I thank the Chairman and members of the committee for inviting us here today. I welcome quite a number of our members who are present in the Gallery, particularly representatives of Irish SME Association, ISME, Motorsport Ireland, Playcentres Ireland, Ireland Active, the Society of the Irish Motor Industry, Retail Grocery Dairy & Allied Trades Association, RGDATA, and the Coach Tourism and Transport Council of Ireland. Their attendance here is a measure of the intensity with which they feel these issues and the way they affect their operations.
Members have already received a copy of our submission. Therefore, I will not go through it all but will summarise its key points. The Alliance for Insurance Reform brings together representative bodies from the not-for-profit charity, sports and small and medium size business sectors across Ireland, representing more than 35,000 organisations, more than 633,000 employees and more than 41,000 volunteers to demand rapid action to end crippling insurance costs.
The creation of the alliance is a response to countless stories from small organisations where services and jobs are being affected by excessive insurance premiums, both liability and motor. Members will have heard many such stories, but there is a considerable fear among many organisations which are afraid to go public on their experiences because they are at the mercy of one underwriter or afraid to draw additional claims on themselves. What members are hearing is only the tip of the iceberg. However, we will not focus on the stories but analysis and solutions.
Our approach to insurance in Ireland is at a turning point. The system is dysfunctional to the extent that what is supposed to be a service industry that facilitates the operation of society has become an extractive industry, taking over €2 billion in motor and liability insurance premiums annually. It is protected and often made compulsory by the State and so expensive that it threatens the viability of many organisations that form the backbone of the nation.
A survey of 950 organisations within the alliance, carried out by Amárach Research in January, found that since 2013, nearly half of respondents had seen their premiums rise by over 30%, while over one fifth had seen rises of over 70%. This was in the broader context of a consumer price index increase of 0.9% in the same period. Two thirds of respondents also reported having increased excesses or new exclusions added to their policies, an equally damaging trend that severely restricts the ability of organisations to develop and creates additional exposure to cost.
Critically, 45% of respondents cited insurance as a threat to the future of their organisation, yet our members believe the insurance industry and the legal profession have the strongest voices in the corridors of power. Policyholders believe we have no voice. This is amplified by last week's Collins Institute report for Fine Gael which concluded that the Central Bank, the State institution charged with protecting insurance policyholders, was too focused on the needs of the financial services industry. There is much activity in the area, but our concern is that a lot will be discussed and that little will be done as it is not in the interests of the insurance companies or lawyers operating in this market for anything to change. If we were them, we would huff and puff in a show of empathy with our customers, but we would fight tooth and nail to stop real change. We would cite issues arising from the Constitution, data protection or competition, suggest self-regulation, agree to protocols, ease off on aggressive profit-taking for a while until the fuss died down and string out the debate to the next general election; anything to stop real reform.
In the last six weeks we have spoken to the Minister of State, Deputy Michael D’Arcy, and his officials, the Personal Injuries Assessment Board, the Office of the Data Protection Commissioner, the Personal Injuries Commission, the Legal Services Regulatory Authority and the Competition and Consumer Protection Commission and it is clear that many elements of the work of the cost of insurance working group are grinding to a halt, with the dead hand of vested interests evident. The buck stops firmly with policymakers. The actions we are suggesting are in the areas of prevention, consistency and transparency. We believe them to be just, proportionate, feasible, achievable within a limited timeframe and, ultimately, effective. The following are practical ways to solve the insurance crisis which we hope the committee will consider and support.
On prevention, to quote a member of the audience at a public meeting we held in Cork in February, "If I had a need for big money and I had a choice between robbing a bank and faking an injury, I'd pick the fake injury every day. More money and no consequences if I'm found out." We absolutely acknowledge the right of genuine claimants to fair compensation, but people have accidents all over the world; it is the consequences for Irish policyholders that appear unique. We are suggesting four actions in this area.
First, we call for sections 25 and 26 of the Civil Liability and Courts Act 2004 to be linked. We want an amendment to the Act such that if a case is dismissed under section 26 because the plaintiff knowingly gives or adduces evidence that is false or misleading, it would automatically be
referred to An Garda Síochána for prosecution under section 25, which would penalise such an offence with a substantial fine or imprisonment or both unless a defendant deliberately falsely accused a plaintiff of giving such evidence.
Second, we seek the establishment of a Garda insurance fraud unit.
The cost of insurance working group's motor insurance reports promised a dedicated Garda unit to focus exclusively on the investigation of insurance fraud. We want the unit to be established as a matter of urgency. The Minister has told us that there is not enough support in the House for it. If that is the case, we urge opposing parties to clarify their concerns and remove the blockages.
