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Dáil Éireann debate -
Tuesday, 26 Apr 2022

Vol. 1021 No. 1

Insurance (Miscellaneous Provisions) Bill 2022: Second Stage

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to address Dáil Éireann today on the Insurance (Miscellaneous Provisions) Bill 2022, which was published on Friday, 1 April. As Minister of State with responsibility for insurance, I move this Bill to address a number of insurance-related matters that have arisen after the publication in December 2020 of the Government's Action Plan for Insurance Reform.

The legislative measures outlined in the Bill will help to increase transparency and bring about clarity in the insurance market, benefiting policyholders and insurers as well as authorities. There has been a critical mass of reforms already achieved in the insurance space in recent years. I believe this has helped to contribute to a significant decline in motor insurance prices.

As we are all aware, the matter of insurance reform resonates strongly with people throughout the country, from individual motorists and consumers to the many SMEs that form the backbone of our economy. I am keenly aware that insurance is also vital to the operation of numerous community and voluntary organisations that make such valuable contributions at all levels of society. Through my regular meetings with people as well as the many useful debates we have had in this House, I understand the availability of affordable cover is critical to groups and individuals throughout the State.

The Government also recognises the importance of a sustainable insurance environment. As set out in the programme for Government, we are continuing to prioritise reform in the insurance sector. The importance we are attaching to this issue is clearly evidenced in the work of the Cabinet committee subgroup on insurance reform. The committee brings together a number of key Ministers and is chaired by the Tánaiste. As acknowledged by all stakeholders, there is no silver bullet to improve the insurance market environment, which is why we have adopted this whole-of-government Action Plan for Insurance Reform.

I am sure we will return to the matter of insurance reform more broadly over the course of this debate. For now, I wish to focus attention on the specifics of the Bill, which is closely related to our ongoing reform work. As mentioned, the aim of the Bill is to address a number of insurance matters that have emerged since the action plan was published. In summary, it will enhance transparency around the practice of insurers deducting State supports from insurance claim settlements; support the Central Bank's new regulations to ban price walking; provide clarity on certain provisions of the Consumer Insurance Contracts Act 2019; and protect existing Irish policyholders following the UK's departure from the EU by supporting the Central Bank's technical changes to the temporary run-off regime, TRR, for UK and Gibraltar-based insurers, thus ensuring such firms can continue running off existing contracts here.

I now propose to give an overview of the Bill and each of its five Parts. Part 1 contains standard legislative provisions that cover the Short Title of the Bill and its commencement, as well as some relevant definitions.

Part 2 provides legal clarity on the Central Bank (National Claims Information Database) Act 2018 on the ability of the Central Bank to collect data on State supports deducted from relevant claim settlements. As Members will appreciate, insurers may be contractually entitled to make such deductions in line with the principle of indemnity. However, this is part of a continuous process of improvement to the national claims information database, NCID, thus enabling deeper insights into this insurance activity. The NCID has already proven to be an innovative and unique data-gathering tool.

It has significantly enhanced the collection of statistics and the operation of the Irish insurance market, thus improving transparency and information. Building on that positive impact, collecting this additional data through the national claims information database will provide further evidence to allow the Government to identify future policy interventions. This, in turn, will ensure that any such measures are targeted and evidence-based.

Part 3 of the Bill is intended to complement the ban on price walking and protect consumers from unfair pricing. From 1 July 2022, a ban on price walking will mean that motor and home insurance consumers can no longer be penalised simply for choosing to stay with the same insurer, thereby ending the unfair practice of a loyalty penalty. This will make Ireland a leader in consumer protection as the first EU country to introduce such a ban. There are 2.2 million car insurance policies and 1.3 million home insurance policies in the Irish market. The Central Bank found that home insurance customers who remain with the same company for over nine years are paying 32% more on average than first-time customers. In the motor insurance sector, the loyalty penalty is 14% for those who remain with the same company for over nine years. The Bill will, therefore, require the Central Bank to report to me on the effectiveness of these measures. As such, prompt passage of the Bill is vital to ensure we get timely oversight of the effectiveness of the price-walking ban and can act swiftly if further measures are needed to tackle unfair pricing practices. This approach would also allow insurance providers to continue to provide discounts for new business customers. It will ensure that consumers retain the opportunity to get a better-priced premium by switching insurance providers. This approach, tailored to Irish market conditions, will facilitate competition, including by potential new entrants.

