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Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Thursday, 1 Jun 2017

Motor Insurance Costs: Minister of State at the Department of Finance

I welcome the Minister of State and his officials. The purpose of the meeting is to review implementation of the proposals of the cost of insurance working group. I ask the Minister of State to make his opening statement.

I thank the Chairman and the joint committee for the invitation to discuss again the implementation of the recommendations of the cost of insurance working group on motor insurance. I will also touch on the work being done in phase 2 to tackle the rising cost of employers' and public liability insurance. I also propose to say a few words about the Setanta judgment issued last week.

I am very conscious of the need to implement the recommendations made in the report of the cost of insurance working group on motor insurance in line with the deadlines set in the action plan. I recognise the importance of this issue for society as a whole as there is virtually nobody who has been left unaffected by the surge in insurance premiums in the past two years. I also accept that while CSO statistics indicate a greater degree of stability on an overall basis, the figures only represent a broad average and there are many who are still seeing increases in the cost of their policies. I take the view that while the greater stability in pricing is good, premiums are still at a very high level and insurance cover continues to be prohibitively expensive for many. That said, both the report on the cost of motor insurance and the committee's report recognise that, unfortunately, there is no single policy or legislative silver bullet to immediately stem or reverse rises in premium costs. However, I firmly believe implementation of the report on the cost of motor insurance will make a difference in the pricing of insurance policies in the next 18 months. I also believe the Setanta judgment, in finding that the Motors Insurers Bureau of Ireland, MIBI, is not liable to meet the cost of third party claims, removes a major cause of uncertainty for the industry which I expect to be reflected in pricing in the short to medium term.

Since I was last before the committee in February, a lot of work has taken place to implement the report of the working group on the cost of motor insurance. It includes the production of its first quarterly report on the progress of implementation of the action plan. The report provides a comprehensive update on progress made to date and reasons for the delays in the few instances where they have occurred. Since publication of the report the advisory committee on small public service vehicles has met Insurance Ireland and I have been informed that a protocol for the insurance industry to promote compliance with road safety legislation should be finalised in the next few weeks. Establishing a reliable set of data and commencing a review of the impact of legal and other fees on personal injury awards is proving to be a more complex task. However, work is ongoing and progress is being made.

I would like to give the committee a more detailed overview of some of the key achievements in the first quarter. One of the key findings made in the report concerns the need to enhance transparency and facilitate the use of data sharing and collection to the level seen in other jurisdictions. The Department of Finance established a subgroup at the beginning of the year to implement the recommendations surrounding data issues. The group has met ten times to date and in the first quarter issued an initial data template to the insurance industry for completion. The returns are expected in the coming days. Once received, they will be analysed by the Department and published before the end of June. The Department will continue to build on and publish a similar update each quarter until the establishment of the national claims information database. The group is also working on the development of legislation to provide for the database, while the Central Bank has led a number of workshop sessions to develop the precise specifications for it. The Department has begun drafting the heads of a Bill to provide for the establishment of the database. Detailed and considered work is already well under way.

Another core recommendation concerns the establishment of a personal injuries commission to investigate and make recommendations based on processes in other jurisdictions which could enhance the claims process in Ireland. The personal injuries commission was established in January, with the former President of the High Court, Mr. Justice Nicholas Kearns, as chairman. The first meeting of the commission was held on 10 February. Monthly meetings have since taken place and will continue to take place for the duration of the commission which is on target to deliver by the end of the year its first report in which it will examine the assessment of soft tissue injury having regard to international experience, its diagnosis and treatment, standardised medical reporting and the use of objective tests.

A number of other actions have also been completed. For example, I recently attended Insurance Ireland’s newly established consumer and business forum which will be of benefit in providing for stronger engagement between stakeholders. Additionally, reviews have commenced of the impact of the changes to court jurisdictional limits and the setting of the discount rate for personal injury lump sum awards.

As the committee can see, some very important work is under way to address the core issues examined by the working group on the cost of insurance. I will be happy to take questions on any of these issues.

A large number of actions are due to be completed by the end of this quarter. The second quarterly update will be published by the Department in July and provide details of ongoing implementation. I hope to be in a position to update the committee on the progress on these actions at the appropriate time.

Members may be aware that the 2017 report of the National Competitiveness Council on the cost of doing business in Ireland which has just been published acknowledges the role of the working group on the cost of insurance in maintaining and enhancing cost competitiveness for Irish businesses. In addition to the work on implementation of the report on the cost of motor insurance, the working group has continued to meet to examine ways to tackle the rising cost of insurance for businesses, particularly public and employers' liability insurance. It has met a range of stakeholders in that regard.

The following broad themes have emerged from our work to date. The cost of public liability insurance seems to be of greater concern to most of the groups to which we talked. There is an increasing trend towards taking on a greater excess to keep premiums down. Related to this is an increase in the number of businesses self-insuring. There is a lack of competition in the market for particular businesses or parts of their business and frustration with inconsistency in awards. There are huge legal and business costs associated with challenging claims through the courts process. Companies not being given sufficient credit for improving health and safety standards and there is suspicion of claims harvesting among businesses. The Statute of Limitations is posing concerns in being able to make an adequate defence of a case. Insurers are settling without proper notification or consultation with policy holders. Some are looking for legislative limits in the book of quantum. Some businesses believe they are victims of fraudulent and exaggerated claims. There is also the feeling the role of the Personal Injuries Assessment Board should be developed further. The working group is considering these matters and will consider what recommendations it can make to address them. It must be recognised, however, that there are some very complex legal and constitutional issues which need to be addressed if we are to make progress on these points to the satisfaction of the business sector.

My current intention is to publish an addendum to the report on the cost motor insurance to cover the cost of employers' and public liability insurance. However, I am reviewing this, as there might be additional updates we might also want to introduce on the report on the cost of motor insurance where there are strong linkages with issues related to the cost of employers' liability public liability insurance. A final report may not be ready until September. However, I hope to be able to provide some clarity in July on potential new measures. When I am clearer on our planned direction of travel, I will be happy to appear before the committee to explain our thinking.

I would like to say a few words about the recent Setanta judgment. While not completely unexpected, there was still some surprise that the Supreme Court overturned the decision previously upheld by the High Court and the Court of Appeal. The impact of the Supreme Court's decision is that third party claimants will be compensated by the Insurance Compensation Fund for only 65% of the claim or €825,000, whichever is the lower. Claimants will also be entitled to a further sum arising from the Setanta liquidation but the current indications are that it is unlikely to be sufficient to cover all of the 35% gap.

As to when payments can be expected to commence, it should be noted that officials of the Department of Finance have had discussions with the Office of the Accountant of the Courts of Justice and the State Claims Agency and indicated that they have plans in place to deal with this issue. Our understanding is both agencies are working with the liquidator to plan the process of validation and the presentation of claims. Once the liquidator has the claims ready for examination, the State Claims Agency will step in to commence the validation process.

The State Claims Agency has assured the Department that it will act swiftly so that there will be no unnecessary delay caused by this validation process. I hope to have greater clarity on the timescale shortly.

While the most recent CSO figures suggest that motor premium levels have stabilised to some degree, the Government is not taking this position for granted and also recognises that motor insurance premiums are still too high. The implementation of all the report's recommendations between now and the end of 2018 is critical to introducing fairer premiums for consumers and businesses.

There is also a recognition of the need to find appropriate solutions to address the employer liability and public liability issues because of the difficulties they are causing for the business community, particularly SMEs. I am determined to ensure that this important work progresses at a pace and that the implementation deadlines relating to it are met. I am happy to take any questions or to provide clarifications on the work of the cost of insurance working group and on Setanta in order to assist the committee.

Cuirim fáilte roimhe an Aire Stáit roimh an coiste. The Minister of State says he hopes to have more clarity shortly about the timescale for Setanta but he has given no clarity for the hundreds of people who have been waiting years for their payments. Can he give any indication of when payments will be made to these individuals?

We met the State Claims Agency to discuss this. The Deputy knows that the Towers Watson report published in 2014 estimated the claims revision required as being between €87.7 million and €95.2 million. There will be a further actuarial report now that the judgment has been delivered and that figure might be revised. There are 1,639 outstanding third-party claims. Approximately 250 payments will be in the first tranche to be made, including in the region of 155 Personal Injuries Assessment Board, PIAB, orders to pay, 61 court awards and approximately 34 settled cases. The State Claims Agency will verify these very shortly. The accountant in the High Court office is working on a date for bringing them to the High Court. That will be done in six monthly tranches. That is how this will be rolled out.

A total of 250 payments will issue shortly. What is the timescale for the other 1,400?

Not all claims have been settled. We can deal with the claims that have been settled where we understand what the award should be. They will be verified by the State Claims Agency and then will be brought to the courts for payment to be issued. That happens in six month tranches. The State Claims Agency is preparing to move with the first tranche of approximately 250. Six months from then is the timeline under current legislation to bring in the next tranche.

That would probably be next year for the second tranche.

It will probably be the end of this year but it is too soon to know how many cases will be in that tranche. Some work has to be done to understand exactly what we can progress with now. The idea is to move with the cases which we understand have been settled so that the claims can be dealt with quickly. Matters will become difficult in circumstances where there claims that are still in dispute and that need to be resolved, either through the courts or by means of settlement with the liquidator. The latter is now a strong possibility given that we have the judgment.

