No. 8 is a discussion on the progress of the cost of insurance working group. I welcome the Minister, Deputy D'Arcy, and his officials to the meeting.
Cost of Insurance Working Group Update: Discussion
I thank the committee for its invitation to discuss issues in the insurance sector. As members will be aware, this week the 7th quarterly report on progress on the cost of motor insurance, and the cost of employer and public liability insurance, was published. It shows that, of the 78 separate applicable deadlines within the action plans of the two reports at the end of quarter 3 2018, 62 relate to actions that have now been completed. This report outlines the significant work being done to address the cost of insurance. In this regard, there has been significant progress on a number of legislative fronts as well as the publication of the second Personal Injuries Commission, PIC, report on the benchmarking of awards. While some deadlines have yet to be met, the general direction of travel is positive and this is reflected in the most recent CSO figures for October 2018, which indicates that private motor insurance premia have decreased by 22.9% since peaking in July 2016.
I will now highlight a number of the key developments that have taken place in the past number of months The committee will be aware that the Insurance (Amendment) Act 2018 was signed into law last July. This important legislation was necessary to address the Setanta legacy. The Act provides for the payment of 100% of the compensation due to Setanta third party personal injury motor insurance claimants, including the additional 35% to those who have settled their claims and received compensation of 65% of their claim. The State Claims Agency will apply to the High Court on 19 November to obtain approval for payments from the Insurance Compensation Fund in respect of the fourth tranche of payments to the Setanta claimants. I am hopeful that this tranche of payments will be made to claimants in late November or early December this year. It involves in the region of 1,500 separate payments, with a value of approximately €21 million.
Another important step forward is in the work the Cost of Insurance Working Group has been doing with the publication, and completion of Second Stage, of the Central Bank (National Claims Information Database) Bill 2018. Committee Stage will be held on 29 November and I am hopeful that with the assistance of all parties in the House, it can be enacted by the end of the year to allow the database to become operational from early 2019. Members should be aware that I intend to propose two amendments to the Bill to amend sections 8 and 14 of the Civil Liability and Courts Act 2004 in order to implement recommendations of the employer and public liability report. These measures are important for stakeholders as, when implemented, they should make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected.
The Personal Injuries Assessment Board (Amendment) (No. 2) Bill 2018 has been published by my colleague the Minister for Business, Enterprise and Innovation, Deputy Heather Humphreys, and completed Second Stage on 8 November.
Given the importance of this Bill, as part of the overall reform agenda related to the personal injuries framework, it is important to facilitate its swift passage. In many ways the most significant development over the last number of months has been the publication of the second and final report of the Personal Injuries Commission, PIC. This was a key recommendation of the Working Group on the Cost of Motor Insurance report and I grateful to the Chair, Mr. Justice Nicholas Kearns, former President of the High Court, and members of the Personal Injuries Commission for their careful consideration of the personal injuries framework. In view of the findings of the benchmarking exercise, which indicated that compensation payments for soft tissue injuries claims in Ireland are typically 4.4 times that of the UK for similar claims, I would like to note in particular my view that it will be important that progress is made on the development of judicial guidelines for injuries rewards. If implemented in the spirit intended, this will be a unique opportunity for Irish society to consider an appropriate rebalancing and recalibration of Irish awards both in the context of their relative values to each other, and comparatively, to other jurisdictions. A significant knock-on effect from such an exercise will be lower premium levels, thus improving the situation for consumers, business owners, and society without disproportionately restricting access to appropriate compensation for genuine and seriously injured claimants.
Consequently, as the Bill providing for the establishment of the judicial council is a legislative priority for the Government, I hope that significant progress can be made towards its enactment by the end of this year. In summary, the implementation of the personal injuries commission, PIC, report is key to fundamentally addressing many of people's concerns about the personal injuries compensation framework in this country.
Since we started our work in 2016, there is a much greater appreciation of the nature and extent of the underlying problems. In particular, publications such as the PIC report continue to influence the public perception of this issue and provide the necessary momentum to continue with this very important project.
In addition, the robust approach being adopted by some insurers to challenging questionable claims is proving successful in tackling fraud, as can be seen in recent media reports detailing personal injuries cases which have been dismissed by the courts after extensive investigations surrounding the circumstances of the claim. This trend is encouraging in tackling the problem of dubious or exaggerated claims from the personal injuries litigation system. These facts, on top of the most recent CSO figures showing an almost 23% decrease since peak levels in July 2016 show that the work of the working group on the cost of motor insurance is making a difference. We cannot become complacent on this agenda, however, and can therefore rest assured that I will work closely with my Government colleagues and the other relevant agencies to ensure that everything necessary is done to achieve this objective as quickly as possible.
Before I finish, Chairman, it is clear that there are a number of pieces of significant legislation at different stages in the Oireachtas. I want to ask members of the committee and their colleagues to help in the aim of ensuring that the maximum amount of floor time in both Houses be made available for these pieces of legislation. To put it quite bluntly, without getting the legislation through both Houses now as quickly as possible, progress will be slower than we would like. If anyone has spare time or if they want to get the best use of their time, my Department is ready, willing and able to deal with these as quickly as possible.
We all sat in this committee and we did a report on the insurance industry and the Minister brought forward his own report; would he not admit that it is simply not working? The insurance industry is rolling him over on the recommendations and as this is happening, people out there whether they are motorists, consumers, business people and those involved in the agricultural sector in marts and other areas are paying astronomical insurance premiums as a result. They are being fleeced by what is being described in Europe and indeed here by cartel-like activities. That is not a stretch of the imagination. We are aware that certain sectors of this industry were subject to dawn raids by European authorities working hand-in-glove with our own authorities.
On some of the recommendations that he is to oversee and implement, for example, the insurance industry was asked to display the reasons for the large increases last year which the Minister agreed in a protocol. Now he is telling us that following a review by the Department, insurers have been asked to ensure that this information is displayed more prominently on their websites so that that it is accessible and visible for consumers and the Department is going to continue to monitor it. The insurers were to provide additional information on premium breakdowns to customers. This was a key recommendation of the Oireachtas committee and the Minister is telling us now that there is consultation under way. This is the second round of consultation. We know in the first consultation, the insurance industry complained about costs and making things complicated. These are recommendations numbers 1 and 2. They are simply not going anywhere.
If we look at recommendation number 3, to extend the current renewal notification from 15 to 20 working days, this has been blocked by the insurance sector complaining about it.
If the Deputy wishes I can go through each of the points, one by one but if he throws them all at me at once-----
The Minister of State can respond because what I am trying to grasp-----
I will probably miss some of them if he throws them all at me.