Part 4 of the Bill contains a number of technical amendments to the Consumer Insurance Contracts Act 2019 and aims to level the playing field for consumers and strengthen their hand in their dealings with insurers. First, there is an amendment to clarify that legal privilege is protected in the disclosure of information requirements. Second, the Bill clarifies that innocent co-insureds should be able to claim under a contract of insurance. Third, we are introducing a new and transparency-driven section 16B into the Act which will require insurers to notify consumers of any deductions made from insurance claim settlements, including deductions made in line with State supports received by the claimant. Insurers must also inform policyholders of the amount deducted and the reason for the deduction. Finally, section 10 provides for a consequential amendment to the Central Bank Act 1942 in respect of the powers of the Central Bank to enforce certain sections of the Consumer Insurance Contracts Act 2019. I acknowledge the work of Deputy Doherty in respect of that Act. Technical amendments have emerged since the Act was passed and I am sure Members will support them here today.

Finally, Part 5 of the Bill amends the European Union (Insurance and Reinsurance) Regulations 2015, which underpin the insurance temporary run-off regime, TRR. The TRR was set up to facilitate the orderly withdrawal of UK- and Gibraltar-authorised insurers from the Irish market following the departure of the UK from the EU. This was done to protect almost 35,000 Irish policyholders and to ensure service continuity of their existing contracts. The Bill will amend the 2015 regulations to address two technical issues identified by the Central Bank in respect of the temporary run-off regime whereby certain firms that also provide reinsurance, and those in liquidation, can use the TRR to run off their existing Irish insurance portfolio. It should be noted that other EU member states have introduced similar provisions.

The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach undertook pre-legislative scrutiny of the general scheme of the Bill and published its report in February. I thank the committee for its work and for facilitating timely consideration of the provisions within the Bill. I welcome the report, which sets out the committee's overall support for the general scheme. My officials have examined its recommendations.

On the recommendation to consider measures that would have a more immediate effect in deterring insurers from deducting State supports from claim settlements, I point out that in drafting the general scheme, the Department closely considered how best to address this issue. This included examining the possibility of legislating to recoup retrospectively the value of deducted State supports from insurers, a matter on which the Department sought legal advice. In light of legal challenges that could arise and the contractual nature of insurance contracts, the measures in the Bill are deemed an appropriate and proportionate approach to avoid unintended consequences. Importantly, they have been designed to ensure the Government does not pre-empt any legal ruling. The issue of State supports may be addressed in the ongoing business interruption test cases which remain before the courts.

The other recommendation of the committee was that the Oireachtas would receive details of the Central Bank's report on price walking on or before the second anniversary of the commencement of the Act. I concur with the spirit of this recommendation as I believe it provides an important layer of transparency and supports the democratic process. In this regard, I point out that the Bill already provides for a report to be provided six months after the first anniversary of its commencement. This will be laid before the Dáil in a timely manner and earlier than the 24 months suggested by the committee.

I welcome the constructive engagement from stakeholders throughout the consideration and drafting of the Bill to date. Officials have engaged regularly with the Central Bank of Ireland and views of industry have been invited and received. Officials have also consulted the European Central Bank, ECB. The Treaty on the Functioning of the European Union requires member states to seek the advice of the ECB on draft legislative provisions. We are awaiting a response on this consultation in due course and will continue to engage with stakeholders as we progress the Bill through the Oireachtas.

In conclusion, I reiterate the importance of the swift passage of the Bill. In particular, ensuring swift consideration of the legislation is important in order to get proper oversight of the price-walking ban, as well as the practice of insurers deducting State supports from claim settlements, as soon as possible.

The Bill is being advanced against the backdrop of the Government's ambitious policy agenda as set out in the action plan for insurance reform. I believe that through the Bill we will achieve further improvements in the insurance environment to the benefit of both policyholders and industry. We will continue our work to reform the insurance sector in order to improve transparency and increase competition.

Finally, I thank colleagues for their support for the Bill to date and I look forward to working with them to bring it through the Oireachtas as quickly as possible. I commend the Bill to the House.

I welcome the opportunity to speak on the Bill. There are many provisions within it but the primary motive for its introduction was to address an issue that came to prominence at the onset of the pandemic, namely, business interruption insurance in the context of Covid-19. Many businesses, primarily in the hospitality sector, held insurance polices that provided a degree of cover in the event of their premises having to close as a result of a Government or public order decision in the context of an infectious disease. As all present are aware, this led to several small businesses being drawn into a long and costly litigation process with an insurance company that refused to accept liability. I will not comment on the particulars of that case. Much has already been said about it.