Will all the claims that have been settled be paid out by the start of the summer? Will they be paid out during or by the end of July, for example?

I indicated that approximately 250 claims would be dealt with initially and that we will proceed with the next tranche six months later, ideally in December. I do not yet know how many will be in that tranche. Work has already begun on identifying the numbers and what can be progressed early.

Will people in my constituency whose cases have been settled for years receive their payments before July?

That is the intention but we are working on a date when we can bring the 250 cases being progressed by the State Claims Agency to the High Court so that payment can be made.

Does the Minister of State envisage that they will be paid out before the start of summer?

All I can say is that we are waiting for a date from the accountant of the High Court to bring those cases before the court. A great deal of work has been done on this first tranche and I am not expecting any unnecessary delays in that regard.

When we met representatives of the insurance industry privately, and when they came before this committee, they suggested that the Setanta case was a factor in driving up prices. What assurances have they given the Minister of State, now that they have won the Setanta case, that they will reduce prices for consumers who they fleeced in the past couple of years while this matter was going through the courts?

I met the CEOs of the insurance companies and representatives of Insurance Ireland prior to the judgment to talk about options in light of what the outcome might be. I met one insurance CEO since the judgment was delivered. From the work the committee did last year and from the cost of insurance working group report, the Deputy is aware of the massive uncertainty created by the initial Setanta judgment - and the successful judgment when it was appealed initially - in terms of possible outstanding liabilities in the event of other company failures. He is also aware of what that meant for insurance companies, of the amounts they had to place in reserve as a result and of how difficult it became for new entrants to come into the market and compete. In short, what happened made the Irish market less attractive. Now that we have the judgment, the removal of that uncertainty should help to reduce premiums in the short to medium term because, as the Deputy put it, the insurance industry has won and no longer faces the uncertainty in the context of what it needs to reserve in order to cover potential future claims relating to insolvent companies. It should have a positive impact on motor insurance premiums.

Did the CEO the Minister of State met give him a commitment that the judgment will result in a reduction in the premiums charged by his or her company?

No, it was not a direct commitment. Rather, it was an explanation as to why, in the context of its outlook and planning for the future, the company will be obliged to reserve less because the massive uncertainty caused in this instance has been removed.

That means the company could just make more profits. I presume, however, the Minister of State, who has direct responsibility here, having seen his constituents and citizens across the State fleeced by these companies, demanded or, at least, suggested that they reduce their premiums, particularly as this case was the main excuse they used for ramping up prices. Did he walk away from that meeting without any assurances bar the fact that the company in question will have more profits because it does not have to reserve as much?

I am not in a position to make demands of any insurance company about how it prices its products. The Government cannot interfere in the pricing of insurance products because that would go against EU law. What we both understand from the insurance industry is that the Setanta ruling was a serious problem for it in the context of the uncertainty in the market in the future. That uncertainty was having an impact and leading to increases in the cost of insurance premiums. Now that the uncertainty has been removed, there should be a reduction in premiums for motorists through the country.

If it does not result in such a reduction, what is the Minister of State, who has responsibility in this area, going to do? Will he continue to allow insurance companies to do as they please on this issue? They ramped up insurance prices and told us face to face that this was the main driver because of the uncertainty, because they had to reserve-----

I do not think they said it was the main driver.

They told me that it was one of the main drivers because they had to reserve money not just for Setanta but in respect of any similar situations in the future. They also suggested to this committee that it was one of the main drivers. Given that the uncertainty is gone and we have seen insurance premiums increase to extraordinary levels in the past three years, what action can or will the Government take if the companies do not reduce premiums?

Let us not reduce the problems relating to motor insurance premiums to this one factor, important though it is. The industry did highlight the matter for us. The report of the working group on the cost of motor insurance published in January highlights several uncertainties that exist for insurance companies, such as the changing of the court jurisdictional limits and the introduction of periodic payment orders. These are listed in the report and we have to tackle them by means of our action plan in order to bring about lower premiums for consumers. The fact that the initial judgment has been overturned on appeal should lead to the delivery of fairer premiums for consumers. If it does not, that will be seen as a breach of faith with the Department of Finance and the cost of insurance working group, which is working assiduously with those in the insurance industry to reform the industry and to arrive at cheaper premiums for consumers.

Are there estimates in the Department regarding the percentage increases in recent years resulting from the uncertainty relating to Setanta?

No, and we did not put a percentage or estimate on this when preparing the cost of insurance working group report.

The view was taken that because of uncertainty and an unknown liability in the future, it was impossible to put a percentage on it.

Of the increases over the past three years of approximately 70%, was it 1%, 2%, 3%, 4%, 15% or 20%? Does the Minister of State have any idea of the percentage?

I cannot put a percentage on it. In the case of Setanta and outstanding claims of, say, €90 million, the insurance entities here had to reserve or provide for potential payment of that amount and for any future insolvencies that may arise for which they might be held liable. They would have made their own estimates through their own actuaries based on what that might mean in terms of reserving an adequate amount. It is not a small amount and so it should have an impact on premium costs for motorists because the insurance companies can now take it out of the mix of the factors which they had to factor into the premiums they were providing to customers.

The point I am making is there is no way to measure that. I presume the Minister of State has not asked the CEOs if what they factored into the price increases to consumers was a result of this uncertainty. In regard to the Government proposal that the industry would still pay out 35% claims in regard to future Setanta-like situations, is the industry view that this is still creating uncertainty? As for Setanta Insurance, motorists who have valid claims will only have 65% or a maximum of €825,000 of their claims met, which could be a huge drop, particularly if somebody was very seriously injured in a road accident. Does the Government have any intention of ensuring that all claimants will have 100% of their claim met, whether from the Insurance Compensation Fund or from the money accruing from the liquidation of the assets of Setanta Insurance? I have drafted and will shortly publish legislation to remove the limits in the case of Setanta Insurance. Given that in the case of any future Setanta-like situations, 100% of claims will be paid, will the Government step in and ensure that these claimants will be treated in the same way?

On the first question, we have come to an agreement with the insurance industry in principle following on from the report published last year by the Department on the new compensation framework for companies in failure. We propose to publish the heads of a Bill by the end of June. It will provide for a 65:35 split. As I have said, we have reached agreement in principle for an ex ante fund to be built up to cover the Motor Insurers Bureau of Ireland, MIBI, portion of that split. The insurance industry has told us that this removes the uncertainty for it in terms of company failures into the future. That is an important win. The Oireachtas and the Government will have to work through the legislation when published to ensure that the uncertainty is removed for the industry. This is another key reform for the insurance sector.

In regard to the current situation with Setanta Insurance, the Insurance Compensation Fund, ICF, will step in to 65% or €825,000, whichever is the lesser. It is not yet clear what the liquidated assets of Setanta Insurance will provide for in terms of the 35% gap. Indications from the Tower Watson report in 2014 suggested it might be 30%. A second actuarial report is being carried out following on from the judgment on the case. It is too soon to know what this will mean for individual policyholders in terms of the timeframe for settlement of claims, the outcome of the liquidation process and what shortfall they might suffer. It could be the case that one claimant will have all of his or her claim met while another might have a substantially lower amount paid, depending on what is left or the stage of the claim in the process. As I said, it is too soon to know.

My question was on whether the Government will give a commitment that all claimants to Setanta Insurance will receive 100% of their claim. In other words, if there is a 5% shortfall, will the Government lift the barrier in regard to the ICF legislation to allow for payment of the additional 5% and so on in order that these claimants will not be penalised, as will be the case for future Setanta Insurance-type claimants, who will get 100% of their claims based on the legislation which the Minister proposes to introduce?

I cannot give that commitment. The focus is on the new framework that we want to put in place for future company failures. I do not think it would be appropriate for the Government to give a commitment to a liability when it does not know the size of that liability or when it might arise.

The Government is effectively doing that because the 65% is an unknown liability from the Insurance Compensation Fund. That money is recouped through a levy.

The Minister's report today in terms of an update is not great and warrants only a grade C or C+ because he has missed three of his targets so far.

They are the first quarter targets.

I was extremely critical in terms of the slow pace of the report when initially published. We have learned today that three of the ten targets have been missed. In regard to recommendation No. 1, that in respect of large increases insurers will be informed of the reasons for them and given a breakdown of what percentage of increases is due to specific factors, which the Minister of State said is being progressed, what is meant by "large increases" and in the case of a large increase in a motor insurance premium, what detail will be provided to an insurer? Motorists are being hit with large increases every week. I will give the example of two people in offices on the same corridor as Sinn Féin Members. One of those people, who has ten years of no-claims driving, was quoted €2,500 for motor insurance. The other person, who has been off the road for two years but also had ten years of no claims previous to that, was quoted €2,000. What is happening is unbelievable. What detail will be provided, what constitutes a large increase, such that it will trigger the detail being provided by the insurance companies and when will the first motorist receive that notification?

On the first quarterly report, I acknowledge that three targets were missed. The key important measures, including establishment of the personal injuries commission and commencement of work on the national claims information database, which are important in the context of reform the industry, are making good progress. In regard to the three delayed measures, one has been recently completed and another is due to be completed shortly. As for the final measure, as already explained, there are difficulties around getting the data because of changes happening in regard to the courts. This is a complex task. The update in the quarterly report indicates clearly that it is not a simple task. In regard to the national claims information database, ten meetings had to take place to get the data set accurate in terms of what we were looking for from the insurance entities. We needed to ensure the database is as comprehensive as possible. It is a big piece of work. These are not simple measures that can be put in place overnight. It must be recognised that a number of actions are happening and being progressed at the same time. I would have liked to have seen a green light for all ten actions in the first quarterly report but unfortunately, in respect of three of them the light is yellow. Nevertheless, they are not the most significant actions. We are making progress on those measures.