It is very simple, recommendations numbers one, two and three have all been blocked by the insurance industry to date. That is the Ladybird version of what I saying. Recommendation No. 6 is a protocol to ensure a greater consistency of treatment for returning emigrants. We hear again, following a review by the Department, insurers are being asked to ensure this information is displayed more prominently on their website to it is accessible and visible. They are messing again and doing the bare minimum.
Recommendation No. 8 is a protocol for policy holders to be notified of claims made against them before settlement. Here the insurers are brazenly blocking the Minister. He wrote to them a year ago but they are still playing hardball. For something as simple as notifying policy holders of claims made against them, they are forcing him to go through the route of legislation.
That is the pattern with a number of key recommendations in the report. The report is now a year old. Many people who are paying these premiums thought it was just a matter of getting through an obstacle after the work this committee did in shining a light on what was happening in the insurance industry and how people were being fleeced. When is the Minister going to start playing hardball with the insurance industry? It is very clear to me and to my constituents that this industry is rolling him over time and time again in these recommendations.
I thank the Deputy but he is wrong. The figure that is most relevant to this is that the motor insurance premium has been reduced by 23%. That is something that he cannot argue with. The figures that we accepted from the CSO showed an increase of almost 60%, going back to the peak of 2016. Since that peak there has been a reduction of 23%. The Deputy is making analogies and broad statements about rolling over but he cannot argue with that reduction figure of 23%. I did not catch all of his points but I will address recommendations 2 and 3, which relate to the provision of additional information and the extension of the renewal notification period. The delay in addressing these actions points is due to the Central Bank having to undertake a second consultation process on the inclusion of last year's premium and renewal notice. This was completed last September. The Central Bank is considering these responses, with the aim of finalising all amendments to SI 74 to the end of this year. The objective of insurers providing additional breakdown of the premium to consumers, including the previous year's premium, and extending the renewal notification period from 15 days to 20 days was to give people the opportunity to see what last year's premium was. I am dealing with people at every level. Many people have more than one premium, for example, those in business. Last year's premium will be noted on the premium for this year. If there is an increase, they will see exactly what it is.
Last year's premium will be noted on the premium for this year.
That is correct.
That is not what was requested or what is in the recommendation. It is to give a breakdown of premium.
That was an add-on which people have said-----
One of the key things that this committee determined is that people were being fleeced and they still are. I did not say that insurance premiums were rising in the motor industry. The fact that the premiums are dropping by the amount that the Minister has said does not take away the fact that they risen substantially over a period when the Government sat on its hands.
Excuse me but the Deputy should deal with the facts.
I am dealing with the facts.
The Deputy is making it up.
Deputy Pearse Doherty has the floor. When he finishes, the Minister of State can come back.
One of the key recommendations was to give an individualised breakdown of premiums to ensure there would be transparency to this. The idea that one would say this is what was charged last year and this is what will be charged this year is not on. We can all dig out our premium quote from last year. It was about trying to make the industry justify how it was charging for motor as well as fleet insurance. I informed this committee of one haulier whose premiums went from €32,000 to €120,000 in the space of three years. In anybody’s book, that is somebody who is being fleeced by an industry which is operating as a cartel.
The Minister of State claimed I was wrong. Recommendation No. 1 is not implemented and has actually been blocked. It is the same with recommendation No. 2. Recommendation No. 3 has been blocked by the insurance industry. For recommendation No. 6, the protocol does not exist and it is just about putting something on a website. Recommendation No. 8 regarding the protocol for policyholders being notified of claims made against them before settlement again is being blocked. Five of the first eight recommendations have all been blocked by the insurance industry.
We will hear the Minister of State put a spin on that suggesting everything is much better for consumers. It is definitely okay for the industry because it has a Minister of State not standing up to it. He referred to the issue of fraud. It is a real issue, but where is he on it? He makes statements on radio and in this committee that he does not agree with the recommendation to set up an insurance industry funded Garda fraud squad but he will do it anyway. That is not what is needed. We need serious action with a publicly funded squad. We need to let the Garda Commissioner know that the Government stands 100% square behind him and make the resources available to stamp out fraud. We need to deal with the real issues, which are these recommendations which are over a year old. The Minister of State is completely out of touch with what is happening and is not playing hardball with the insurance industry.
The Deputy is out of touch. He is ignoring the fact that the average insurance premium has decreased by 23%. The figure which peaked at July 2016 was a 60% increase. That figure is from the Central Statistics Office, CSO. The CSO is analysing the numbers and has stated there has been a 23% decrease since then. We need to deal with the facts.
We have problems in the insurance sector with fraud and exaggerated claims as well as high awards. Those are the facts and that is what the bulk of money goes on when the premium is paid.
Maybe the Deputy does not agree with the CSO. It is easy for him to pluck out an individual case, claiming it has gone from €30,000 to more than €100,000. I have to deal with the average figure. The Deputy can ignore it all he wants but there has been a reduction of 23% since the cost of insurance working group was established.
The Minister of State keeps on talking about something that I am not disputing.
He said it is all wrong. I am not saying it is all right but it is not all wrong either. We have a significant problem with fraud, exaggerated claims and the levels of awards. That is where the real problems are in the insurance sector.
The Personal Injuries Commission benchmarked the level of award for soft tissue injuries, which come to 70% of all claims, against those in the UK. It found awards here are 4.4 times what they are in the UK. We have a problem with insurance fraud and exaggerated claims. In my view, the latter is a much larger issue. We will deal with that when the national claims information database comes online when section 8 of the Central Bank (National Claims Information Database) Bill 2018 is commenced.
The Deputy misrepresented my position on the Garda insurance fraud section. I support it. However, I do not support it being paid for directly by the industry. If Insurance Ireland wishes to pay the moneys into the Exchequer and they are then passed on to the Garda, then I am 100% behind that.
Is recommendation No. 1 fully implemented or not?
Recommendation No. 1 stated there would a bespoke breakdown of every premium. When we analysed that, there would be an additional cost to every premium. Everything we are doing is to reduce costs, not increase them. I have said before that not every recommendation will be implemented. When we did an in-depth analysis-----
Yes, but-----
The Deputy should allow me to finish. When we did an in-depth analysis, there were implications, costs and overlap of work.
It took the Minister of State long enough to come up with these recommendations in the first place. Recommendation No. 1 is not implemented because, as the Minister of State said, the insurance industry claimed it would push up prices.
Recommendation No. 2 has not been implemented.
Recommendation No. 2 will be implemented by the end of the year.
Is it not the case that there is a consultation process under way?
That has finished.
Has it been implemented?
Recommendation No. 2 will be implemented by the end of the year.
Accordingly, it has not been implemented as of yet. Has recommendation No. 3 been implemented?
It will be by the end of the year.
It has not been implemented either. Has recommendation No. 6 been implemented?