What is at stake in the context of sections 2 and 3 is the deduction by insurers of Covid-19-related State supports from final business interruption insurance claim settlements. The Central Bank informed me in written correspondence dated 4 May that at the end of 2021 more than €163 million had been paid to 5,128 policyholders through settled claims and interim payments. This included 4,271 claims that had been settled fully and 857 claims that had received interim payments. It became apparent that insurance companies were deducting the value of State supports provided to firms during the pandemic from the value of the business interruption payouts. There are good reasons these State supports, which included wage subsidy schemes and were ultimately paid for by the taxpayer, should not have been allowed effectively to subsidise the insurance industry with a windfall. That is not the basis on which State supports were introduced or on which the taxpayer tacitly accepted to foot the bill. Many of these insurance companies have thrived during the pandemic, continuing to receive premium payments despite long periods of empty roads or shut businesses.

In March 2020, at the onset of the pandemic, I wrote to the Minister for Finance, Deputy Donohoe, warning that financial assistance and relief provided by the State should be structured and made with strict conditionality and that public money must not be diverted towards shareholders or used to cushion or protect profit margins.

Unfortunately, that is not what happened. We have seen companies that are receiving wage subsidy payments make dividend payments to their shareholders. We have seen insurance companies cynically deducting public moneys from insurance payments they are required to make to their customers. These were not the outcomes of the schemes taxpayers agreed to, but they are the outcomes that have come to pass through a lack of oversight of, and care for, public money.

Specific to the issue of insurers deducting State supports from insurance payments, it should be noted that, last year, the Minister of State, Deputy Fleming, was explicit in warning that insurance companies that did so would not be let off the hook. It is clear that he has since rowed back on his promise. The insurance industry has, in fact, been let off the hook and this legislation puts a nail in that. Through a freedom of information request I made on 18 January, we know he met with representatives of the insurance industry on 22 June last year and warned them that further Government action remained an option. We know that on 24 June, he received a submission regarding the issue of insurers deducting the value of Covid-related State supports from business interruption insurance claims settlements and warned of possible ministerial action in this regard. No such action has happened. It is clear that the only action the Minister of State has chosen to take is through sections 3, 4 and 8 of this legislation. In essence, it amounts to an information-gathering exercise and nothing more - zilch, nada - and the insurers are off the hook.

Sections 3 and 4 of the Bill will require the Central Bank to publish, as part of the national claims information database, data on any deductions from insurance claims settlements by insurance companies that relate to public moneys. Section 8 amends the Consumer Insurance Contracts Act 2019, which will require insurers to notify their customers of any such deductions. What will be done with that information and what will happen next? As has been noted, where public moneys are deducted from personal injury awards by insurers through recovery of benefits and assistance, RBA, schemes, those moneys must be returned to the State. However, this legislation makes no provision for such a scheme in this instance or, indeed, in the future. What action, if any, does the Minister plan to take once this information is disclosed? What possible ministerial action was laid out to him by his officials in a four-page document provided to him on 24 June, which has not been made public? Are these provisions the extent of his response, which is, in effect, to let the industry off the hook?

With reference to the recoupment of State money through RBA schemes, I want to make the House aware of a new method insurance companies are using to avoid and circumvent the legislation passed by this House. It involves settling claims of damages incurred but not for the loss of earnings. Such losses do not go to the individual if they were similar to the payments made by way of social welfare. This is a means of circumventing the return of moneys to the State. There is a major issue in this regard and it is one of the matters I will be examining next.

There are broader questions that need to be addressed as we reflect on business interruption insurance in the context of the Covid-19 pandemic. I recognise that in response to the crisis, the Central Bank set up a business interruption insurance examination and engaged with insurers on the issue. As I have said many times before, this stood in stark contrast to the actions of the Financial Conduct Authority, FCA, in Britain. The latter took a test case on behalf of policyholders and in the interest of the public. It took that case with a sample of 21 different types of policies, thereby providing clarity to as many businesses as possible. The situation here was very different, where the onus was on small businesses with limited financial clout to take test cases themselves, with no guarantee of success. I have engaged with the Central Bank on this issue and it has informed me that the FCA has legal mechanisms at its disposal that the Central Bank does not possess and which would require legislative changes. Has the Minister explored this issue and considered providing the Central Bank with the legal powers to take such test cases in the future?