The majority of actions under the action plan will be completed this year. In terms of the second quarter, we are making good progress. I will be happy to update the committee on that progress when the second quarterly report is published. In regard to recommendation No. 1, Insurance Ireland has been engaging with the Department of Finance on the putting in place of the protocol to communicate to customers the reasons for large increases in motor premiums. The output of this work will form the basis of a protocol. It will then be the responsibility of each insurer to communicate the details contained in the protocol to their customers. Insurance Ireland has stated that the interaction between the customer-facing systems and the underwriting systems is complex and will require significant IT infrastructural change. That said, the industry is aware that there is a need to improve communication channels. Insurance Ireland has informed Department of Finance officials that its implementation committee will have completed a draft protocol for review by the Department of Finance no later than mid-June. Included in this protocol will be access to a number of channels that will allow customers not only to understand how a premium is calculated but also what may give rise to an increase in a previous policy. We have previously discussed what percentage increase would give rise to this process. We are still in discussions with Insurance Ireland on the protocol.

Can the Minister of State answer any of the three questions I put to him on the issue, which are, what constitutes a large increase-----

That is still under discussion.

Okay. What details will be provided to motorists and when will the first motorist receive that detail?

We are still engaged in that conversation with Insurance Ireland. That work is not yet completed. It is still in progress. When completed, I will update the Deputy on that matter.

I welcome the Minister of State, Deputy Eoghan Murphy, and his officials.

I will start with the Setanta issue, about which the Minister of State was questioned by Deputy Pearse Doherty. The Minister of State has refused to say that the Government wants everybody to get 100% of outstanding claims. I wish to place on record some details from a solicitor's letter which has come into my possession. The letter was issued to a Setanta claimant following the judgment last week. The solicitor wrote that he had news concerning the claimant's case and that, unfortunately, that news was not good. He explains the judgment and says that the consequences would not be good for the claimant, that the ICF would only pay 65% of the compensation or award for the claimant's personal injury, loss or damage and 35% of the legal costs, court duties, medical, expert report and barrister's fees. The solicitor indicates that the balance of 35% of the claimant's compensation and legal costs will not be paid by the ICF. It is also indicated that there might be some small payment by the liquidators of Setanta Insurance in Malta but that, in the solicitor's view, this will not be significant. The solicitor said that it might be possible to pursue the driver-policyholder for the 35% shortfall but that there would be costs involved in doing so and that these would have to be paid by the claimant. His letter indicates that it might not be cost-efficient to take this course. The solicitor goes on to say that it is doubtful that all or most of the remaining 35% could be recovered and that there would be cost implications involved.

The solicitor proceeds to state that as there was uncertainty as to who was going to be responsible, his firm had to join the MIBI to the action and that, from the date of the letter, the latter had no responsibility and that its legal costs would have to be paid. He also states that the MIBI's costs would have to come out of the 65% and that there would be a shortfall in the legal costs and outlay occurred - 35% plus all the solicitor's work completed in joining the MIBI to the proceedings. He further states that there might be medical expenses and other items of expenditure which might have been incurred on the client's behalf and which would have to be paid and that, therefore, the net compensation the claimant would receive after the deductions outlined would be less than 65% but that it was too soon to say by how much. The solicitor finally states that the situation was a total mess caused by the insolvency of Setanta, that it would take time for all the issues to be resolved and that it was unclear when the ICF administration scheme would come into play and what would need to be done at that point.

People have been hung out to dry. That is the reality. There are over 1,600 claimants who still do not know where they stand and the Minister of State has refused to take the opportunity to give them any comfort to the effect that they will not be out of pocket. We have people who could be held personally liable in respect of any shortfall that arises from a claim. Will the Minister of State not sit down with the insurance industry and the liquidator in order to get a proper handle on this? Will he seek the support of and a commitment from the industry - he may find those involved to be more willing than he might imagine - in the context of ensuring that the shortfall will be met and that people's costs will be fully covered?

Obviously, I cannot speak to an individual claimant in respect of his or her position with his or her solicitor or comment on the advice he or she is receiving. This is a very difficult situation for a number of people who have had claims in this area and who may have this uncertainty as to what will be recovered or what might be their liability. We are still in the early stages of working through this. We have rough numbers as to the first tranches that will come through. It is not yet clear what the liquidation of Setanta will cover for policyholders in the context of the 35% that needs to be made up and what this will mean for individuals, including the person to whom the Deputy refers. We do not know. Even if the Government was to think about stepping in to fill the gap, there is a difficulty regarding how this might affect priority in respect of the liquidation of Setanta. We have difficulties in terms of what we can do. In so far as what the insurance industry might be willing to do, again, matters are at a very early stage. We need to find out exactly what the position might be in terms of how we proceed with realising the funds from the ICF for claimants. We also need to obtain a better understanding, from the second actuarial report that will be done following the judgment, of what exactly will be available as a result of the liquidation. At that point, we will know better where we stand.

Will the Minister of State sit down with the industry and establish its point of view on this issue? The Government's policy is that once the legislation is passed, the cap will be lifted and 100% of the cost of claims will be met by the ICF, which will involve a contribution by the industry in the order of 35%. That is Government policy. The Minister of State has had the report on the new compensation framework since last June but the Government has failed to legislate in that regard. If the relevant legislation had been put in place by now, the Setanta issue would be fully covered and 100% of the cost of claims would be met.

We could not have legislated in advance of the court's decision. We had to wait for that decision before we could proceed. We are ready to move forward with the heads of a Bill by the end of this month. We also needed time to come to an agreement with the insurance industry in so far as ensuring that the uncertainty overhang which it claimed existed would not affect the new arrangement. We have now come to such an agreement in principle. My hope would be that the Government and the Oireachtas can progress this legislation as quickly as possible in order that we might bring those principles into law and create certainty for policyholders to the effect that, should events similar to those involving Setanta occur in the future, they will be 100% covered. My engagement with the insurance industry regarding a number of issues is ongoing. It is too early to say whether there will be a mechanism whereby whatever gap that might exist after liquidation might be filled.

Will the Minister of State sit down the industry and the liquidator immediately to discuss the Setanta issue and its consequences and discover whether it might be possible to come up with a solution to ensure that 100% of claims will be covered?

The liquidator is the Deloitte office in Malta. We communicate with it through the Dublin office. The office of the accountant of the High Court and the State Claims Agency are involved in doing that. We are still discussing the Setanta judgment because it will very much feed into our preparation for the heads of the Bill relating to the new compensation framework. As we seek to draft the new legislation, I will be discussing the matter at our next engagement in the context of what this now means for the industry.

The point is that it will be a stain on the entire industry if this issue is not dealt with properly and if people are not looked after. Let us consider the harrowing case of Kate Flynn in Waterford. I am sure the Minister of State is aware of Ms Flynn's case. I spoke with her again this morning and she is distraught at the lack of clarity. Her partner and her friend's partner were killed in a head-on collision involving a drunk driver in 2009. She was left with a five-month-old baby girl at that time who lost her father in the accident. They received a court award but it has not been paid because the drunk driver was a Setanta policyholder. These are the issues with which we are dealing. That is the human reality of this issue not being resolved. People were waiting for the Supreme Court judgment in the expectation that they would finally have clarity and know where they stand. It seems that there are more questions now than there were previously. I am not even hearing empathy from the Government. I am not hearing that it is the Government's objective that 100% of the claims will be covered. What are we saying this morning to Kate Flynn and others who are caught up in this? I do not know what to say to them.

I know there are some incredibly difficult cases as a result of what happened with Setanta. I refer here to people who made claims and who are now uncertain as to what this will mean for them in the context of the difficulties they have endured and the costs they might be obliged to bear in the future regarding personal injuries or other difficult medical issues. It is a very difficult situation for many individuals. What we have been trying to do with the insurance industry is to reach a point whereby we can protect people in the future with a new compensation framework. It is very important that people will know that once this legislation is on the books, this type of uncertainty will not arise in the future. I met the relevant actors involved before the judgment was handed down in order to ensure that they were ready to progress the first tranche as quickly as possible. That work continues to be done. They will move forward with it very quickly and bring about as much certainty as they can for those involved in the initial 250 cases. They will then move to the next tranche. Other work has been done to speed the process up even further. I do not want to go into detail at the moment. Conversations are being held to see if we speed up the process. It might require a change in legislation that would have to be fast-tracked almost immediately. If we can do that, we will because we want to resolve the uncertainty people have felt for a number of years. If the Deputy recalls, this company failed in 2014 but there has been a delay because of the case that was taken. It is unacceptable but that is the system and the courts and-----

How long will the liquidation take? How long will be it before it is clear what the residual is in terms of assets available for distribution? Could the liquidation go on for a number of years?

It is not yet clear. However, to provide clarity in the context of expectations, it may be one or two years. What we need to do is make sure that this actuarial report that has been promised is compiled immediately and we can then move on from that.

The State Claims Agency and the accountant of the High Court are talking to the liquidator. They are aware of the concerns on the Government side and the importance we have placed on progressing this as quickly as possible. Any help that can come from the Oireachtas, once we have the relevant legislation, to move on this quickly would be very much appreciated with regard to the future outcome.