Is there a protocol?
Where is it?
It is agreed between Insurance Ireland and the companies.
Is the Minister of State telling me that the protocol is just about putting more information on websites?
The protocol is agreed.
Is the sum total of this protocol, on the issue of insurance for returning emigrants, just for the insurance industry to put more information on its websites?
The matter is concluded-----
Will the Minister of State tell us what is in it?
I have had no complications in the past four months with this. When I first took office, I had a large number of representations from returning emigrants. The matter has been concluded with Insurance Ireland and its companies.
The Minister of State told me that. Will he now tell me what is in it? Is the sum total of this protocol, on the issue of insurance for returning emigrants, just for the insurance industry to put more information on its websites?
The Department of Finance and Insurance Ireland have agreed a protocol which commits insurance companies to accept claims-free driving experience in another country, subject to appropriate verifiable documentation being provided. The guiding principle is to ensure that a returning emigrant is not treated any differently from any other driver, subject to verification. The Deputy might not be happy with that. He would prefer to say it is only on the website. That is agreed with Insurance Ireland, the Department and the insurance companies, however.
I find it hard to figure out what is new from what the Minister of State just read out and what was there before.
There was nothing there before for returning emigrants. The issue arose during the process.
Has recommendation No. 8, protocol for policyholders notified of claims made against them before settlement, been implemented?
That has to be done through legislation. It has not been implemented.
The Minister of State wrote to the insurance industry last year but it is playing hardball. Take taxi drivers-----
I cannot direct the insurance industry to do any of this. I will explain it to the Deputy because he is not aware of what the cost of insurance working group does. There are four Departments involved, as well as the State Claims Agency, the Central Bank, the Personal Injuries Assessment Board and others. I do not have authority over all of them. My job is to work with them and encourage all of these processes through all these agencies and Departments. The Deputy seems to think I have a magic wand to do this and that. It does not work like that. In the same way, I cannot instruct any insurance company to what we are asking them to do. I can encourage them and bring them along. That is the process which I am chairing.
There is a clear pattern here.
Let us take taxi drivers as an example as I and many other members have raised this issue previously. I got a call from a constituent, a taxi driver in Donegal who has had motor and home insurance policies with Liberty Insurance for more than ten years. He has two cars and has not made any claims. He told the company he wanted to put another taxi on the road, as part of an expansion of his business, which is great to see. Liberty quoted him €11,700. That emphasises the point that, while all of this feet-dragging has been happening, people are being fleeced.
There was only one reference to taxi drivers in the plan and that was for an advisory committee on small, public service vehicles to enter into regular discussions with Insurance Ireland to explore solutions for drivers in these sectors. How many times has that committee met?
It has met once, but what has happened-----
Once in 18 months.
The Deputy does not have to raise his voice.
I am raising it on behalf of taxi drivers.
My hearing is fine. If the Deputy would allow me to explain. What I have proposed are two pilot schemes for taxi drivers who would be prepared to install dashboard cameras and a control box in their vehicles in order that they would be intentionally tracked by the insurance companies. There is an opportunity to do this and we are examining it.
A constituent of mine is being charged €11,700 and the most recent and only time this committee met was a year and a half ago. The Minister of State with responsibility for the insurance industry can say he is doing a fine job but, by God, he is not. Let me come to the issue of fraud.
I have not been lobbied on this by the taxi sector.
The recommendation is there in black and white.
That is fine, and I accept that.
Does the Minister of State not think this is his responsibility? Why has the advisory committee not met for the past year and a half?
I am looking at the opportunity-----
This is one of the recommendations.
-----to introduce a pilot programme to try to reduce the cost to professional drivers. Taxi drivers are professional drivers and they are a higher risk. Those are the facts.
Will the Minister of State do the right thing and ditch the idea of a private industry funding a section of An Garda Síochána? We heard the Garda Commissioner discuss Garda concerns about this. The Minister of State should do the right thing and ensure his Government colleagues support what this committee is seeking, namely, a publicly funded fraud squad within the Garda. It is ridiculous that we do not have a fraud squad in the Garda at the end of 2018. We have raised this matter year after year. We have heard from the industry and others. No prosecutions are being brought when the courts clearly find that claims are fraudulent. The false claimants walk out the door of the court. Why would they not when there is no fraud squad in the Garda Síochána to deal with fraudulent insurance claims?
The Government has complicated the issue by throwing in this idea that, for the first time, the Garda would be funded by private industry. It should instead do the right thing and send a letter or make a call to the Garda Commissioner informing him that the Government stands foursquare behind him. Fraud is a serious issue, although not the only issue facing the insurance sector. The Government should tell the Commissioner that it make the resources necessary available to him if he wants to establish a fraud squad forthwith. Why does it not do that?
The deployment of resources in the Garda National Economic Crime Bureau is a matter for the Garda to decide as it sees fit.
Through section 14 of the Central Bank (National Claims and Information Database) Bill, we are trying to improve the opportunity and pathway available to judges in the civil court in cases where they suspect there is fraud and exaggeration. There have been, I believe, only six prosecutions since the Act was introduced in 2004. That is not good enough for all those who are participating in the pursuit of people who are fraudulent. Those people should be pursued, but that is a matter for the Garda and the Director of Public Prosecutions. There is a cross-over from the civil courts into the criminal courts, which operate in a different space. I am not satisfied that this cross-over has taken place. The superintendent in charge of the Garda National Economic Crime Bureau informs me there has been a big improvement in the conversation between the bureau and Insurance Ireland. Details of claims have been sent to the bureau and the insurance industry has highlighted that some of these claims are fraudulent. As a result, the Garda has informed some of those making the claims that it is investigating the matter. The information that I have been given indicates that, on the basis of the number of visits that have occurred, two thirds of these claims have been withdrawn. Claims are being withdrawn because they even get to court because the Garda is now investigating the matter. The Deputy is again wrong when he says nothing is happening. We are improving the pathways. The Deputy wants to establish a new section in the Garda when it is not necessary to do so.
The Minister of State wants to establish a new section.
No, I do not.
It is in his recommendation. He should not misinterpret the position. He wants to set up a new section in the Garda to be funded by private industry.
Deputy Doherty said he wanted to establish a new section and he also-----
Let us establish the section and get it up and running.
I do not instruct the Garda on what it must do or how it should investigate these matters. We have the proposals and I have written to Commissioner Harris who has replied. The Commissioner is getting his feet under the desk and I do not want to be a burden to him. He has serious issues to deal with. For example, we are all aware of what happened in Drogheda in the past couple of days. I expect to meet the Commissioner before Christmas when I will raise all these matters directly with him. I will see what his opinion is at that stage.