Sections 5 and 6 of Part 3 of the Bill concern the issue of dual pricing, or price walking, in the insurance industry. This practice involves insurance companies using big data and algorithms to identify loyal and vulnerable customers who are less likely to shop around or are less sensitive to price changes and then targeting them with artificially high premiums. In simpler terms, it is a practice of price gouging that is recognised to undermine the consumer interests of loyal customers and to harm vulnerable groups. That is what it does. It also exposes the dangers of big data and machine learning with respect to customer rights. I welcome that the Central Bank is now taking action by banning this price discrimination, with effect from 1 July this year. I have campaigned on this issue for many years, first submitting a complaint to the Central Bank in October 2019. The bank responded and acted on that complaint. It is important that the regulations that come into force are kept under constant review. The Central Bank found that more than 2.5 million customers were paying a combined €187 million more than the actual cost of their policies. I hope these regulations will be successful in putting money back in people's pockets. That is what I set out to do and what I hope to see being done on 1 July.

Of course, this legislation does nothing to end dual pricing or price walking, despite previous claims to the contrary in the media and elsewhere by members of the Government. All it does is ask for a report, within 18 months of this legislation coming into force, on the regulations that will take effect in July. I would have expected such a report to be published in any case and doing so will not reduce insurance prices by a single cent. Nonetheless, we are not opposing this provisions of the Bill, although I question why we need legislation to ask the Central Bank to provide a report. To tell the God's honest truth, I think this is more about party politics than anything else.

I turn to other provisions in the legislation, some of which will amend the Consumer Insurance Contracts Act, as the Minister of State mentioned. I introduced that legislation in January 2017 before it was signed into law in December 2019. Sections 7 and 8 relate to and amend duties of disclosure requirements under the Act. This is a technical amendment to clarify the scope and duty of disclosure requirements after a claim has been made. Section 9 of the legislation amends section 18(4) of the 2019 Act by clarifying that insurers may exclude property loss or damage arising from certain forms of criminality from basic risks insured under a contract. Section 10 provides that the Central Bank will enforce a number of the provisions within the Act. Section 11 makes important provisions that provide for technical changes in regard to the TRR for British- and Gibraltar-authorised insurers in the context of Brexit.

Sinn Féin will not oppose this Bill, which includes several technical but necessary provisions in regard to the Consumer Insurance Contracts Act and the TRR. It should be noted that this legislation was touted as removing dual pricing from the insurance market and confronting the practice of insurers deducting State supports from business interruption insurance payments. It does not do so and we need to be honest and clear about that. Instead, it provides for information-gathering exercises. Price gouging through dual pricing will be banned by the Central Bank independently of the Government on 1 July. Unfortunately, there is no provision in the Bill to stop insurance companies from doing what they have done with Covid payments. While there is no harm in these provisions, they should be recognised for what they are.

There are big problems still to be resolved in the insurance market. Premiums remain too expensive and many businesses and community organisations remain unable to access affordable insurance cover. Despite personal injuries guidelines resulting in personal injuries awards falling by 42% through the Personal Injuries Assessment Board, PIAB, those reduced claims costs have not been passed on to consumers. My Judicial Council (Amendment) Bill 2021, which will be considered by the finance committee in the coming weeks, will require insurers to disclose whether, and how much of, such savings have been passed on to their customers. This would provide transparency and put pressure on companies to reduce premiums in line with reduced personal injury awards. Given that the Minister is so confident of the virtues of the reports he is providing for in this legislation, I cannot understand why he and the Government have opposed my legislation for the past year. In addition, promises to reform and rebalance the duty of care, which is essential, have not been acted upon by the Government despite years of delay. This legislation provides for miscellaneous measures in the insurance sector. We still are waiting for substantive measures to reform the duty of care. Small businesses and community organisations cannot afford to wait any longer.

As I said, Sinn Féin will not oppose this legislation. We recognise the limits of its ambitions, which are disappointing. The Government must act with speed to tackle the big challenges that remain in the insurance market. It must stop blocking the legislation I have introduced, as it has done for more than nine months. Let us get behind that Bill, which is now in committee, and push down insurance premiums for consumers across the board.

I welcome the opportunity to make a contribution to the Bill. The cost of insurance, as we all know, is one of the most frequently recurring matters raised with us as politicians and with policymakers by both individuals and businesses. To that end, effective insurance reform and the speed of that reform should be at the forefront of the work carried out by the Government. While we do not oppose the legislation, as my colleague has advised, or its provisions, it must be pointed out that what is before us, particularly the measures relating to business interruption claims and dual pricing, is little more than window dressing. The measures, as my colleague, an Teachta Doherty, has indicated, are nothing more than an information-gathering exercise rather than effective measures to tackle what we know is happening, which we can refer to colloquially as price gouging or whatever other way we wish to put it. There is nothing effective in the legislation that will actually make a difference.