The Minister of State will find that will be forthcoming.

I have a question on the mechanics of the payment of the 65% and the six-month cycle referred to by the Minister of State. Can he elaborate on that? Is there a particular date every six months that this process can be executed? When is the next such six-month date? Is it the case that there is no particular date but that every six months we can have a drawdown from the Insurance Compensation Fund through the courts?

There is no particular date. The date is every six months from when a body takes the first drawdown. Under that process the liquidator takes a claim. The State Claims Agency verifies the claim and then brings it to the accountant of the High Court. The accountant of the High Court brings the claim to the High Court for the release of payment. The accountant of the High Court does that in batches to make it as expeditious as possible because doing it for individual cases does not make sense.

As soon as a batch is ready, the Department will be ready to press the button. Is that correct?

Exactly, and in my replies to Deputy Pearse Doherty I indicated the size of the batch was circa 250. The details are being worked out. The Department will progress that almost immediately. That is what we are waiting to find out.

Can the Department look at changing this six-month rule? For example, what if the second batch is ready one month or two months after the first batch has been drawn down from the ICF? Is there any flexibility such that people need not wait a further six months unnecessarily if they are ready to go?

I do not want to say too much in respect of conversations that are being held at the moment. At the moment there is no flexibility, but we are seeking it.

There is a broader issue relating to the quarterly report and the implementation of the overall report. I acknowledge the work of the Minister of State and all the officials and stakeholders involved in the working group. I know the Minister of State is personally committed to this issue. That is evidenced by the work done to date. I hope we are beginning to see some impact.

My question relates to the issue of fraudulent or exaggerated claims. When I meet industry representatives privately they say it is a significant issue. They say we now have fraud tourism in Ireland and that people involved in insurance fraud come to Ireland and stage accidents. They say it is a significant problem. What specifically will be done to deal with the issue of fraudulent claims and exaggerated claims?

A number of measures in the report published in January are being worked upon to deal with fraud. One of the big things we can do is remove the incentive for fraud. I am referring to the idea that a claimant can get a higher claim paid out more quickly in Ireland in terms of a settlement being made. A number of measures work across this area. One is the personal injuries commission to ensure that we are not outliers when it comes to other European jurisdictions in terms of the amounts being given for awards. The commission will report by the end of the year. The work the commission is currently doing involves this international benchmarking exercise.

Another thing we need to do is reform the book of quantum. This derives from another action under the report. The idea is to bring about more granularity to it and to publish it in conjunction with the work of the personal injuries commission. At present, the book of quantum essentially is just a summation of awards that have been given. People use it as a target or guide but really they should not do so. If we can combine a revised book of quantum with more granularity along with the work of the personal injuries commission then we should have a template for the awards that should be made.

Work is already being progressed in discussing with the Judiciary how it could take a more of an active role in the publication of this work, just as the Judiciary does in the UK. I am in favour of this. The idea is there might be more buy-in from the Judiciary into the information in the reporting work.

Another thing we need to do is to strengthen the funnel into the Personal Injuries Assessment Board. The heads of the Bill to improve the powers of the board will come by the end of this month. We know the percentages. Of the claims taken, some 20% get resolved in the PIAB, 10% are settled in the courts and 70% are settled elsewhere. We do not want to see people fast-tracking through the PIAB to try to get a better deal. We do not want people intentionally missing medical cases such that they fall out of the PIAB automatically and can then go to court. Then, when they go to court, they introduce new evidence. We are looking to change all these things. We are also looking to bring in pre-action protocols. This would be another step to reduce the costs and shorten the process. We are also looking at the possibility of an appeals mechanism for the PIAB.

All these things should make the process shorter, thus reducing the costs and, in particular, the need for additional costs to arise in the process. It should give greater certainty to the types of awards. It should also remove the inventive for fraudulent behaviour.

A number of other initiatives relating to fraud are referenced in the report. We are trying to build a database around fraudulent behaviour. This work is under a longer-term time horizon in terms of the action for completion next year. There are sensitivities around data protection and liability issues as well. We are looking at a particular recommendation that Deputy Pearse Doherty has raised several times. It relates to working with the insurance industry and the Garda Síochána on the creation of a dedicated unit within the Garda to tackle insurance fraud. The idea is that it could have the potential to be funded by the insurance industry, which is what happens in the UK. Work on that project is ongoing.

I commend the Minister of State on keeping to his word and coming before the committee on a quarterly basis. It is a useful exercise in terms of evaluating where we are. However, it does not fill me with confidence. It appears to me that the tail is wagging the dog in the context of the insurance industry. The insurance companies continue to laugh at us. It is obvious that it appears to them that they got away with it. We had our consultation and examination but things go on with business as usual. That is the bottom line in evaluating all of this.

It concerns me that the Minister of State appears to be congratulating us on the stabilisation of the market. Prices went to extortionate levels such that saying we have stabilised at that level is an abject failure and it shows a complete market failure. We need to look at reversal. In the case of all the people I have talked to who have received insurance premiums of late, the amounts have increased. I do not know of one person who has had an insurance premium reduced. In the light of all the work we did last year, I am seriously concerned that we are not having any impact. I am not referring to stabilisation but reversal.

I am concerned about the setting up of fora. I realise what the Minister of State is trying to achieve but it almost amounts to making things more obscure. Certainly, it is not making things more transparent. The ethos running through the insurance report we produced was that things should be more transparent and that people could see what was happening.

Has the Minister of State given serious consideration to examining properly the different models? Has he considered running what would almost be a parallel system? Has he given serious thought into the different models or to introducing a State-backed rival offer of competition? New Zealand has a no-fault model with a compulsory scheme for personal injuries. Under the Australian model, compulsory third-party insurance is included in the vehicle registration. Under the model in Quebec, the public insurer manages the insurance regime for bodily injuries only. That is my first question. I believe we have given enough time to the insurance companies to show some kind of gesture in reducing the rates, but they have failed to do that thus far.

I thank Senator Conway-Walsh. We all have anecdotes. I have an anecdote of a person whose premium went from €1,500 to €1,060 one month ago. The anecdotes go in either direction. It is important to try to work off the data. It was the data from the Central Statistics Office that gave us a concrete indication of exactly what we were hearing from our constituents last year and the year before.

Stabilisation is not failure; stabilisation is progress. We need to stabilise the market first before we can start to drive down premiums to a fairer level. We are trying to move away from the super-cycles that we have seen in the past under which people were paying low premiums and getting cheap car insurance but at levels that were unsustainable for those companies and for the industry as a whole. Now we have seen levels rocket back in the other direction but we do not want that either.

Costs have stabilised. They are down around 6% since last July. That is not good enough. This is only the beginning of our work. These actions and this work began some time before Christmas. It is positive that we are starting to see results. Not all of this progress is because of the cost of insurance working group – let us be clear. The increase in rates by the Federal Reserve System in the United States has had an impact on the bottom line for some of these companies in terms of the investment returns they are making. That is helping in terms of their profitability. Several factors are contributing to this.

Senator Conway-Walsh made the characterisation of the tail wagging the dog. I want to be clear on this. To be fair to the insurance industry, there has been a change in attitude since the members of this committee began their work on the costs of insurance and since those of us in government began our work in this area. The public engagements not only in this committee but in the media too have been helpful.

We are trying to work with the industry, which is now responsible for a number of the actions in the report. The Department takes the lead ownership but we are working with them to get the actions completed. As they are completed, it will mean substantial reform of the motor insurance sector. This is very important.

The Senator spoke of the forum. We have had our first meeting. It brought some key actors together into a room for the first time and it was important to do that. We will expand that forum to more participants.

I must reject the idea about things becoming more opaque and about there being no transparency. Consider what we are doing with the quarterly reporting. We update members in regard to the specific actions completed in that quarter and we update on progress under the recommendations. This is transparency that we really have not seen before. There is a person responsible for implementing that action and the person for overseeing the implementation of the action. Those reports come back, on a regular basis, to me and my committee, which I chair. We then present them to this committee on a quarterly basis. Even in advance of the first quarterly report, I presented an interim report to the committee to show that work had already commenced.

The Minister of State is doing good work on this but the bottom line is the actions are not reducing or impacting the higher rates of insurance-----

We cannot do that immediately. I was quite clear that they were never going to do that immediately. We had to put together a comprehensive plan to have buy-in from the Oireachtas and the Government. This was in order that people were clear that this was going to happen and was not going to be a report sitting on a desk.

The problem I have is I am confronted with this by constituents every week. Were I say to them that we have a plan, that the Minister of State believes there is more transparency now and that things will change, they would ask me when will it change and when will their premiums come down. This is the question I am now asking the Minister of State, Deputy Eoghan Murphy, today. There is no point in my saying to them that the data indicate there is a 7% reduction. We need to break it down to make it relevant for people.

I get this kind of query myself. I have become something of a focal point for people to give out about their insurance premiums. If I am at a wedding or some function, people come up and give me hassle about their car insurance; it is a great time. I understand that it is difficult to explain what is actually being done because we always said this was a complex problem that required a number of things to be done across a range of fronts over a period of time to actually solve it. Stabilisation is a positive development and we hope it continues but we must be vigorous to complete the reforms. We can say to people that we are in the middle of doing work that will result in fair premiums for those customers. It is not going to be overnight and we must be clear about this with our constituents. This work is being done-----

When? Can we give them an indication, say by the end of this year, that premiums will have come down?