I do not have a magic wand to instruct the Garda, DPP, Courts Service, Central Bank, State Claims Agency, Personal Injuries Assessment Board, PIAB, and other Departments involved in the insurance sector. This is a big and broad sector and we are moving in the right direction. The Deputy also chooses to ignore the 23% reduction in the cost of premiums. That is the one figure he has not highlighted.
No, I did.
He did not.
I accepted that.
The Deputy is trying to say it is all wrong.
The Minister of State is ignoring that his recommendations have not been implemented.
The Deputy is trying to-----
He comes in here, year after year, after the fact. He is completely failing this industry.
Excuse me. The Deputy is wrong.
He is completely and utterly failing.
The Deputy is ignoring that 62 of the 78 recommendations have been implemented. We have done a lot of good work. We have improved the sector. The flow is in the right direction, but the Deputy wants to say it is all wrong. That is not the case.
Most of the questions have been covered at this stage. I want to break down what the 23% figure means to the individual consumer. Is the Minister of State saying, based on the CSO figures, that if everything has remained the same for consumers in terms of the vehicle they are driving and so on, they can expect to have their insurance premium reduced by 23% this year?
That is the industry average for motor insurance.
If a consumer's premium is not reduced by approximately 23% - it could be more than that - is he or she being ripped off?
Every premium taken out by an individual is a matter for him or her. The Senator can describe it as being ripped off if she likes, but companies have different pricing arrangements. We recently did a mystery shopper exercise with insurance companies. Insurance with some companies costs twice as much as with other companies because of the way in which they price it. The Senator can call it a rip-off if she wishes but each company has a different method of calculating risk for pricing.
I understand that but the figure of 23% has to mean something to people. I am trying to get a handle on this because in all honesty I have not met anyone whose insurance premium has been reduced by 23%.
I have.
I will give an example from last week involving an elderly person who had a tip with her car and notified the insurance company that the car she tipped into had been slightly damaged.
She went to the garage and it was fixed for less than €100. Her insurance premium was doubled. There was no insurance claim, nothing like that. She rang up the insurance and asked if the other party had claimed. The Minister is saying and I want to get this clear that people can have a rightful expectation to have their premium reduced by 23%.
Sorry, but the Senator should not misrepresent this. The 23% is the calculation by the CSO on the basis of the entire industry of an average reduction. If somebody is applying for a new premium 12 months later in exactly the same circumstances, there should be a reduction. Companies have different pricing models and are stronger in certain markets than in others. Some companies are averse to insuring younger people and some are very strong with younger people.
I understand the Minister but there is vagueness and ambiguity around it and what it actually means for people. That is what is causing a lot of the concern and there is frustration at how slow this is to make an impact; it is not making a difference in many people's pockets.
I have to disagree with the Senator. The figure that was used for the increase was the same figure that we are using for the decrease. As people saw their premium increasing, and it was calculated on that basis by the CSO, the same figures were being used for the decrease. Let us not tiptoe around this. We have 62 out of the 78 recommendations concluded. Some of the remainder will not be done because our analysis is showing that potentially it would cost too much. We are down to the big stuff now. The big stuff includes the national claims information database. That has to be passed by the Oireachtas as quickly as possible. We are down to the recommendations from the Personal Injuries Commission, PIC report from Mr. Justice Kearns where the analysis is that the rewards are way out of kilter-----
Is the Minister saying that this is almost a job done?
No. What I am saying is the 23% reduction is because of the 62 recommendations and all of the work we have been doing by analysing this sector. There will be a further decrease when we establish the national claims information database and the judicial council. The first piece of work that the judicial council should do is, following on from the PIC report, is recalibrate the book of quantum. Our book of quantum is way out of kilter with every other jurisdiction.
We have gone through all of that.
I ask the Senator not to be glib about all of this.
I am not at all.
She is.
I really am not. I am here to do a job on behalf of the people that I represent-----
I am here to answer these questions.
-----and I want to get to the bottom of why they are not seeing the impact of all of the recommendations that were made, even the aggregate impact of it, why it is not making a difference in people's pockets. One can go back to the 23% which I do not want to do, but when one deals with averages, one knows that this does not mean anything to many people. It still seems, from looking at all of the recommendations, that all of the cards are still with the insurance industry. That was what we spent weeks and weeks examining-----
All of the what?
All of the cards are with the insurance companies. I accept what the Minister of State is saying and that he cannot instruct the industry but the buck does stop with the Minister.
Let me outline again that we have recently conducted a mystery shopper exercise between the Department and Insurance Ireland. Both entities had a mystery shopper exercise for vehicles over ten years of age. The variation in the market was enormous - the premium doubled between the lowest and the highest. I cannot instruct each individual company how to have their pricing structure based upon their risk models. That is a matter for them. What is a matter for every individual is - a point I make all of the time - is to shop around. Unfortunately too many people stay with the same company or broker. They never change. There is much better value out there, if people shop around and get new pricing opportunities, whether with a broker or directly with the insurance company.
The Minister of State's message to people is to shop around more.
My message to people, absolutely, is to shop around more. The Department of Finance and Insurance Ireland have just concluded a mystery shopper exercise and the variations were double between the premium offered for similar vehicles. That is a matter for insurance companies themselves with different pricing models with different target market areas.
People will and do expect more from a Minister than being told to shop around.
I am not just saying to shop around. We have implemented 62 of the 78 recommendations. That is why the figure is down 23%. The Senator and her colleague do not seem to want to engage and seem to be more taken up with the 23%-----
My insurance is not down 23%.
The next big issues are the national claims information database, the judicial council and the recalibration of the book of quantum. That is where I would hope we will reduce the figure further. Unless I get co-operation between both Houses, to get these pieces of legislation through as quickly as possible, then we might get stuck at 23%, I do not know.
Has the Minister published the legislation?
Which legislation?
The legislation he is talking about.
Yes. The national claims legislation has gone through Second Stage in the Dáil. The Judicial Council Bill is in the Seanad and is stuck behind the Judicial Appointments Commission Bill, where there has been 41 hours of a filibuster. I do not agree with guillotining but if we get stuck behind legislation, there is a cost. The cost on this occasion in the Seanad of which Senator Walsh is a Member is that other legislation gets stuck behind it. The Judicial Council Bill is sponsored by the Department of Justice and Equality. The Judicial Appointments Commission Bill is ahead of it. Until we can get that Bill concluded the Judicial Council Bill will not progress.
The Minister is saying that the Judicial Appointments Commission Bill is holding all of this up. I acknowledge that it is Fianna Fáil, the Independent Senators and Labour that are holding that up.
Can I also make the point that in the Dáil there has been a filibuster on other legislation? We have only so much Government time available. That is why I am asking, very openly and clearly, if any Opposition party members or Independents want to make time available to get this crucial legislation through, I will take it. We are ready to go.