I welcome the Central Bank regulations banning price walking from 1 July, but that is being done by the Central Bank independently. This is something we in Sinn Féin have campaigned to ban for quite some time.

It is important to see a multidepartmental approach to tackling issues relating to the insurance sector.

Recently, at a meeting of the Joint Committee on Enterprise, Trade and Employment, we discussed the general scheme of the personal injuries resolution board Bill 2022. The policy objective of that Bill is to amend the legislation to facilitate an increase in the number of personal injury claims that may be resolved through the board. Tackling issues within the insurance sector across the board and in tandem is what individuals and businesses want and what is needed.

It would be remiss of me not to mention commitments previously made by the Minister of State not to let insurers off the hook for deducting State supports from business interruption payouts. This legislation does not respond to that development, unfortunately. The Minister of State spoke about this and his intention to tackle it. It is very disappointing that this has not manifested itself. Many businesses out there suffered significantly during the pandemic, and for them to see this legislation, it really will not cut it. Insurance companies did well throughout the pandemic. Despite the €20 One4All voucher given to people here and there, they did not give much back to drivers who could not travel throughout lockdown. The Minister needs to look at this section again and include measures to sanction insurers that continue or start this practice on the commencement of the legislation. The finance committee recommended this in its pre-legislative scrutiny report on the Bill, and it is unfortunate that it has not been included in the final draft of the legislation.

A number of people have raised with me an issue that has become even more pertinent as we move into the summer months. People with full driver licences who do not have insurance policies because they do not own cars face difficulties with short-term leasing of vehicles which require a no-claims bonus or proof of previous driving record as part of the hiring process. These people who rent cars or car-share do not own cars and do not have the capacity to build up no-claims bonuses because they do not have ongoing insurance policies. I would very much welcome it if the Minister of State would investigate that matter.

The public and businesses are crying out for effective, efficient and expedient insurance reform from the Government. I hope the Minister of State heeds these calls on Committee and Report Stages and brings forward amendments to strengthen the Insurance (Miscellaneous Provisions) Bill in that regard, or at the very least supports the amendments that will come from Sinn Féin.

I welcome the Central Bank regulations seeking to ban dual pricing. I commend my colleague, Sinn Féin's finance spokesperson, Deputy Doherty, who has painstakingly and relentlessly pursued this issue. That is known the length and breadth of this country. It is disappointing that the legislation will not ban the practice but will simply require the CBI to produce a report on the impact of the regulations. This Bill will see the Central Bank collect information on the insurance companies interpreting business disruption claims in a manner that has led to the deduction of State supports from businesses during Covid. Insurance companies have engineered a transfer of State supports provided to businesses across the State during Covid to boost their own profits. Insurance companies have stripped thousands of euro from policyholders' awards by deducting the value of State supports such as wage supports and rates waivers.

The Minister of State said that the Government was responding to the issue and that insurance companies would not be let off the hook, and now, months later, this is what the Minister of State has brought forward. In truth, this legislation in many ways looks like a political response, that is, an attempt to be seen to be doing something. The Minister of State's own Department stated that business supports should not be seen to be subsidising the insurance industry, nor should the industry be seen to be indirectly benefiting from taxpayers' money. The legislation is a weak and inadequate response to what is essentially the hijacking of public money. If this is in line with the established insurance principle of indemnity, as the insurance industry has argued, we need to address that head-on. This legislation does not force insurance companies to return wrongfully accrued savings to the State, nor does it ban the practice in the future. All it does is require the Central Bank to report on this practice. Ordinary workers cannot be asked to subsidise insurance companies. We need far more than information collection.

The public rightly expected the Government to go after the insurance companies for this money. I think what gets to people is that we have seen this Government pursue people beyond the grave for the smallest amounts of money where people have made minor mistakes in claiming payments, maybe an unemployment payment or a pension payment. People in their 80s and 90s are penalised and criminalised for not ticking a box or failing to disclose even the most modest savings. That is why people see this as the insurance companies and the insurance industry getting off while they are pursued, as I said, beyond the grave, and it is not right. It seems, as always, like there is one rule for ordinary people and another rule for the insurance industry, banking and big business in this country.