The current hope is that the downward trend we have seen since last July, and which is now at 6%, will continue through the course of this year. This would mean that people who renewed their policy in the last month should notice a reduction in their premiums when they renew in 12 months' time. I would be amazed if they do not. These reforms are being done and other things are happening in the wider market that are of benefit to the insurance industry, not just the Setanta Insurance judgment but also with regard to yields and investments.

Is the Minister of State saying that in 12 months' time, almost everybody should see this?

I cannot speak for-----

Bar things remaining the same, I understand that there are some variables within the insurance business.

There are many variables that an insurance company will use in the pricing of an insurance policy. It is very difficult to say to an individual case that his or her premium should have gone down. People can bring up anecdotes - as in the recent Dáil debate - where they know of a person and such and such happened to them. We cannot know fully all the circumstances of why an insurance company might decide to price a risk in the way it has done. I would be amazed if we were to still see the kinds of anecdotal price jumps that we hear of at the moment when there has been absolutely no change in circumstances. It is not always clear to me. When looking at the cases that are brought to me individually, I do not always get all of the information. When I start digging beneath the surface a couple of things come to light which might help to understand why the insurance company has decided to change the risk pricing.

I hope the Minister of State is not amazed in 12 months. I want to move on to recommendation No. 3. This extends the current renewal notification period from 15 to 20 working days but it requires a consultation paper that will not be ready until the fourth quarter of this year and any resulting legislation could take another six months. Is this just an example of putting things on the long finger? Does it really require a consultation paper to increase the renewal notification period from 15 to 20 working days?

The Central Bank is responsible for this action and there are a number of changes to be made by the Central Bank. It is progressing this as one. We must go through due process and there must be public consultation on the changes. There are certain timelines already in place that must be followed. I believe this is a good thing to do but it is by no means the most important thing we have to do. The Senator may have heard, as I have heard, that when people have shopped around in the two-week renewal notification period they currently have, they have obtained a reduction compared with the first quote they received. There is competition in the market and people are getting lower premiums if they shop around. We want to extend that period to give them a bit more time. We know that people are very busy and sometimes they might not pay attention to the letter when it comes in the post during the first week of that period and suddenly they find they are up against the deadline for renewal. This gives them just a little bit more space. These are, however, the timelines that are currently there and due process must be followed and a consultation.

Why do insurance companies not just increase that time period as a gesture of goodwill? They could increase it to 20 days without having to go all through all the hoops.

One of the things I want to do with this piece of work is to put as much as I can on a legislative basis in order that measures cannot be unilaterally withdrawn.

That could be done at a later date. Could the insurance companies not just come back with some of these actions and fix them as a gesture of goodwill? The renewal time seems to me to be a very simple thing that could be fixed.

I want to make sure that all of the industry is moving together to make this reform so it is on a legislative basis and cannot be changed unilaterally by one company or by them all. This is the process we are following, with the Central Bank leading on this work.

I ask that maybe the Minister of State could go to the insurance industry and ask them to change that without trying to bring them all along. In this situation the Minister of State is being dictated to by the slowest vehicle within the system.

The timelines are dictated by the process that must be observed when changing legislation in this area.

Yes, I know, but the legislation could follow.

Speaking to the better relationship we now have with the insurance companies, and in light of the recent agreement we have reached on the competition framework - which is a positive for them and for customers - I will of course put the Senator's suggestion to the industry. I will report back on what its answer is.

I thank the Minister of State. I want to ask specifically about declined cases and the system. It seems that there is still a lot of delay in this regard. For example, one of my colleagues was contacted by a taxi driver who had sought insurance. The taxi driver had entered into the declined cases system but several months later was still waiting for a reply. How do consumers know what are their rights under that agreement? When can they expect a reply or a right to appeal? What is in place to improve the transparency around that system?

Recommendation No. 7 speaks to the declined cases agreement. Action No. 15 under that recommendation is on track. Insurance Ireland has made the necessary alterations to its website to provide more prominent information on the declined cases agreement on its homepage so people know it is there and can access the facility. As for what has actually been happening, there is still some opacity in this regard. This is why in our reforms the first thing we want from the insurance industry is a report on exactly what is happening with declined cases. That report is one of the actions and is on track for completion before the end of the second quarter. By the end of June we will have a detailed report on exactly how that system has been operating. We can then look to see what needs to be changed.

What can somebody do who is in that system at the moment?

If they go to the website they can find the appropriate email or phone number to call to go into that process. It is not operated by the Government but it is there for them to access. If the Senator is aware of a few particular cases, the Department is happy to pass people on to the relevant person in order that they can access the system.

The Senator has used her time.

This is a final point. I am really concerned that privatisation of the policing and the specialist Garda units seems to be on the Minister of State's agenda. It should be rejected. It reminds me of the whole situation with Shell and the Garda and the force that was used there. I am appalled at the thought of privatising policing or allowing the industry to rent a cop, as it was allowed to do in the Shell case. Will the Minister of State explain this?

I will give Senator Conway-Walsh an update on where we are with this recommendation, which is recommendation No. 26. This requires An Garda Síochána to determine, before the end of the second quarter of this year, whether there is a mechanism for further co-operation with the insurance industry around fraud investigation. This is being done with the agreement of the Garda Commissioner and the Garda national economic crime bureau, GNECB, within An Garda Síochána.

They have engaged with Insurance Ireland with a view to examining a proposal that Insurance Ireland will provide funding to set up a dedicated investigative unit within the GNECB to focus exclusively on investigations of insurance fraud. They have visited a similar unit in the UK to assess whether it is a viable option for An Garda Síochána. This happens successfully in the UK. If it is deemed possible from an operational perspective to establish such a unit, a proposal will be submitted to An Garda Síochána for consideration. The Department of Justice and Equality will then be consulted and consider the broader issues arising before making a decision on the matter. The current position is that the GNECB has provided Insurance Ireland with estimated costs associated with the establishment of such a dedicated unit and this estimate will be brought before that body's non-life council meeting in June for decision as to whether it will be submitted to the Garda Commissioner for consideration. That is the update. This decision will not be made by me but we are still working through whether there is an actual recommendation that can be made to the Minister for Justice and Equality.

Is the Minister of State proposing that?

What I propose in the report is that an investigation take place as to whether it is possible and should be pursued. That is what we are looking at.

I have grave concerns about that. Sinn Féin has grave concerns about it also.

I understand that. As I said to Deputy Pearse Doherty in a previous engagement, this is something we will have to debate and examine very carefully. If it is to be proceeded with, it will not be a decision made here in committee. It will be a decision for the Minister for Justice and Equality. I anticipate that some people will be uncomfortable with this but I note that it has worked in the UK and has not had the impact Senator Conway-Walsh fears in terms of buying a cop because of the way in which the funds are ring-fenced and procedures are in place to separate completely the insurance industry contribution from the actual work being done by the fraud unit. Again, we are still working through the proposal.

What does it lead to? Can we get a philanthropist to fund a police service to investigate corrupt politicians? It opens a can of worms that is way beyond this.

I understand the concerns. If this becomes a proposal, it will absolutely need to be debated in full by the Dáil and Seanad.

That philanthropist might investigate the police force. Then, when we get the police force back, we might be able to implement our recommendation No. 14 on strengthening the road traffic corps. That is what we recommended which is different and more acceptable.

I commend the Minister of State and his officials on their work to date. A liquidator for Setanta is based in Malta but Deloitte is actually acting on his behalf in Ireland. I suggest we bring the liquidator before the committee to find out exactly where he is at on the liquidation of Setanta and paying out premiums. It might be a worthwhile endeavour. It is just a suggestion but what we read in media report indicates a belief that they will only get 30%. I am looking for a timeframe, the amount of money and exactly where the process is at. Has the Department had discussions with the liquidator about where the Setanta liquidation is at now?

Officials in the Department have been discussing this with the liquidator as have the State Claims Agency and the office of the accountant of the High Court. In so far as the Senator's recommendation to the Chairman is concerned, I am not sure if that is possible but it could be helpful.

Why might it not be possible?

Off the top of my head, I am not sure he will be able to appear.

When liquidators were appointed to the Quinn Group, they were brought before the finance committee. It is a component around which there is lack of clarity. We have the Insurance Compensation Fund and we know that is 65%. It is a proposal and it is worth looking at.

We will inquire and if it is possible, we will arrange it.

The Setanta judgment in the Supreme Court should bring about a reduction in premiums. As the regulator, does the Central Bank have the power to request motor insurance companies to provide details of the breakdown of premiums, in particular the element of the premium which could bring a discount in relation to the uncertainty arising on foot of Setanta?

Is this the premium in terms of what the customer pays when he or she buys motor insurance?

They are basically saying the premium will come down because we now have clarity around the Setanta judgment. By definition, there must have been a form of loading on premiums on foot of the uncertainty surrounding the Setanta judgment.