We can work with the Minister.
I want to address the returning immigrants issue and what difference they can expect. The Minister is saying here that their driving record is to be recognised.
If it is verified.
If it is verified. What if that is not happening?
The agreement is that it has to be verifiable. If one had insurance in another jurisdiction, it should not be that difficult to get that information and have it provided from that jurisdiction.
If it is verified and provided to the insurance company and the insurance company is still not allowing or acknowledging that, what happens?
They should because the protocol has been agreed between Insurance Ireland and the Department of Finance. The insurance companies are part of Insurance Ireland.
If it is not happening, what happens?
It should be happening.
What if it is not happening?
Then it is a matter for somebody to perhaps go to a different insurance company with their verifiable information.
The Minister's message to them again is to shop around.
One must always shop around, Senator.
This is the problem.
The problem is that the Senator expects me to be able to direct a company to insure individuals. I do not have that authority. No Minister in any jurisdiction in the European Union has that authority. That does not seem to have been computed by the Senator's side of the House.
I expect the Minister to hold the insurance industry to account.
As we do and we have implemented a protocol so that if it is verifiable, the insurance companies should take it into consideration.
If one cannot hold people to account, at the end of the day the protocol does not mean anything.
Of course it means something. I can outline again-----
If people do not have to adhere to it.
When I commenced this job I received a great number of representations from returning immigrants who could not get insurance or quotes. Since the protocol was agreed between Insurance Ireland representing the insurance companies and the Department, I have had very few representations.
I do not believe I have had any representations in the past three to six months.
The Minister of State is saying that people have to make representations if the protocol is not being agreed to. Is there way of measuring whether the protocol is being agreed to?
There have been a number of declined cases, but the number has decreased significantly.
What is a declined case?
It is a case that has been declined totally by insurance.
Where do the figures for declined cases come from?
They are provided to the Department by Insurance Ireland.
When the Minister of State says "declined cases", does he mean completely declined case?
Yes, I mean completely declined.
What about a case where an enormous price is quoted for someone returning from abroad? Are those cases counted?
No. A declined case is one in which no quote is given at all.
The cases where extortionate figures are being quoted are not captured.
We are capturing all the information.
Returning emigrants are being quoted thousands of euro for insurance.
Perhaps there is a bigger issue where the Senator is from, but we are getting very-----
It is an issue throughout the country.
-----few representations on returning emigrants.
I do not believe anything has changed or that the protocol is having the impact the Minister of State is assuming it is having.
If people were not getting insurance, the information would be coming back to the Department. On any occasion an issue with insurance arises, for example, the issue with ten year old cars, the Department receives a huge number of representations. We had been getting representations about returning emigrants, but they seem to have stopped.
Is the Minister of State saying that that problem has been solved? There are many-----
I am saying that the situation has significantly improved.
The Minister of State might find that, after today's meeting, the number of representations will increase.
If something is happening that I am not aware of, I want people to make me aware of it.
I appreciate that. If somebody makes a claim against me this week, will I know about it before my insurance premium goes up next year?
Yes, the Senator would be notified.
The protocol for policyholders is that people are to be notified of claims made against them before settlement. Is the Minister of State saying that is being done?
Legislation to instruct insurance companies to do that is required, but in general, insurance companies are informing people if a claim is made against them. If we want to oblige them to inform people, then legislation is required.
Has the Minister of State asked insurance companies to do that? What does the protocol mean? It is in place so that policyholders will be notified if claims are made against them before settlement. Is it actually in place?
It is not in place yet. However, we accept that, in general, the insurance company informs the person that a claim has been made against him or her.
This is a very explicit recommendation within the report.
We have to put legislation in place to make it an obligation, to give it legal effect, rather than simply agreeing it. Some of these things are not going to be done, but some will be. As I said already, 60 out of 78 recommendations have been concluded.
The Minister of State has said that legislation is required and that the protocol cannot be put in place without it.
To make it legally operable and to ensure that insurance companies are obliged to tell-----
Can the protocol not be put in place? There must be some goodwill in place for the insurance industry.
The protocol has not been agreed, but the insurance companies, in general, are informing people if a claim has been made against them.
The Minister of State knows that is not the case.
It is.
It is not.
Of course it is not the case. The insurance companies would agree to the protocol if that was the case. I apologise for interrupting.
In general, they are informing people when a claim is made against them.
Have the insurance companies told the Minister of State that they will not accept the protocol?
They have not agreed to the protocol.
Is it the case that they will not accept it?
If we want to make this legally enforceable, we have to pass legislation.
Legislation has to be passed. The insurance companies refuse to act in good faith. This is unimaginable. They will not even tell people when a claim has been made against them. It really speaks volumes. It is indicative of how the insurance industry has not been impacted at all by any of the reforms.
Of course it has been impacted. The misapprehension here is that I can instruct insurance companies to do things or ask them to act in a certain way. If they refuse, we can then try to agree a protocol with Insurance Ireland, which only covers 70% of the sector. If the insurance companies say no to that, the only way forward is for the Oireachtas to pass legislation.
The insurance companies have actually said no. This is quite unbelievable.
They have not said no.
It is unbelievable that those companies would say that they will not tell people if someone takes a claim against them.
They have not agreed the protocol, but most companies have agreed to inform the insured person that a potential claim is being made against them.
When is the legislation going to be passed? Has it been prepared?
No, it has not, because I have five other pieces of legislation ahead of this which are much more important.
Senator Kieran O'Donnell.
There are five pieces of legislation that are much more important than this.
We can get caught up with the fact that this has not been done, but it is not the be-all and end-all. The Senator is talking about a very small issue. The Central Bank (National Claims Information Database) Bill 2018 is a big piece of legislation that has to be concluded. We have just passed the Insurance (Amendment) Bill 2018 which, with the help and support of the Senator, passed through both Houses very quickly. The Personal Injuries Assessment Board (Amendment) Bill 2018 is forthcoming. It is with the Department of Business, Enterprise and Innovation at the moment. The Judicial Council Bill 2017 is with the Department of Justice and Equality. Those pieces of legislation are much more important that the legislation the Senator wants in place. She is talking about a tiny little thing.
Senator Kieran O'Donnell
Why does the Minister of State believe that the insurance companies will not do something as simple as telling people when a claim has been made against them before it is settled?
In general, it is covered by the consumer protection code. The Senator is raising a small issue.
It is not.
It absolutely is.
It speaks to the whole issue.
Senator Kieran O'Donnell.
We have the Central Bank (National Claims Information Database) Bill 2018 to pass. The fraud database has to be completed. We also have the Personal Injuries Assessment Board (Amendment) Bill 2018 and the Judicial Council Bill 2017. Those are the big forthcoming measures we are taking. The Senator is talking about something tiny.