Action needs to be taken to ensure the Government retains the ability to support businesses in emergency situations without business being at risk or simply being transferred over to large insurance corporations. This is evident in the fact that the Government continues to drag its feet in addressing the duty of care. We know that small businesses, sporting organisations and community groups continue to close down or to struggle due to a lack of affordable insurance. Despite promises in election manifestos and the programme for Government, we still have not seen any legislation in this regard. The Tánaiste, who chairs the Government subgroup on insurance reform, promised that legislation to reform the duty of care would be published by September 2021. This is a threat to jobs and our economy. This Government's approach to insurance reform has always been and continues to be as little as possible and as late as possible, and people really will not stand for that any more. This Bill, while welcome, needs to do an awful lot more to tackle the insurance industry.

I welcome the opportunity to speak on the Bill. The Labour Party will not oppose the legislation. The Minister of State will know that is not the same as supporting the legislation. The legislation should not make any extensive claims as to how effective it will be in making the playing pitch of insurance fairer for consumers. There is a degree of tokenism in the legislation. Of course, the bulk of the insurance reforms that are about to be introduced come from the Central Bank, not necessarily the Minister of State or the Department of Finance, yet it would be churlish of me not to recognise that the Government has the Action Plan for Insurance Reform in place. The jury is very much out on the effectiveness of the measures that the Government has announced and that are central to that initiative. We know that reform of the insurance sector has been snail-paced at best. Over the course of the past few years, insurance companies have continued to raise their premiums year after year and the Government has, frankly, stood idly by and failed to protect customers, businesses and community services in the way it ought to have done.

A prime example of this is the so-called loyalty penalty, or differential pricing. In fairness, I pay tribute to the work undertaken by Deputy Doherty over the past few years in drawing attention to this set of circumstances and the imposition, to put it diplomatically, it has involved for customers and consumers across the country. Efforts are under way to address that in the context of the Central Bank reforms that will be instituted from 1 July, but it has taken nearly three years for the Central Bank and, to a lesser extent, the Government to take action finally on price discrimination across the consumer insurance market.

That is what this is. It is clear price discrimination. Of course, we know that the situation relating to the loyalty penalty involves a practice whereby suppliers charge higher prices to existing customers who they believe are unlikely to switch to another provider in order to get a better deal. In practice, it means that after years of staying with the same insurer, one customer’s policy might be 30% more expensive than that of a new customer, even if the risk profile is exactly the same. Repeated work by the Central Bank of Ireland has identified that as an issue. It is important that that is on the public record. Credit is due to the Central Bank for undertaking those important exercises.

The so-called loyalty penalty does not impact everyone equally. It particularly effects those who are disadvantaged and older customers who may not have the time, the resources or the knowledge to navigate complex financial products. I am thinking of elderly parents or elderly grandparents, who may be in their mid-70s, 80s, or even 90s. They may live at home alone. They may not have the Internet, or they may not be all that comfortable using the Internet. Yet, the system expects them to fend for themselves and to go into battle against what I describe as “rogue” insurance companies to scour the net and shop around for the best deal available. Not only are these non-switchers - or what used to be termed loyal customers, which should be the term applied to them - being ripped off, but to add insult to injury, they are also indirectly subsidising lower premiums for those regular switchers who are often more financially savvy, who are capable themselves and are better equipped to begin with to get a better deal given the skills and experience that they might have. This whole issue of price walking and the loyalty penalty is a scam, plain and simple. That is what it is. The Central Bank reforms, which are due to come into effect in July, will help. There is no doubt about that. This legislation complements those reforms, but it should not make excessive claims about what this legislation might achieve in itself. There is no doubt that more transparency is required. The Central Bank reforms, and indeed this legislation, will assist in that regard, especially around the issue of consumer consent for renewals and so on. That is an important issue that will be addressed and that ought to be addressed.

