of their apartments.
I can prove that the insurance companies have misled the Minister, and I can give cases where insurance companies have refused business out of hand without even considering the individual merits of each case. I have discussed this appalling situation with an executive member of an insurance company in the last few days, and I have a certain sympathy for some insurance companies who have been left with bad risks on the nonprofitable part of house insurance because of a number of factors, and I would like to refer to them briefly.
I refer to the restrictive practices being pursued by building societies in forcing their member borrowers to take life and house insurance business from an insurance company nominated by them. This has resulted in the creaming off of the more lucrative portion of the market by these companies. In my view this restrictive practice is illegal because, I am informed, the building societies gain something like 33? per cent commission on this type of business. Therefore, not only are they entering into a restrictive practice with their borrowers, they are entering into unfair competition with insurance brokers through the country.
The second major factor which, I have been informed, is causing this problem is local authorities insuring their properties with Irish Public Bodies Mutual Insurance Ltd., who because of their structures are unable to take insurance on the contents of apartments. I would ask the Minister for the Environment, too, to consider the matter because it is creating a problem.
Finally, I ask the Minister to impress on his colleagues that until such time as the reform of the court system and a closer scrutiny of the escalating legal costs takes place, we will continue to have an increasing problem in the area of insurance. These are matters which must be tackled in the long term, but I am asking the Minister to begin discussions immediately with the insurance industry in order to alleviate the hardship being experienced by thousands of people in Cork city and county, and I expect tens of thousands throughout the country
Another matter I wish the Minister to pursue immediately relates to the practice whereby building societies insist on their borrowers dealing with specific insurance companies. That should be discontinued. I understand that in 1984 one building society alone made profits running into millions of pounds as a result of this restrictive practice, which is unethical and possibly illegal. When the building societies sought recently to increase their interest rates the Minister might have taken the opportunity of discussing that practice with them.
The Deputy wrote to me about this matter in March 1984 and I told him then that the insurance companies had indicated that all applications for household contents or any other kind of insurance were being examined strictly on their merits. However, I took the question up with the two representative bodies of the insurance companies, the Irish Insurance Association and the Federation of Insurance in Ireland. They both confirmed that each case is treated on merit, that there is no specific policy of refusing to ensure the contents of flats or apartments in the Cork area. I asked the Deputy then if he would let me know of any specific case with which he was concerned and in which insurance companies were adopting discriminatory policies without reasonable grounds. The Deputy raised the question again by way of Parliamentary Question in October 1984 and I again invited him to submit details of specific cases but he has not done so.
I can do that now.
The Deputy is welcome to submit these details now or to call at my Department to discuss the issue with officials as he has done on a number of other issues. He is most welcome to approach the Department's officials on this issue.
The position with regard to flatdwellers is that companies treat all applications for insurance on their merits. There is no policy of discrimination against flat dwellers. Though the level of claims in respect of flats is very bad, insurance are very concerned about the level of burglaries and the subsequent claims in the area of household insurance generally. They are anxious to improve their results in this area, in which they have incurred huge losses in recent years. There is no need for me to reflect on this in the House this evening. The House will be well aware of the price applications I have sanctioned in the past two years. These reflect the underwriting position with regard to household insurance, especially in respect of contents.
There is no evidence to suggest that flatdwellers are being discriminated against, but if the Deputy furnishes me with details of specific cases I shall have them investigated. However, he must realise that there may be specific reasons in some cases for refusing cover. I cannot compel any insurance company to underwrite any specific risk or indeed to provide full cover. My authority in this matter is a supervisory one so I cannot force insurers to assume risks. My primary duty is to ensure that insurance companies are viable and operate within the very strict liquidity reserve ratio terms that apply to all insurance companies operating on the Irish market.
The insurance companies are in the business of offering insurance, and they have a requirement to make profit for themselves. In my price application situation I have tried to ensure that by and large the companies have an underwriting break even level. This criterion has been adopted in the Department down through the years, but to this extent the insurance companies have not been very successful in recent years because of the increasing level of burglaries and break ins, sometimes with violence, as the House knows. However, I am again issuing an invitation to the Deputy to come to the Department and discuss any specific case he may know of in the Cork area in which he believes there is discrimination. I am most anxious, as are the representative bodies of the insurance companies, that insurance is available to apartment and flat dwellers in general. If the Deputy can bring specific cases to my notice I will have them investigated. His concern is shared by me and by the insurance companies also.
The Dáil adjourned at 9 p.m. until 10.30 a.m. on Thursday, 21 February 1985.