This affects a big chunk of people and they want the truth and they want the bloody insurance companies to accept that.
Senator Kieran O'Donnell.
If the Senator believes that that is a big issue, she does not understand what she is talking about.
It might be worth the Minister of State's time to take a serious look into a mirror occasionally.
The Deputy should-----
That attack was wrong. The Minister of State's officials are telling him whether the protocols are implemented. It seems he does not even know himself.
The big stuff is-----
Does Senator O'Donnell wish to make a contribution or not?
If I am permitted.
I have called him four or five times now.
I want to make my contribution in a climate where we can talk about this topic. I acknowledge the fact that premiums have gone down, but we are still hearing from people who are having issues with them. The Minister of State is well aware of that. The debate on the Judicial Appointments Commission Bill 2017 currently going through the Seanad is being dominated by two individuals. That happens in the Dáil as well. The second Bill could have been brought through the Dáil initially, rather than the Seanad.
To get down to brass tacks, the biggest issue we face in terms of insurance is lack of transparency. I acknowledge the work the Minister of State has done, but I want to talk about facts. I want to know how the Central Bank (National Claims Information Database) Bill 2018 will improve transparency. Who will control the database? Who will have access to it? What information will be in it? Insurance companies repeatedly go through peaks and troughs. Nobody seems to know what profits those companies are earning or the make-up of the premiums they are providing. I want to know precisely what the Central Bank (National Claims Information Database) Bill 2018 will do. Everyone wants to work to get this through. What will be in the Bill? Who will own the database? What information will be in it? How quickly will it be up and running? Will the public have access to it? Outside of claims, what will bring premiums down will be utter transparency around them.
Many members of the public believe it is not worth their while shopping around. Many are elderly and only use their local broker.
Their broker is supposed to get them the best value for money. In fairness, most of them do a good job. Will the Minister of State talk to us about the Central Bank (National Claims Information Database) Bill 2018?
The national claims information database will analyse settlement channels. Right now the only numbers available to be analysed of which we can be 100% certain are those made available in the courts. That represents approximately 6% of the sector. We have the Personal Injuries Assessment Board, PIAB, figures on top of that, but many of those cases move through PIAB first and then on to the courts. We do not have any way to analyse those settlement channels. There are massive grey areas. The divergence in the business models of the different companies is enormous. Some insurance companies will settle before any analysis is done. Some even settle before medical reports are made available because it is cheaper. That is their business model. They decided that was the wisest thing for them to do commercially.
This database is about claims. That is very important. Will there be any database which will give an analysis of what individual companies are charging on average across a range of areas? I am referring to premiums.
That is not what this database is for, no.
I accept that. I know that is not what this is for but I am concerned about the transparency aspect. What would be in this database?
All of the settlement channels used in the sector would be included. The key objective of collecting the data is to improve transparency and to enhance the ability to analyse the relationship between claim costs and the cost of premiums. The data specification outlines the data that are required from firms relating to both premiums and claims, allied to information on the income and expenditure of the individual firms. While this has not been fully finalised, the general thrust of the specification is along the following lines. In respect of the data to be collected on premiums, premium policy data for the past ten years will be collected from each insurer across all private motor insurance policy types. The data to be collected on claims will include the aggregate claims information for the past ten years in respect of all private motor claims, both open and closed.
On the first point, the Minister of State spoke about premiums. Was he referring to premiums relating to a specific claim or to premiums generally?
Premiums in general.
Right. This database covers a lot more than just claims.
It covers the relationship between claims and premiums.
When one is looking at it one will see a claim and the associated premium. There will be no general analysis on premiums.
No, it will be about the relationship between the premium and the claims.
It will collect information for the last ten years. Will each insurance company be obliged by law to provide this information?
Can they opt out?
How quickly will the Minister of State have access to the information?
Is the Senator asking when we will be starting?
Yes. When will it be up and running?
Whenever we get the legislation through both Houses. The Central Bank has already done a lot of work in parallel to the legislation being prepared and going through the Houses.
How quickly will this database be compiled?
We hope it will be established by the first quarter of 2019.
Who will have access to the database?
The Central Bank.
Will only the Central Bank have access?
The Central Bank can share information with relevant parties.
We are aiming to get to a point at which we can see the claims being made and the claims being paid out on in stark terms and in terms of the premium. The Minister of State referred to stakeholders. I am trying to come up with the mechanism by which this measure will bring about a reduction in claims and a reduction in premiums. I am trying to find out who will be able to see this database.
I will give the Senator an example. There are two areas of which we have no sight. One is the number of claims settled before being lodged anywhere. These are cases in which there is an incident and before-----
I accept the information deficit. I am more interested in the user. Who will be able to get access to this? I want to give an example. There is no point in having a database if it is not being used by the correct people.
Sorry, what does the Senator mean by "not being used by the correct people"?
Who will use the database?
The industry will have access. The industry will provide the information and it will be made available to it. We will be able to see the effect claims have on premiums.
Will we have access to it?
Is the Senator asking whether we will have access as individuals?
Obviously the Central Bank will have access. Let us take the case of someone making an insurance claim. For argument's sake let us say I am the holder of a motor insurance policy, I am involved in a car crash and someone takes a claim against me. In that case will I be able to see the database? I am trying to figure out how this decrease will manifest. What will be the purpose of this database?
The information will not be on individual claims but the aggregate from each company. The information will flow to the Central Bank that a given company has settled 22% of claims before the claims entered the system whereas another company has gone through PIAB and has settled on the steps of the court. The information will cover all that type of thing.
I accept that. I am going to look at single issues. That is all I am going to look at. I still do not understand who will actually use the database to bring about transparency and to bring down the value of claims, which would then bring about a reduction in premiums. When this is compiled by the Central Bank, which will control it, how will it bring about a reduction in claims and premiums on the basis of transparency? If this is just a bookkeeping exercise by the Central Bank it is of no use. I need to know how this will be of benefit in, first of all, bringing about transparency. Transparency only works if people can see it.
The issue is that we do not know the reason many claims are settled. Potentially some of these claims should not be settled, although it might make commercial sense for the insurance company to do so.
Is this really for use by the insurance industry?
It will be for the insurance industry and for analysis which will drive the subsequent direction of policy.
The Minister of State is referring to policy in the Central Bank and the Department of Finance.
Yes, in the Department. The hope and expectation is that many more of these claims would go through PIAB and would be concluded through PIAB following the passage of the Personal Injuries Assessment Board (Amendment) (No. 2) Bill 2018.
I welcome the measure in respect of Setanta. When the payments are made in late November or early December, will it bring a conclusion to matters for all policyholders with Setanta?