The practice of loyalty penalties is not confined to the insurance sector. It is a practice that is common across the economy. The Government’s failure to regulate adequately cartel-like behaviour extends beyond the insurance sector, which is the sector that is at issue here. The loyalty penalty is somewhat endemic in this country. It is a practice that is common across economic sectors. For example, existing customers of gas and electricity suppliers are also charged higher rates than new customers, who often get offered special deals to switch. With prices soaring, every customer should be obliged to be switched to the best available price. Ofgem, the regulator from the UK, has already moved existing customers to the best tariffs available. Their rules require suppliers to provide payment plans on emergency credit for prepaid metres. Similar measures ought to be considered here. Yet there has been no move, from what I can establish, from the regulator or the Government to do this. Particularly in the context of the ever-rising cost of living, this should be an area that is properly examined by the Government and by the relevant regulator. They can also take some guidance from my party, the Labour Party. We published legislation last year. We introduced last year the Consumer Protection (Loyalty Penalty and Customer Complaints) Bill, which would ensure, if passed, that utility companies must offer all their customers the best possible rate and not to restrict lower rates to new customers only. It would also significantly strengthen existing consumer protection legislation. As we know, too many citizens have been at the sharp end of shoddy customer service in insurance, energy and utilities. We recall here many debates and references for example to the behaviour of Eir over the last few years.

This kind of behaviour also extends to the banking sector, as the Minister of State will know. With the rushed exit of Ulster Bank and KBC potentially putting over 100,000 account holders under pressure to switch, this is going to become a bigger issue over the next period of time. Put simply, the system will not cope with the number of closures at one time. Yet again, the cost here will be borne by ordinary people, due to the failure of regulators to regulate appropriately and to take the companies that they ought to regulate into hand in a proper fashion. There is a common pattern here, which is a hands-off approach of it will be alright on the night and waiting until the 11th hour until acting in the interests of consumers. I am mentioning this issue in relation to utility companies and other service providers because there is a pattern right across the economy. This question of a loyalty penalty does not only apply to the insurance sector, but it applies to others as well. It is important to point that out. There is deficiency here in how we regulate.

I want to return to the general point of reform in the insurance sector. A narrative, as the Minister of State will know only too well, was long sown by the insurance sector that the so called compo-culture was to blame for sky-high premiums. Undoubtedly, sky-high pay-outs were part of the problem that needed to be tackled. Excessive high payments were extremely damaging to businesses, to their prospects and to jobs. Yet, this was not the full story. It was far from it. The Central Bank’s successive reports on the experience of Covid-19 proved how premiums still rose even as claims declined. We were promised that the introduction of judicial guidelines for personal injury awards last year would put a stop to runaway premiums. Yet, a recent survey from the Alliance for Insurance Reform showed that premiums for liability insurance for businesses, sport organisations and charities have increased by 16% in that period.

The foot dragging with regard to passing on premium reductions and rebates is simply unacceptable but, given the track record in this country, should we be surprised? We all know that excessive rewards were a problem. There is no doubt about that. There is no getting away from that, but they certainly were not the kind of problems that were presented to us by various insurance sector interests. The scale of the problem was simply not that significant. We know that now from our experience and from research by many organisations, which is important to note.

Nearly two thirds of organisations also had additional accesses or exclusions imposed on their policies since 2019. That is just not good enough. It is deeply unfair. The insurance sector should have no more excuses. It should have no one else to blame. It has to be held to account. We all know, and Deputy Conway-Walsh referenced this, of experiences in our constituencies and across the country of local businesses and community services folding as a result of their inability to get insured. We know the challenges that we have experienced over the last couple of years in the context of Brexit where often specialist insurance providers are not any longer available to insure certain types of activity. That is something we need to be mindful and conscious of. That is having a particular impact on the tourism and leisure sector in my experience. I have dealt with in many cases in my constituency where companies of this nature have only been able at last minute to access reasonable insurance cover to allow them to continue with their businesses. Therefore, competition and access to products is a big challenge undoubtedly.

It is clear that we have a fundamental market failure in that regard in the insurance sector. That is acting as a block and it is holding back Irish society. When there is that kind of market failure, it is imperative that the State steps in, as in housing and healthcare, to ensure that good local businesses, community services and jobs in the real economy across the country can be maintained. For instance, in recent years, my party has proposed the introduction of what we describe as innovative pooled insurance schemes, which are the norm in other EU countries. They would allow community services, such as community-run childcare centres, sports clubs and others to group together under one policy to secure significantly cheaper premiums. We have also called, for example, on local authorities and education and training boards, ETBs, to use their mutual ownership and collective ownership of the Irish Public Bodies Insurance to extend cover to community events and festivals in certain circumstances. That would be necessary if we are to help our vibrant arts and entertainment sector to bounce back after their desperate experience of Covid-19. They do require our support.

We need some more lateral and innovative thinking about how we address some of these societal problems in a progressive way and how the State responds to those problems because the reality is that the market is simply not going to do it. It is not profitable enough and they would argue that it is too risky so the State has a function here or an entity like Irish Public Bodies, IPB, Insurance could step in.