Whether an insurance entity itself was disaggregating out the amount it was reserving based on the different uncertainties it saw in the market, I do not know. They may not have. They may have calculated a reserve amount based on a number of uncertainties but they may not have disaggregated out how much of that reserve was because of Setanta. When they then had a premium for the customer, it may have been a general increase based on the high reserves they had to carry and a general feeling of uncertainty around a number of issues in the market. One of the actions we are progressing now is that customers will get a breakdown of their premium and where there is a rise that there will be an explanation for it. In terms of getting a breakdown of the premium and an explanation for where there is a reduction, that is not something we considered because I am not sure people have been that concerned as to why their policies have gone down if it was not around general issues like having their two-year no-claims bonus kick in. We are still devising the legislation or protocol for this breakdown for customers. We are still discussing this with the industry but I do not think we are going to get on a policy-by-policy basis what that will actually be.

No. What I am looking at is simple. When we were doing the report around the insurance industry which was in parallel if slightly prior to the Minister of State's report, we had insurance companies coming in and saying "uncertainty this" and that would have fed into the Minister of State's report also. It was all abstract. If they are now saying the uncertainty around Setanta was one of the reasons for the problem with premiums, by definition there should be scope for the regulator to go back and ask what the companies factored in. That is in general terms, not in specific policies.

The Central Bank cannot intervene when it comes to pricing. In terms of reporting requirements and what the insurance companies - entities - report to the Central Bank, I would not be across the detail of that or the conversations they will have with it. However, we are in ongoing discussions with the industry as to what Setanta means. While I have discussed this at a high level with one company, there are more conversations to have as to what we can expect to see. To be clear on the sequencing, we published our emerging recommendations at the beginning of November and prior to the report coming out from the committee at, I think, the end of November. It might have been a helpful guide for the committee's own work.

Absolutely. I take that very much in the spirit in which it was delivered. How many competitors have come into the motor insurance market in the last six months?

That is a good question. There are five entities which have applied for authorisation to operate out of Ireland. My understanding is that two of them are coming in to access the Irish market and three are Brexit-related applications seeking to do European business from here. There are another 15 companies which are looking at Ireland. The Central Bank published information on increased competition coming into the market recently and I met with one of the insurance companies yesterday and was told that another entity had just started to do business here through a broker. We will see competition increase and that will be of benefit. There are currently 41 members of the MIBI and authorised to write business in Ireland.

That is insurance companies.

Yes but most of us deal with eight or nine companies. What we are seeing, however, is an increase in applications to do business and a couple of companies, as I was told yesterday, operating through brokers. There is more competition.

There are three new ones.

I do not want to say that is a rock-solid figure but it is a positive indication that competition is increasing in the market.

The database was probably the single most important finding in the report. When will it be put in place?

Off the top of my head, I think it is the middle of next year.

Does the Minister of State anticipate the target can be held for a national database?

I said earlier that ten meetings have already been held with regard to the initial data sets that are being built. Progress has been made on the legislation and specifically the heads of the Bill that must be introduced, as this must be on a legislative footing. When the Chairman published the committee's report, it was all about data, lack of transparency and needing to bring data to a number of areas. This was perhaps the most crucial area because it covers the 70% that we have no sight over. It is a key priority for us and everything is on track currently. It will require additional resources of the Central Bank and a change of mandate. We will work through that and ensure there are no delays on our side.

Has the Minister of State had any reaction from the insurance industry?

To whom will this be available? When a national database is up, who will be able to access it?

The national database will publish data at an aggregate level publicly for everyone to see, whether it is a potential entrant to the market looking to compete here for business, the Central Statistics Office or even this committee, in order that we can know exactly what is happening and consider trends in the market.

The Setanta implosion arose in Ireland because, effectively, the company was being regulated in Malta but operating in Ireland. If a company operates in Ireland now but a different company is regulated in Malta or elsewhere, is there a potential change in the regulation process, either from an Irish or European perspective, that could give more comfort to the person holding a policy with a company similar to Setanta and who wants to make a claim? How do we ensure we will not have a Setanta mark 2 on the Irish landscape?

There are a few issues. The first is the introduction of Solvency II, which should protect most insurance entities from ever having to fall into a liquidation or administration scenario. That is a major change in Europe that will give some good protection. The Central Bank has increased its market intelligence in terms of understanding how entities are being regulated in their home jurisdiction if they are operating into Ireland on a freedom of enterprise or freedom of service basis, and that is another positive. The Senator is probably aware from looking at some of the international press that work is under way to find more convergence in the regulation and operation of insurance in the Single Market. We do not have the same rule book that we have in the banking sector in Europe. There are moves now under way, partly as a result of Brexit, that will see more convergence around supervision when it comes to insurance entities. That will be a further protection. The new framework we have agreed in principle with the insurance industry, for which we will see heads of a Bill at the end of June, will bring protection for the consumer at the other end. To answer the Senator's question, much work has been done to prevent what happened with Setanta being repeated, but if that does happen, it will prevent the customer from being at a disadvantage as a result.

Would it be fair to say the level of engagement and due diligence by the Central Bank on companies regulated from abroad but operating in Ireland for motor insurance is now more intensive?

There are two issues. If a company is regulated abroad, it is not regulated here but the Central Bank regulates the operations from a code of conduct perspective. The bank also has a markets intelligence unit - I cannot remember its exact name - but it does this work. The Central Bank has been at the forefront of pushing for greater convergence when it comes to the supervision of insurance across Europe and it is very much across this, protecting not just the Irish customer, as it has a responsibility to Irish entities, but also European entities as that comes under the European Central Bank.

I welcome the Minister of State, Deputy Murphy, and his staff before the committee. Is there any evidence pointing to cartels in operation in the insurance industry? It was mentioned on a number of occasions that cartels could be operating.

I have seen no evidence to suggest there are cartels operating in the insurance industry. The Senator would be aware that the Competition and Consumer Protection Commission is looking into this now because of information brought to its attention.

Most of the ground has been covered. With regard to the training of judges, we have seen quite recently that some judges have taken quite a tough line on the claims being rewarded but in other cases they seem to take a very soft approach. Is any training being provided for judges to update them on a new book of quantum, for example? Is there any specific training or are they supposed to take the one line?

With court awards we want to arrive at a state of consistency in the awards being given. There are a number of processes under way to achieve that consistency, bearing in mind the separation of powers and the fact the Government cannot directly intervene in awards. One of the pieces of work being done by the personal injuries commission is to bring about international benchmarking and greater granularity in how we judge different grades of whiplash and affixing a standard sum to cover that. That is the work of the commission and it will publish it in tandem with the book of quantum. We hope it will be a guide for the Judiciary when it makes awards for claims but we must also reform the book of quantum. We want ownership of the book of quantum by the Judiciary, as it is in the UK, and discussions are under way to try to achieve that. It will be a longer-term process.

That kind of work has been done to try to bring about more information both in a medical sense and with regard to the standard practice across Europe to better inform the Judiciary about the awards that might be given. The Judicial Council Bill provides for the establishment of a judicial council that would establish best practice for the education, support and training of judges, and provide a code of conduct for and a structure to deal with complaints about judges. The Judicial Council Bill, in combination with the work of the personal injuries commission, the work we are going to do to strengthen the Personal Injuries Assessment Board and the work being done with the Judiciary on the book of quantum will bring that about. The Senator will have heard, as I have heard, particularly in engagement with businesses on employers' and public liability, of recent awards publicised in the papers and the concern it has raised for business people.

Does the personal injuries commission monitor particular judges or areas where awards are given? Is there a record kept of awards given by judges or how they arrive at a decision?

The commission is new and was established by our cost of insurance working group earlier this year. The former President of the High Court, Mr. Justice Kearns, is the chairperson of that commission and it has other people involved. It is working to a timeline and terms of reference detailed on page 99 or 100 in the cost of insurance working group report. It is essentially doing international comparisons to see exactly what is happening. The committee report indicates that we are an outlier when it comes to the size of awards being given for whiplash and other soft tissue injury claims. We were significantly higher for those and 70% higher was the claim. The work being done by the commission is to establish the typical level of award for different types of claims abroad to help better inform the level of awards granted here. It will also bring about more granularity, such as with the grading of whiplash. Rather than someone presenting with whiplash and the judge looking at a ball park figure, there could be an assessment by an independent medical expert, with the type of whiplash classified according to a grading system we will have introduced. The judge could consider the award level and act on that basis. The book of quantum currently only gives a summary of awards given in the past, which is not really instructive of where we could go with the personal injuries commission.

No sanctions may be taken against a judge who is overly-----

No, but we have the newly established Court of Appeal, and it has proved to be very successful in overturning the size of awards given by either the lower courts or the High Court. That has been an important mechanism for arriving at more consistent and fairer awards from the public perspective. The Personal Injuries Assessment Board will continue to work with the Court of Appeal judges and the Judiciary with regard to future iterations of the book of quantum, ensuring there will be more buy-in from the Judiciary in what we are trying to achieve with our cost of insurance working group.

There has been much public comment about some awards given recently. One would wonder about some of the decisions made by some judges. I welcome what the Minister of State is saying.

I hope that it is an area that will be monitored because whether it is through education or judges, it is important that systems are in place to monitor how this happens.

It is very important that we have consistency here and that we have fair claims being paid out. We should do nothing that would impinge upon the ability of someone arriving at a just award for the injury he or she has suffered. We have to protect the legitimate claimant as well.

The Minister of State of course is correct.

A new book of quantum was published recently. Will there be more changes to the book of quantum now in view of all of the reports that have come out?

