Vol. 547 No. 3
41 Mr. Flanagan asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to increases in insurance costs, in particular, employer's liability, public liability and motor insurance; and the steps she proposes to take to deal with the issue. [3602/02]
42 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the severe problems being created for many firms by the increase in insurance premia and the withdrawal of cover in some cases, which is now leading to a threat of closures and job losses; the immediate steps she intends to take to address this crisis; and if she will make a statement on the matter. [3281/02]
I would like to put the Deputy's mind at ease. I know he does not have much experience in this field.
I ask the Minister of State to give way to the Minister.
As Minister of State responsibility for this area has been devolved to me since October 1997.
The Minister of State has been a failure.
Neither the Deputy nor his profession has helped over the years.
Could I again ask the Minister of State to give way to the Minister?
I propose to take Questions Nos. 41 and 42 together.
I am aware of the substantial increases in insurance premiums that many firms are facing and of the problems this is creating for them.
The pricing and underwriting of insurance is, however, a matter for individual insurance companies. EU law prevents us and our Department from intervening in relation to premium levels or in respect of the risks they are prepared to underwrite. Insurers make decisions on provision of cover based on their assessment of that risk.
The insurance industry has pointed to a number of factors, both domestic and international, to explain these increases. These include the high cost of settling claims in Ireland, the general reduction in investment returns, recent court decisions regarding the calculation of compensation losses in personal injury cases and the effects of the 11 September attacks in the United States. The situation has not been helped by the failure of the UK authorised insurer, Independent Insurance Company Limited, who had a significant presence in the Irish market.
An interdepartmental implementation group is progressing the establishment of the personal injuries assessment board. I am confident the establishment of that board will achieve a reduction in the delivery costs of personal injury compensation, thus permitting a reduction in insurance costs to consumers.
The Motor Insurance Advisory Board has been charged with advising us on motor insurance costs and, in particular, with examining the relationship between the incidence of claims and the premiums charged for various classes of policyholder identified by age and sex. The issue of the high cost of insurance for young drivers is especially being examined by the board. I expect to receive the final report of the board in the next month. In light of its recommendations, the Government and I will consider what further action is appropriate and necessary.
A workplace safety group has been established with a view to improving health and safety standards in the workplace. Its objectives are to reduce workplace accidents, to encourage injured workers to return to the workplace at the earliest possible date and to improve claims handling procedures, thus reducing insurance costs. The group is developing proposals at present designed to bring the initiative to small and medium sized firms.
I encourage consumers and insurers to consider ways to reduce the worst effects of the current circumstances, for example, by better management of risks, examination of excess cover and whether the full extent of the cover included in policies is actually required by individuals and companies.
I again record my disappointment that the Minister has not seen fit to take charge of this most important issue, particularly with regard to the litany of failures on the part of the Minister of State. He, his party and his Government colleagues have no idea of the extent of the problem of the high cost of insurance.
Is he aware that jobs are being lost as we speak because of insurance premia going through the roof? Is he aware of increases in excess of 100% on business in particular? Is he aware that manufacturers are withdrawing from insurance plans because of the disincentive of the cost and the consequences thereof?
Every item included in the Minister of State's reply formed part of his response to a similar question last year. No progress has been reported. In view of this will he indicate why he does not immediately refer this matter to the Competition Authority under section 11 of the 1991 Act?
Insurers and consumers have paid a 2% levy on premiums for the past 15 years. What is the annual amount levied, how much is in the accrual fund and what does the Minister of State intend to do with it? Will he also outline why the Personal Injuries Assessment Board is not in operation, despite promises by him and the Minister that it would be dealing with employers liability cases in early 2002? Will he indicate the strict timeframe within which the body will operate?
I refute what the Deputy has said. We are fully aware of the situation. I have spent much of my time over the past few years working on this issue. I have dealt at length with the various crises that have emerged, including that created by the Independent Insurance Company Limited situation and the fall-out of 11 September. We have worked assiduously to ensure that the information required by the Motor Insurance Advisory Board will be made available. I have co-operated with the board to ensure it concludes its work and I am confident it will produce a report we can address.
The Minister of State said the same thing last September.
I am not the master of creating information. I must await a report that is based on factual information. I sought to ensure the information would be made available and this happened following my intervention and that of others over the past year. It is being processed and there is nothing more I can ask of those who are doing an outstanding job to create a report—
It was frustrated by the insurance industry while the Minister of State did nothing.
I did not interrupt the Deputy and I ask him to listen to what I have to say.
The Minister of State without interruption.
Deputy Flanagan said many factories and plants are not insuring their employees. If he has information on that I would like to have it, including the names of the companies involved and the numbers of workers affected. I have indicated to the House on a number of occasions that the 2% levy on insurance premiums is diverted to general revenue. It is not available to my Department and it is a matter for the Exchequer and the Government to decide what to do with it.
Does the Minister of State accept that state of affairs?
We deal with every situation that evolves with the information that is available to us and we can only take conclusive decisions when all the facts are before us. At present all the facts are not available to me.
How much money is in the levy fund?
I will get that figure for the Deputy.
Deputy Flanagan asked the Minister of State if he is aware that companies are doing without employers and public liability insurance because of the rate or escalation in premiums. In response the Minister of State asked the Deputy to provide him with information on such companies. Why would he seek it? It appears he does not know that such insurance is not mandatory.
Will the Minister of State explain to the House why the report by the MIAB was not produced last year, as he assured the House it would be? He now assures the House it will be produced within one month and he referred to it as a final report. Does that mean he has received an interim or draft report and, if so, is that why material from the report appeared in the Irish Examiner on 25 January?
Apart from telling Deputy Flanagan that he has dealt with these crises at great length, what has the Minister of State produced in consequence? Is it not the case that, on average, the cost of employers and public liability insurance increased by 42% last year and it is forecast to increase by up to 55% this year, and that many companies, especially small ones, cannot absorb the cumulative impact of such increases? Will he indicate the tangible conclusions for these companies that have emerged from his dealing with these crises?
Deputy Flanagan said that many factories and plants are not providing cover for their workers at present. That is alarming and as Minister of State with responsibility for commerce, dealing with the insurance industry on a regular basis, I wish to put it to the industry. If the Deputy has such facts it will assist me in my negotiations with the industry.
The Minister of State is doing nothing about it. Indeed he is not even aware of the situation.
I am aware these are not mandatory issues but I am entitled to have information if somebody makes a statement of the kind made by Deputy Flanagan.
If such insurance is not mandatory what would the Minister of State do with the information?
I would use it in my negotiations with the insurance industry.
What negotiations?
Order, please. We cannot conduct Question Time in this manner.
I deal with the insurance industry on a regular basis. As an example of what I have been doing to address these crises, last June, on a bank holiday in the UK, the Independent Insurance Company Limited went bankrupt. The following day my Department was notified and we received 17 calls from 17 big companies in this country which had no insurance cover and faced the threat of bankruptcy. The following day I called in the Irish Insurance Federation and persuaded it to give cover to companies it had not covered for up to seven years. We saved those companies and maintained employment in them. We have also worked carefully with the professional bodies and various business organisations over the past year to put together the necessary information to address the serious consequences of this situation. On different occasions I have requested information on different aspects of it but to date I have not been furnished with it.
Was there an interim report and, if so, did the Minister of State receive it?
We have far exceeded the time on these questions.
I did not receive an interim report. There has been only one report, in June 2000, of which the House is aware.