We could also put an immediate levy on the profits of insurance companies that have not played ball in the context of regulation and Government policy. We could ring-fence this revenue to give customers a long overdue break on their premiums. It is high time that we had much more progressive thinking on how we do insurance in this country. There is certainly merit in many of the propositions contained in the 66-point action plan that was published by the Government but it is fair to say that the jury is out. There is little confidence, frankly, in the regulator and in the Government that they will take the insurance industry in hand and make sure it works in the interests of consumers. We know from the loyalty penalty and the dual-pricing scandal that there is no confidence whatsoever in the insurance industry. It is concerned with and motivated by one thing alone and that is profit.

While the Labour Party will not oppose this Bill, we believe much more reform is needed in the coming years. We are happy to work with the Minister of State on progressive reforms he might want to introduce in the best interests of society, the economy and jobs and enterprises across this country. We have proposed some ready-made solutions that I suggest the Minister of State takes another look at. He really needs to fast-track and expedite many of the reforms that have been long fingered and that, according to his action plan, have been identified for actioning next year or the year after. This is an urgent matter. This Bill overpromises in many ways or, at least in the way it is presented, seeks to make excessive claims in terms of its effectiveness and what it aims to do. The reality is that the bulk of the reforms that are about to be introduced that are consumer focused are coming from the Central Bank and not from the Government. We are constantly told, of course, that the Central Bank is the independent regulator and that it makes its own decisions independently of the Government and that is the case. The Central Bank reforms are welcome but the Government needs to do much more in relation to reform of the insurance sector more generally.

I thank all of the Deputies who contributed to the debate, each of whom said they were supporting the Bill and not opposing it which suggests it is non-contentious. I appreciate the comments of all the Deputies opposite and no doubt we will have more detailed discussions on Committee Stage in due course. Some Members said the Bill could do more and that is one of the points we will discuss.

Much of the commentary related to the fact that the Bill itself will not ban price walking but I want to be clear that that is the job of the regulator, the Central Bank. The Department of Finance is not the regulator. The Department of Finance is not the Central Bank. It is the job of the Central Bank to do this work, not the job of the Department of Finance. It is unfair to suggest that because the Department of Finance is not banning price walking, there is very little in the legislation. Deputies said that all we have done is put a timetable in place with regard to reporting from the Central Bank, and that is quite right. That is the job of the Department of Finance. As part of the overall Government approach, the Department's job is to make sure that various State bodies and agencies under its aegis do their job. It is not up to the Department of Finance to do everything here. The subcommittee includes the Department of Justice, the Department of Children, Equality, Disability, Integration and Youth and the Department of Public Expenditure and Reform. I can tell the House that the Department of Justice's duty of care legislation is at a very advanced stage. I expect it will be before the Cabinet in the very near future. We will see progress on that as this legislation progresses. It is a key element of the insurance reform package.

I want to draw a comparison with the personal injury guidelines which were drawn up by the Judiciary. The same comment could have been made by people as to why the Department of Finance did not draw up those guidelines or commission consultants to do so. We did not do so because it is the Judiciary that makes judgments on these matters when they go into court. The Judiciary drew up the guidelines and the sole function of the Department of Finance was to put a timetable into legislation by which the Judiciary would report. That is all we did in the Department of Finance on those two key measures. The Central Bank had one job to do and the Judicial Council had its job to do. All the Department had to do was give them a timetable to make sure the job was done. That is our function in this area, rather than doing everything ourselves. It is good way of working, whereby the relevant State agencies do the work on those areas.

Deputy O'Reilly mentioned a particular issue concerning new drivers and I will make inquiries on that. Everybody accepts that insurance companies should not benefit from State supports. As I said in my opening statement, this matter is still before the courts in certain cases so I am not going to comment on that particular topic. The issue of business interruption claims is still before the courts. While people might like me to comment on it, I am not in a position to do so; nor would it be appropriate to trespass on a matter that is before the courts. When we see the outcome of the court proceedings, we can discuss it at that stage.

Finally, Deputy Nash spoke about non-switchers being penalised and the issue of the lack of availability of insurance in some sectors of the economy. Most people have insurance policies but there are some pinch points in the country where there are difficulties. We are working on each of those, area by area, with the insurance industry and consumer representative bodies. I thank the Deputies for their comments. I commend the Bill to the House and look forward to it progressing to Committee Stage.

Question put and agreed to.
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