I thank the committee for inviting the Alliance for Insurance Reform to this meeting. I am joined by Mr. Ivan Cooper, director of public policy with The Wheel, and also a director of Alliance Insurance Reform; Mr. Colm Croffy, director of the Association of Irish Festival Events, AOIFE; and Mr. Alex Sinclair, chief executive of Motorsport Ireland. Unfortunately, Mr. Cooper has to attend the annual conference of The Wheel today so he will have to excuse himself at approximately 10.50 a.m. As I forwarded the presentation to the committee last week and members may have read it, I propose to stick to the key salient details today.
The Alliance for Insurance Reform brings together representative bodies from the community, charity, sports and small and medium sized business sectors across Ireland, representing over 35,000 organisations, 645,000 employees, 41,300 volunteers and, with the joining of the Irish Co-operative Organisation Society, ICOS, this week, 150,000 co-operative members, to demand rapid action to end crippling insurance costs. Full details of our membership are available at Appendix 1.
The creation of the alliance is a response to countless stories from small organisations where services and jobs are being affected by excessive insurance premiums, liability and motor. Members will have heard many such stories already. That said, there is a great deal of fear among many organisations. They are afraid to go public on their experiences because they are at the mercy of one underwriter or because they might draw additional claims on themselves. What members are hearing is only the tip of the iceberg. However, we do not intend to focus on stories today. Rather, we intend to cut to the chase and focus on analysis and solutions.
We are at a turning point in our approach to insurance in Ireland. The current system is dysfunctional to the extent that what is supposed to be a service industry that facilitates the operation of society has become an extractive industry, taking over €2 billion in motor and liability premiums annually, protected and made compulsory in many cases by the State and so expensive that it represents a major threat to the viability of many of the organisations that form the backbone of our nation. A survey of 950 organisations within the alliance, carried out by Amárach Research in January, found that since 2013 nearly half of respondents have seen their premiums rise by more than 30%, while more than one fifth have seen rises of over 70%. This is in the broader context of a consumer price index, CPI, increase of 0.9% in the same period. Two thirds of respondents also reported having increased excesses or new exclusions added to their policies, an equally damaging trend that severely restricts the ability of community organisations to develop and creates additional exposure to cost. Critically, 45% of respondents cited insurance as a threat to the future of their organisation. A summary of the research is available at Appendix 2.
Our members feel that it is the insurance industry and the legal profession that have the strongest voices in the corridors of power. Policyholders feel that we have no voice. This is amplified by the recent Collins Institute report for Fine Gael which concluded that the Central Bank, the State institution charged with protecting insurance policyholders, is too focused on the needs of the financial services industry. There is certainly a great deal of activity around the area right now, but our concern is that much will be discussed and little will be done. It is not in the interests of the insurance companies or lawyers operating in this market that anything changes. If we were them, we would huff and puff as a show of empathy with our customers but we would fight tooth and nail behind the scenes to stop real change. We would cite constitutional issues, data protection issues or competition issues. We would suggest self-regulation, agree protocols, ease off on the aggressive profit-taking for a while until the fuss died down or just string out the debate until the next election. We would do anything to stop real reform.
In the past eight weeks we have spoken to the Minister of State at the Departments of Finance and Public Expenditure and Reform, Deputy D'Arcy, and his civil servants, the Personal Injuries Assessment Board, PIAB, the Data Protection Commission, the Personal Injuries Commission, the Legal Services Regulatory Authority, the Competition and Consumer Protection Commission, the Department of Justice and Equality and An Garda Síochána. It is clear to us that many elements of the work of the cost of insurance working group, CIWG, are grinding to a halt with the dead hand of vested interests evident. The buck stops firmly with policy makers. The actions we are suggesting are in the areas of transparency, consistency and prevention. We believe them to be just, proportionate, feasible and achievable within a limited timeframe and that, ultimately, they will be effective. They are also practical ways of solving the insurance crisis and we hope the committee will consider and support them.
I do not intend to go through all of the actions in detail but I will go into some detail on the transparency issue. The insurance industry is of systemic importance to the proper functioning of Irish society and is enshrined as such in much legislation and regulation, yet there is virtually no transparency in this market, either at industry or individual policyholder level. In regard to control of the data coming from the new national claims information database, we demand that control of analysis and reporting of that data
be given to the Personal Injuries Assessment Board rather than the Central Bank. The PIAB has the expertise and funding necessary and no additional legislation would be required as sections 54 and 55 of the Personal Injuries Assessment Board Act 2003 already allow for this function. Even if this legislation is cleared, and with the best will in the world, we will not have any useable data for at least another five years. This creates an enormous vacuum. With this in mind, we are calling for the reinstatement of the blue book. We insist that the blue book be immediately reinstated and enhanced to restore the only transparency which previously existed in the market before the Central Bank unilaterally discontinued it in 2016.
We are also asking that the agreed large increases protocol be scrapped and the issue revisited. The first recommendation in the CIWG motor insurance report was that insurers set out reasons for large increases in premiums to consumers. The protocol produced from this recommendation was one of the first actions to be ticked as completed in the CIWG updates. However, the protocol, as agreed between the Department of Finance and the insurance industry - an example of which I sent as a link in the document - is a good example of how the CIWG is being strangled. We would be better off without it, as it only creates the impression that something has been achieved when it has not. We want a meaningful protocol agreed for both motor and liability insurance policyholders that individualises explanations with clear calculations showing the basis of premium charges.
In the transparency area, we are seeking the reinstatement of the 2003 insurance industry IBEC protocol for dealing with claims. Almost a year was spent by the Department of Finance and Insurance Ireland talking in circles about a protocol for notifying policyholders about the progress of claims against them before the Department discovered a pre-existing protocol agreed between the insurance industry and IBEC in 2003. The insurance industry is now resisting its implementation anew. We demand that it is implemented immediately, backed by legislation, for both the motor insurance and liability insurance sectors. A copy of this protocol is available at Appendix 3.
I will briefly outline the other six asks we have of this committee. In terms of consistency, we are seeking a change to the approach used in calculating the book of quantum. The Court of Appeal has already set the parameters for this changed approach. We ask that they be put in place. We also ask that judges who award damages in excess of the book of quantum set out detailed reasoning for doing so, such that we know what is going on in the courts when it comes to sky high awards.
In terms of prevention, we are seeking the linking of sections 25 and 26 of the Civil Liability and Courts Act 2004 so that where a person's claim is dismissed because he or she has presented exaggerated or misleading information, the case would be automatically referred to the Garda Síochána for potential prosecution. We are awaiting the establishment of a Garda insurance fraud unit, which has been stalled now for six months. I understand the file has been with Insurance Ireland for the past six months. We want this unit put in place immediately. We are also seeking regulation of claims management companies, also known as claims harvesters. We believe these companies are adding fuel to the fire of fraudulent, exaggerated and misleading claims. The UK has legislated for these companies with just cause since 2007. We are asking that parallel legislation be introduced in Ireland.
We are also seeking amendment of section 8 of the Civil Liability and Courts Act 2004, to bring us in line with the data protection legislation. Currently, our members are caught between a rock and a hard place in that they are obliged to delete bulk CCTV footage within a month yet claims can come in for up to two years.
We want that amended as a matter of urgency.
As an alliance we have put a lot of work into addressing this crucial issue for our members, their employees and volunteers. We hope that the committee can help us get action quickly and we are happy to take questions.