Yes. That book of quantum was the first book published in approximately ten years. We want to publish the book of quantum on a rolling basis, at least every three years, if not more frequently. We are also looking at a whole new type of book of quantum, which in the ideal scenario would be published by the Judiciary itself, but that is something for it to decide to do. It would contain not just a reflection of the awards given but a guide as to what awards should be given and much more granularity and detail around that. It is on pages 100 and 101 in the cost of insurance working group's report. It will give an idea of the type of detail the personal injuries commission will deliver. It will be published in tandem with the book of quantum and might even be published more frequently. We are going to be looking at something quite new in the future.

I thank the Minister of State. It has been acknowledged by other members that his own personal efforts have been put into this and he clearly is on top of his brief. It is cold comfort to those of us who did get increases. I acknowledge myself that the rate of increase, certainly in my experience, is better, but my initial claim came in €300 or €400 higher than the €500 it had been. I managed to get it back to €60 or €70 higher than it was. It was better than it had been but the price is still going up. The rate of increase has reduced.

I want to go through some of the actions taken and where they are going. Some of the actions taken to establish a fully functioning database to identify uninsured drivers, even though the target dates are quite far away in quarter four 2018, look like they are going to be delayed. I am referring to section 28 of the fifth objective on reducing insurance fraud.

What is the action number?

I refer to actions Nos. 61, 62 and 63. Even though the deadline was quite late they still look like they are likely to be delayed.

Are we talking about the uninsured database?

Yes. If we can harness the technology better it is all about access to data, but it should not be impossible. If we can track cars going over the M50 and bill them if they do not pay the toll, why is this so difficult? What are the problems here?

The first thing to acknowledge is that when the Government first tried to put in place an uninsured database to track uninsured drivers a number of years ago it failed and the Garda stopped using it because it was delivering a number of false positives. It is not a simple thing to do and we need to make sure that we are doing it right because we do not want the Garda rejecting it again. I can tell the Senator that action No. 61 is back on track in terms of going live in quarter three with the uninsured database for private vehicles. That information will pass to the Garda Síochána.

Is the orange dot now a green dot again?

Yes, kind of. My officials have said that to me and I should not have repeated it.

It is not as orange as the other orange dots.

To be clear, there are some problems in trying to make this work because we do not want to make the same mistakes that were made in the past. While we have been able to get action No. 61 back on track and into a green space, the other actions which flow from it, actions Nos. 62 and 63, which are due to be completed next year, have moved into the orange space, unfortunately. I chair a working group that has representatives from each Department. This falls under the Department of Transport, Tourism and Sport. We are trying to get greater urgency under these particular action points, recognising that they are due for completion next year. They are so important in terms of what we need to do to tackle uninsured driving that they must be met. They can be met but it is a question of making sure that I can bring sufficient pressure to bear to ensure that they are met. It would have been absolutely irresponsible for me to come to the committee at the end of 2018 and apologise for missing the targets. This feeds back to the idea of transparency which we discussed earlier. The idea of this traffic light reporting is to let the committee know well in advance so that the members can raise the issues with me and to make sure that the members are putting enough pressure on me so that I can put enough pressure on the relevant Department to get this done.

Even though this is mainly a Garda measure, it is still operated via the Road Traffic Act and so therefore it is the responsibility of the Minister for Transport, Tourism and Sport rather than the Minister for Justice and Equality.

I do not have the actual framework for the plan but the Department of Transport, Tourism and Sport is the responsible actor here. The Department of Justice and Equality might be the lead actor, but the Department of Transport, Tourism and Sport is responsible for this. We are continuing to work with it. As it has a number of measures it must complete under this plan, it is as pressed as everyone else is in terms of making this happen. Action No. 61 is back on track, which is a positive. We are going to get the other two actions back on track but it will require a bit more work.

In the Minister of State's opening statement, he said that establishing a reliable set of data and commencing a review of the impact of legal and other fees is proving to be a more complex task. He noted that work is ongoing and progress is being made. Can the Minister of State elaborate on the complexity to which he is referring?

This is recommendation No. 22 under action No. 45. It was flagged as being partially completed but with a further delay likely. The review has been commenced, but it has proven more difficult than anticipated to establish the reliable set of data and therefore the relevant action point was not completed for the first quarter. A data set based on the aggregation of cases submitted for adjudication will become available when the new Office of the Legal Costs Adjudicator, OLCA, is established either later this year or early next year. A steering group will migrate from the current office of the Taxing Master to the OLCA was formed earlier this year, and the underlying data requirements are being designed into the set-up process. There have been discussions on an alternative data set in the interim period. Until the new office is established we hope to have something that will work. It might not be perfect but sometimes good can be better than perfect. The only useable data set on legal costs available to the working group was provided by the insurance industry in response to a specific request that we made. It is recommended that a quarterly reporting system on cost trends be put in place with the insurance industry until the OLCA is operational. We are going to go with a temporary solution until the new office is up and running. It will be something but it will not be what we want. What we want will come when this new office is established.

Our report, as well as the Minister of State's report, is all about data, information and knowing what is going on. Equally it is about getting a handle on why there have been such increases. We have spent months here discussing it and published our report before the Minister of State's report came along. It is all welcome analysis but we still have the situation where expensive claims are still happening, as Senator Paddy Burke said. There is an element of fraud in that and equally there is an element of road safety. When this was discussed in the Seanad previously, it was stated that road safety is not part of the Minister of State's remit but ultimately, the fewer severe crashes there are the fewer payouts there will be. There will always be accidents but we hope that there will be fewer and fewer. The numbers in the Garda traffic corps have not been increased or been maintained in the way they had been previously. One can drive at the speed limit on any motorway in the country and other cars will still be flying past.

The use of technology, telemetry and tracking of vehicles exists and is probably very close to being commercially available or operationally viable. Is there emphasis on, or is there anything the Minister of State can do, to effectively reduce the number of crashes and the type of injuries that are being created? I am not trying to defend the insurance industry at all but clearly the more incidents and payouts there are, the more the rest of the 92% who are not making claims are paying for it. It is not the Minister of State's remit - he is not the Minister for Justice and Equality yet - but what can he do to try and reduce the number of claims and the severity of those claims? I acknowledge he is not driving the cars.

I heard an anecdote, I do not know if it is true, that when a person died in a motor accident for the first time ever, the coroner's report said that this must not be allowed to happen ever again because it is something that is absolutely preventable. The cost of insurance working group is looking at the cost of insurance and it prioritised motor in the first instance. It is not for want of being able to control all the other aspects around motor driving, but it just does not come under the remit. If we look at telematics there is a particular action point in the report.

The industry is putting together a piece of work on how we can use telematics to mean safer driving and more information, detail and data; to prevent fatalities; and to get a better understanding of claims. Last year, I spoke at a conference on the future of insurance which examined where telematics might be going. It was suggested that in a future of driverless cars and people having Fitbit indicators on their arms, when two vehicles collide it will be possible to know precisely what speed they were going, what the thread count on their tyres was, whose heart rate was going faster and whose pupils were dilated. Computers will be able to make decisions on claims and liability on the basis of such information. The huge changes that are going to happen in many industries, including the automotive industry, will have an effect on insurance and other aspects of this matter. If that means fewer accidents and fewer people being impacted on the roads, it will benefit everyone. There is a strong case for the introduction of speed cameras on motorways, as has been done in the Dublin Port tunnel, to make sure people are not driving too fast. I do not think An Garda Síochána will ever have the resources to watch every piece of road at every point in the day. Changes can be made in that regard. By the end of this year, we will have a comprehensive report from the insurance industry on telematics and the issue that has been raised by the Senator.

I would like to refer to one aspect of public liability insurance. Members of both of the publicans' representative bodies were here before Christmas. Every member of the committee is being asked about this issue. Like the Minister of State when he is at a wedding, we are always being told about individual cases. The two-year Statute of Limitations that applies in this area means that someone can arrive into a pub 23 months after an incident and say that he or she slipped there almost two years ago and wants to make a claim. The likelihood of CCTV footage being available in such circumstances is very slim. In the hospitality industry, the likelihood of staff members still being there after almost two years is very slim. What moves are being made? We all want people who make genuine claims after suffering injuries through no fault of their own to be compensated. Equally, by allowing claims to be made after 23 months, we are making it almost impossible for people to defend their positions.

This significant issue is being raised with us in our work on employers' liability and public liability insurance as part of second phase of this process. During my recent engagement with the Law Society, I raised the issue of suspected claims harvesting by solicitors' firms. We will continue to work on that one.

Is there actual evidence of that, as opposed to anecdotal evidence?

That is what I am looking for. Since we began our work on the second phase of this process in January, a number of representative bodies have made these claims in front of the working group. I have met them formally and informally. We are looking for hard evidence. It is going to be a difficult thing to pursue. We cannot do anything unless we have actual evidence. When I met representatives of the Law Society last week or two weeks ago to discuss this issue, I said we will see what we can do to get evidence. In the absence of hard evidence, we will see whether further progress can be made to give businesses faith that solicitors' firms are not behaving in this kind of way. It is important for that to be achieved. We will need to look closely at the Statute of Limitations issue. I referred in my opening address to making an addendum to our current report in September. I would like to come to the committee in July with a clear indication of some of the big-ticket items we will have to address. They are not going to be easy to address. Potentially, they will involve constitutional issues that will have to be circumnavigated by the committee and the Government.