No, the issue will not be concluded at that stage.
What will remain to be done?
We have no control in respect of the people whose claims have not been settled with the liquidator. Some 1,500 payments will have been made to people who have settled by 19 November.
That will bring all of those cases up to date.
What I am saying is very simple. We talk an awful lot about insurance. Ultimately if there is a database which analyses all of this information we do not want to be back here again in a year's time to see it just trundling along. Resources need to be put into it so that it can be up and running pronto.
Yes. If the analysis is done and we see that 40% of claims are being settled without any medical reports, there will be a policy decision for others to make.
Does the Minister of State expect to have the database up and running by the end of the first quarter of next year?
No. We expect the process to have started by then. When the legislation is passed the information will then be requested from the companies, which will be obliged to provide it to the Central Bank.
Does the Minister of State have any idea of how long it will be before it becomes a functioning database?
We expect that to happen at some stage in the third quarter. It will take a bit of time. The reason we are only including motor insurance is that it is specific to what is there.
I ask that a dedicated unit be established in the Central Bank and that whatever resources are required be put into this process in order that it can be up and running as quickly as possible. This is where major strides can be made.
That has been done.
I thank the Minister of State for his opening remarks, which I studied carefully. Many points have been covered, but Senator Kieran O'Donnell is right about the lack of transparency, which is the most frustrating element for people. No one has yet told me that he or she has seen a 23% reduction in his or her premium. I have met people who have seen plenty of increases, though. I am happy to acknowledge that if a premium reduces, people do not necessarily go around talking about it, but if the average is 23%, there should be people who have received 46% and 47% reductions, and I have not heard of anyone like that.
I take issue with Senator Conway-Walsh in respect of the Judicial Appointments Commission Bill. My party has not contributed the 41 hours of speaking time. Were the speaking times analysed in any fair way, it would boil down to one or two individuals, as Senator Kieran O'Donnell pointed out, neither of whom is in my party. It is the business of the Government and the Leader of the Seanad, as the Minister of State well knows as a former Senator, to schedule time. If they want to schedule business other than that Bill, they are free to do so. We get through a great deal of business every week, and when it needs to get through the Seanad quickly, it often does. The Minister of State knows that. My party has facilitated him, as have other parties. A particular Bill cannot be used as an excuse for everything else being slowed down. That is not fair.
I will respond to that, if the Chair does not mind. If the Department is taking a Bill through a House, it will not lodge another Bill until that one has been concluded.
Other Departments do.
Not very often.
It happens. Various Bills come from other Departments and are handled. Many people have problems with the Bill in question and there are many amendments to it. I have chaired far more hours of its consideration than I have spoken on it. I have only contributed approximately 15 minutes to it, as it is not my brief.
It is not a criticism of just the Seanad. When filibustering occurs, other legislation gets delayed. It is a criticism of-----
The Minister of State can try to make that point - I am not saying otherwise - but it is for the Government to schedule business. If it wanted to schedule something else in advance of the Judicial Appointments Commission Bill, I am sure that could be done quickly with the agreement of others. For example, the Greyhound Racing Bill 2018 is being dealt with extremely quickly because it is a priority for the Minister in question and we are happy to see it go through. Many other Bills have been dealt with quickly. This discussion is a distraction rather than anything else. I will leave it at that.
The Minister of State hoped that the Central Bank (National Claims Information Database) Bill would be passed by the Oireachtas. When does he anticipate the database will go live and start collecting information? For those watching in who may not be as familiar with it as some of us, what will it do for people? We mentioned that it would be an industry tool and that people would not have access to it, but what are the legislation's benefits to the public?
We find ourselves in the dark on far too many of the settlement channels. We have access to wards of court settlements and PIAB settlements, but the majority of cases are settled without anyone having access except for the individual and the insurance company. We do not know what the percentage is. When one aggregates the channels-----
The percentage of what?
The percentage of total settlements that are settled out of court, on the steps, before PIAB, after PIAB or before any form of medical report is requested. We do not have access to that information.
If we knew that, what could we do?
Insurance companies have different settlement models. I have spoken with all of the companies. Unusually, some settle claims before they even get lodged. They make an offer of X thousand euro and the matter is concluded. On the other end of the spectrum, some companies will fight every step of the way even where they know that people have been genuinely injured and impacted. Other companies are in between. We do not have sight of those channels.
If we find out that 40% of claims are settled before any medical report is requested, there will be an issue. Insurance companies will have been settling without any form of medical evidence, which means that policy may potentially-----
Who will get to see that information?
That will be a matter for the Department, the Central Bank and the industry.
What does the Minister of State mean by "a matter"?
The people who make policy decisions will have sight of it.
The Minister of State is referring to actuaries and the various people who-----
No. The Department of Finance.
Will the Department see that information on a company-by-company basis?
It will be aggregated data.
The Department will discover whether, on an aggregated basis, 30% of claims are settled just to get rid of them, but it will not necessarily know which companies are the offenders.
We will not, but if the percentage is high or unusually high, the Department will have decisions to make. Hypothetically, we might have to insist on all claimants providing a medical report. I do not know, but that is a suggestion that-----
I do not want us just to place lots of faith in something. I want this to happen because it can be of benefit, but I am trying to establish - I presume those looking in want to know - what it will actually do. Is it just an interim analysis in order that the Government can implement other policies?
We do not have any analysis of the settlement channels.
The Minister of State was a member of the committee two years ago when we examined the issue of motor insurance. We seemed to have information that 70% of claims did not even get to PIAB, 20% did and 10% were settled in the courts. We somehow knew those figures. I do not know how, but-----
Those figures were given to the committee by the insurance sector, but we do not know whether they were accurate. We are putting on a statutory footing a structure to ensure a full analysis and detailing of the aggregate data. The hope and expectation is that, subsequently, a higher percentage of claims will be entered and concluded within the PIAB process than are settled prior to PIAB. Sometimes, people use the PIAB award as a floor and threaten court action to see if they can get more than that minimum amount.
The Minister of State hopes that the database Bill will be through the Houses by the end of the year.
When would it be commenced and when would the database go live?
We expect the information for the previous decade to be transferred from Insurance Ireland by the end of the first quarter.
Into the Central Bank, which will start working on it. Will the Central Bank produce reports for the public, Members or anyone else? Will we ever see anything?
We are expecting an analysis from the Central Bank six to eight months after that point.
When the Minister of State says "we",-----
The Department of Finance.
It will not be published.
The aggregate data will be published.
That is my point. The public will be able to see aggregated data on the national insurance database. When does the Minister of State anticipate the first report will be published?
The end of the third quarter of 2019.