Third, we seek the regulation of claims management companies, also known as claims harvesters. Our members tell us that claim harvesting websites are acting as the ambulance chasers of old, pursuing potential claimants with promises of money to be made, regardless of how dubious the claim and with no costs or consequences. They are adding fuel to the fire of fraudulent, exaggerated and misleading claims and must be regulated by the State to protect policyholders and society as a whole. In particular, referral fees they might charge to refer live cases to solicitors must be banned outright. Regulation, registration and a ban on referral fees would only bring Ireland into line with the regime in place in the United Kingdom since 2007. It is not sufficient for the Government to pass this onto the Legal Services Regulatory Authority which is still in the process of establishing itself. Regulation must be brought forward now.
Fourth, we want sections 7 and 8 of the Civil Liability and Courts Act 2004 to be amended. First, in section 7, we call for the period in respect of the Statute of Limitations on personal injury claims to be reduced from two years to one year. As the average period for a claim to be registered with the Personal Injuries Assessment Board following an accident is nine and a half months, this would not disadvantage claimants. Second, the language used in section 8 which purports to oblige a plaintiff to inform a defendant of an incident within two months is so conditional as to be useless and ignored in our experience. We ask that it be tightened in order that judges would have to take into account any delay in notification before allowing a case to proceed. The Department of Finance has stated it is pursuing this issue with the Department of Justice and Equality, but we want it done urgently.
On consistency, the general damages awarded in Ireland for minor injuries bear no relation to those awarded in other countries, which makes Ireland a very attractive place to have a minor accident. Furthermore, there is no consistency within the jurisdiction in awards for identical injuries, which makes it very attractive in personal injury cases to reject a PIAB offer and head for the courts, safe in the knowledge that with the right judge, the rewards may be substantially better. We seek two reforms in this area, the first of which is that the approach to calculating the book of quantum be changed. The Court of Appeal has established that the ceiling on general damages for catastrophic injuries is €450,000. It has also established that the concepts of common sense and proportionality are central to the principles of proper compensation. We call for a revised book of quantum calculated on that percentage disability basis as a matter of urgency through the Personal Injuries Commission which is only looking at solutions in the case of motor whiplash claims. The Government should extend its remit to all injuries immediately. Next we encourage consistency among the Judiciary.
The 2004 Civil Liability and Courts Act should be amended to require judges who award damages in excess of the book of quantum for general damages to set out a detailed reasoning for so doing.
On transparency, the insurance industry is of systemic importance to the proper functioning of Irish society and enshrined as such in much legislation and regulations, yet there is virtually no transparency in the market, either at industry or individual policyholder level. We demand that control of analysis and reporting of the new national claims information database be given to the Personal Injuries Assessment Board, rather than the Central Bank, as envisaged by the cost of insurance working group. The PIAB has the expertise and funding necessary and no additional legislation would be required as sections 54 and 55 of the PIAB Act of 2003 already allow for this function. We ask that the blue book be reinstated immediately and enhanced in order to restore the only transparency there was in the market before the Central Bank discontinued it in 2016.
We want to scrap and revisit the agreed large increases protocol. The very first recommendation in the report of the cost of insurance working group on motor insurance was that insurers set out for customers the reasons for large increases in premiums.
The protocol produced from this recommendation was one of the first actions to be ticked as completed in the cost of insurance working group, CIWG, updates. However, the protocol agreed between the Department of Finance and the insurance industry which I have linked with the submission is a good example of how the cost of insurance working group is being strangled. We would be better off without it as it only creates the impression that something has been achieved when it has not. We want a meaningful protocol agreed to for both motor and liability insurance policyholders that individualises explanations, with clear calculations showing the basis of premium charges.
We seek the reinstatement of the 2003 insurance industry-IBEC protocol for dealing with claims. Almost one year was spent by the Department of Finance and Insurance Ireland talking in circles about a protocol for notifying policyholders about the progress of claims against them before the Department discovered a pre-existing protocol agreed to by Insurance Ireland's predecessor, the Irish Insurance Federation, IIF, and IBEC in 2003. The insurance industry is resisting it being implemented anew. We demand that it be implemented immediately, backed by legislation, for both the motor insurance and liability insurance sectors. A copy of the protocol is attached in Appendix 3.
As an alliance, we have put a great deal of work into addressing this crucial issue for our members and their employees and volunteers. We hope the committee can help us in ensuring action. We are happy to take questions.