Decisions will have to be made about where the balance or burden of proof should fall when someone comes in and makes a claim at the eleventh hour as the two-year Statute of Limitations is coming to an end, when CCTV evidence is not available and the person who might have logged the claim if it were made at the time is not available to explain why this was not done. We have heard about such cases anecdotally. All of these things need to be looked at. It appears to me that when such cases arise, there is an unfair burden on the business to be able to make a fair defence. I hope to come back to this issue next month. I hope to be able to say at that stage exactly what we want to do about it. This is one of the two big issues that have been flagged with me by each of the groups I have met during the second phase.

The Minister of State is saying he will deal with this within the next month.

As I said in my opening statement, I am hoping to do this in July. I think three or four things will need to be tackled if this problem is going to be properly solved for businesses. Some of the things that are being done on foot of the motor insurance report - for example, with regard to the Personal Injuries Commission - will flow into the costs that are being paid for employers liability and public liability premiums. Our focus is now on business. A couple of things are having an impact on them. Significant change and serious buy-in will be required from the Oireachtas and the Government if we are to get these things done. One of the first things we will have to do is ascertain whether they can be done constitutionally. I will be in a better position to explain that when I come back in July. We will be clear on what we want to do and on the changes that might be required.

I wish the Minister of State and his staff well with their work. I look forward to the updates as they progress.

I thank the Senator.

I would to ask a few questions about the various reports. I commend the Minister of State and his officials on the work they are doing. I commend all the groups and stakeholders that are contributing to the analysis of the insurance industry and taking the steps that are necessary to bring about the changes all of us want. Our ultimate aim is to see a reduction in part of the market, where possible. We are in a sort of bubble as we discuss that here. Our understanding of where this is going must relate back to the reality of life for some people. When I met a group of people recently to discuss this issue, the taxi drivers at the airport pointed out that the general charge from the airport to town is between €20 and €25. They were measuring that against the massive increases in their insurance premiums they have experienced.

I will mention one common denominator. The monthly cost of insurance, which started at €100 a few years ago, increased to €159 and then to €200. It is now €239 per month. That is the way they measured it. These ongoing increases do not seem to be stopping. One taxi business at that location recently received a quote of €20,000 for a premium. Given that the insurance companies and Insurance Ireland have a great deal of knowledge about the work that is being undertaken, one would imagine they would start to understand that the Government, the Minister of State and this committee are serious about this matter. They should almost be ahead of the Minister of State in delivering the type of response that is required. One would imagine that when the taxi drivers who have experienced these massive year-on-year increases ask the insurance companies from which they buy insurance products why the price of those products has increased so substantially, it should not be impossible for the companies - even without the Minister of State's work - to give the drivers a breakdown of the relevant data. Why is it so impossible for them to provide this information?

I would like to say a couple of things in response to that. While the Government cannot interfere in the pricing of premiums, it cannot consider it acceptable for Insurance Ireland or anyone in the industry to look to set a signal around pricing because that would feed into the type of price-fixing or price-signalling behaviour about which people have raised fears. We have to understand that the insurance industry cannot co-operate by providing certain details about how it determines premiums or how it weighs a particular risk into a policy because that might be perceived as untoward behaviour. As we know, the taxi industry has suffered significantly as a result of the increase in premiums. Driving a taxi is a riskier form of driving from the point of view of the insurance companies because of the greater frequency of trips being done. If a taxi is successful, it is constantly in motion on the roads. As it is carrying passengers for most of that time, it has other liabilities that the average driver would not have. That would be reflected in the pricing of premiums.

A meeting of the body responsible for representing small business vehicles in the Department of Transport, Tourism and Sport was due for completion in the first quarter of this year, but was delayed. That meeting, which has now taken place, marks the beginning of the progress that is needed in this area to get a better understanding of what can be done to make the situation better for taxi drivers and other people who use small vehicles for business functions. It is hoped that the general trend towards stabilisation in motor insurance premiums that we have seen over the past five months will lead to lower premiums, which would be of benefit to the taxi industry.

It is to be hoped that lower premiums will be of benefit to the taxi industry. I can absolutely ask Insurance Ireland to provide a better, more detailed and rigorous breakdown for the taxi industry to explain why it has been weighted with such heavy premiums.

My point is more specific. The cost of a product from the insurance company has gone completely out of kilter with the normal premium. Good customer relations would dictate that the insurance company should explain to its customer why the premium has gone up so far.

That is what we are working to achieve at the moment. It is one of the actions in the report.

That is the point I am making. Is it not just a normal courtesy that an insurance company could extend to its customers overnight? I am not being critical of the Minister of State or his work. The companies know where he is going with this. Why do they not just co-operate, even on that front? They could give the taxi driver in this case a reason as to why it is going up. I understand what the Minister of State said about more frequent journeys and so on. However, that does not explain matters fully.

I understand that. It is not for me to defend how they interact with their customers. That is their side of things. I recognise that the insurance industry is co-operating on a number of fronts. While the premium breakdown for drivers is important, there are things that are more important, such as building the national claims information database. They are doing a number of things. I do not think it is as simple as deciding overnight to give a breakdown. We are talking about changing significant IT systems, how they interact with their customers and what information they give. I am not an employee in one of these companies, but-----

The Minister of State is not, but if he goes into an insurance broker and asks why his insurance premium has gone up from €500 to €1,000, that broker can easily give the reasons. The broker is dealing with a bigger company and can have the reasons explained. The day we insist that an insurance company must explain increases in premiums to its customers is the day we will get transparency. I know it is a small thing. Imagine something that costs €20 in one shop that is for sale down the road for €15 and it is exactly the same product. The explanation of that price difference is what gives rise to the transparency that is necessary.

I am not saying the Minister of State can force them to do it. I am just saying that the insurance companies seem so reluctant to co-operate on the most basic of things, that being one of them. This committee and working group need to put more pressure on them to respond more quickly.

I do not want to say that we are going to force them to do that because I do not want to use that language. They are going to do it because we have mandated it in our plan and the protocol will be agreed by the end of June. That is the reporting deadline. It is going to happen.

I want to make it perfectly clear that the taxi driver example is repeated in the haulage industry. The number of cases that have been brought to my attention would not lead me to believe there is stabilisation in the insurance market. I know today's CSO report indicates that, by comparison with last April, there has been a 2.6% reduction in insurance premiums. That is not the experience right across the board. Shocking levels of premiums are being asked for without any explanation at all.

The other report that is out today is on the economy. It states that Ireland remains a relatively high-cost location and that already the return to sustained levels of growth has resulted in a series of upward cost pressures. It goes on to highlight the importance of prioritising policies and actions that are within Ireland's control to enhance cost competitiveness. Insurance falls into that category. It is affecting business. I know from personal experience that it is causing the amount of the premium to be passed on to the consumer. Whether someone is a taxi driver or in transport or wherever else, we at the end of the line are the ones paying those costs. They are fleecing the country.

Obviously we cannot price the premiums ourselves because of EU law, but there is a lot that we can do. That is the work that the Chairman has done in the committee's report and that we see is being done now in terms of the cost of insurance working group. We are getting on top of this. The trend is 2% down year on year but 6% down since July of last year. There have been five months of no increase according to the CSO data. The person seeing a €200 increase in their motor insurance premium is going to take no comfort from that. I completely understand that. However, from our perspective as the Oireachtas and the Government, the overall data are going in the right direction. We are seeing a stabilisation and may hope to see a proper reduction follow, not just 6% year on year but greater than that. That is what we are hoping to achieve.

The Minister of State's report states that Insurance Ireland is to do certain things and provide certain reports. The Central Bank is to request new legislation. The Department of Finance and the EU are looking at something in terms of a report. The Department of Transport, Tourism and Sport is doing something else. They all come together and are represented within the Minister of State's group. It begs the question as to what were they doing over the past ten or 15 years. They have not modernised their IT systems. They have not brought forward legislation to modernise the courts system or the industry itself. The Personal Injuries Assessment Board should have been dealing with that. It has done nothing. It has just allowed the increases to creep into the marketplace to such an extent that whatever reduction we might come to enjoy in five or ten years will be nothing compared with the original premiums we paid.

In terms of things not being done, when I was before the committee before Christmas 2016, I said we were not coming at this from a standing start. Work was already under way, for example, preparing to strengthen the powers of the Personal Injuries Assessment Board. That work had commenced last year. The book of quantum was published in October, I think. They were working on the new book of quantum even while the working group was set up in July and the committee was entering into its hearings in September when I first appeared. They were working to update the book of quantum at that time. Work had already begun around the national vehicle driver file and the single passport for drivers. It is not that nothing was being done. It was a question of co-ordinating some existing actions and working them to a stricter timeline while introducing the new reforms identified by the committee and by our working group around things like a national claims information database or the need to set up a personal injuries commission. What is good about this plan is that it has tied it all together in a comprehensive manner and we can see what body is responsible for which action. That would have been identified by some of the stakeholders that appeared at the committee. Previously, the committee would have had to pull in representatives from every Department to try to get answers.

Was there reluctance in any of those groups to co-operate?

We have an excellent working group. People have put in a huge amount of time. We set it up in July and moved to subgroups in August, which were meeting every week. People had to take on additional workloads and have worked very well together. We are now looking at breaking into a new subgroup structure for the employers' liability and public liability, EL and PL, piece. I will be able to talk more about that in July when we have a greater idea of where we want to go.

I think we are finished with the section of the meeting on insurance. I suggest we suspend for five minutes. I do not envisage the section on procurement going on too long.

Sitting suspended at 12 noon and resumed at 12.05 p.m.