I am conscious that we have discussed motor insurance a great deal. It is an important issue, but so are public liability and other types of insurance. I might have been in the Chair when the Minister of State previously said that, if people wanted high payouts, there would have to be high premiums. It was not a case of "Get over it", only "That is the way it is". There is a large window for people who have had accidents or claimed to have had them to, for example, return to a licensed premises, restaurant or night club one year, 11 months and 30 days later and say that something happened two years earlier. Many of the staff will have changed, GDPR will have required the venue to get rid of its CCTV footage and so on. How do we tackle that situation?
We will be altering section 8 of the Civil Liability and Courts Act 2004 on Committee Stage of the Central Bank (National Claims Information Database) Bill. The Senator will be aware that any imagery, including video footage, from a premises has to be deleted within one month because of GDPR.
We are reconciling the period in which people have an obligation to inform the owner of the premises in order that an image or footage can be stored safely to enable the individual to have a proper defence.
Does it mean that people can keep two years of footage?
Does it mean people must make a claim within a year?
No. The owner will keep the footage on the basis that, potentially, there is a claim. He or she can keep the footage as evidence for his or her defence.
Are people in the position that if something happens on 1 January 2019, on 30 December 2020 they can say something happened but do not have to say it before that?
No, they do. We are reconciling the period to one month in order to give somebody an opportunity to store or keep footage. Section 14, which is the same Act-----
Is the Minister of State now saying that if somebody wants to make a claim against a premises, restaurant, public house, cinema or whatever, he or she must do so within a month of the incident?
No, they still have the same period of two years. What they have to do within one month is give the individual, who is the owner of the premises, an opportunity to store the footage because otherwise the footage, by law, will be deleted.
What happens if people do not do so?
Section 14 means there is an inference taken, against the individual, that he or she did not adhere to that portion of the Act, and that this inference will be against the claimant.
What the Minister of State has just said is at variance with what he said at a committee six months or a year ago when he said that he thought it was fine that people might want or need two years to not come in.
There are two time schedules. One is the period in which one must tell the person who is, potentially, mounting a defence against one in order that he or she can store the imagery. That is because legally now the GDPR states one must delete the footage. The second period is not changing.
I accept that.
I mean the period somebody has, potentially, an opportunity to make a claim.
The Minister of State mentioned in his opening statement that "Members should be aware that I intend to propose two amendments to the Bill". All of that will be incorporated in the Bill. When does he hope the legislation will pass through both Houses?
By the end of the year.
The Minister of State might ask the Leader in the Seanad to schedule the legislation ahead of the judicial appointments Bill. We would be all happy to take this legislation in advance of the judicial appointments Bill if we are still talking about the latter by the time we get to that time, and there is every possibility that we will be.
The judicial appointments Bill came from the Department of Justice and Equality and this legislation came from the Department of Finance.
Great. All the better.
Earlier this morning the Minister of State made the point, as I think he did on the last day, that exaggeration is much greater than fraud. I reiterate that exaggeration is fraud. I accept that exaggeration is a form of fraud and that there is blatant fraud where nothing happens or an accident has been staged. However, exaggerating a claim is still fraud. Exaggerating mileage is fraud. If one loses a coat and claims it is worth ten times its value then that is fraud.
The Senator is partially right. An exaggerated claim is, in my view, where somebody is impacted through no fault of his or her own.
Correct.
Fraud is trying to establish or plan an event. There is a difference.
That is the Minister of State's interpretation. I still think that if one deliberately claims something that is not true then it is fraud.
I accept that.
An exaggerated claim is fraud in my opinion, and I think in that of most people.
In terms of exaggerating a claim, most people have not tried to plan an event or accident and have, through no fault of their own, been impacted. They may exaggerate the claim. The level of exaggeration would really be the level of fraud involved.
I know people who ran events and they have told me that there was never a coat lost that was not a brand new leather jacket. When people produced a cloakroom ticket invariably the coat concerned was never a battered old one. If somebody writes something on a claim form and seeks more money than the sum to which he or she is legitimately entitled, then we should not simply call it an exaggeration as it is a form of fraud. An exaggerated claim may not seem to be as blatant or as awful as fraud but it is. Fraud is fraud and exaggeration is a form of fraud. The blatant staging of accidents is worse such as a person who drives a vehicle into a pothole at two miles an hour and claims something happened.
I believe that an exaggerated claim does more damage than fraud or staging of an accident.
Is the Minister of State saying that volume-wise, exaggeration costs more than blatant fraud?
I do not dispute that this could be the case.
That is also, in my view, because of the high levels of award. If the levels of award were much less then people would be much less likely to exaggerate a claim.
What is the position regarding the Garda fraud unit? When the Minister of State attended an earlier meeting of this committee, he said he did not want gardaí being taken away from an investigation into real crime to deal with fraud. We have established that fraud is real crime. I am not saying that we should stop members of the Garda investigating gangland murders and deploy them to the Garda fraud unit. We should have a Garda fraud unit. Senator Ó Céidigh brought forward the Perjury and Related Offences Bill 2018 and the Second Stage debate took place in the Seanad recently. Equally, Deputy Billy Kelleher, has tabled Private Members' legislation that deals with people who make fraudulent claims and ensures they can be pursued for making fraudulent claims.
I know.
Where are we with the Garda fraud unit?
The Garda fraud unit is a matter for the Garda Commissioner. I have met him but I cannot instruct him to do this work.
Can the Minister of State ask the Garda Commissioner to do this work?
I can ask him.
Will the Minister of State ask the Garda Commissioner to do this work?
Yes. I will ask the Garda Commissioner to establish a section within the Garda National Economic Crime Bureau. There is a sum of €1 million available. I have always been in favour of the initiative. I have never been in favour of the industry paying the Garda directly.
I heard the Minister of State say so.
I am on the record as saying so for quite some time. Again, the matter must be discussed with the Garda Commissioner.
When is the Minister of State likely to discuss the matter with the Garda Commissioner?
I hope to meet the Garda Commissioner before Christmas.
Has the Minister of State received any indication from the Garda Commissioner?
I have not.
I accept that the Garda Commissioner is only newly appointed.
I made the point on the previous occasion that I presented here that I did not think it was appropriate for the previous Garda Commissioner, who was an Acting Commissioner, to make the decision. I think that was appropriate as well.
I take the point made by the Minister of State. Have the amendments to sections 8 and 14 concerning the national claims information database been published?
They are not published but they are in line with what we had on the cost of insurance legislation.
When will the amendments be published?
On 29 November when we will have the Committee Stage debate.
Will the amendments be tabled a day or so in advance of the debate?
The Senator's time is up.
I am nearly finished. Will the Government support the legislation proposed by Deputy Kelleher?
We have analysed sections 25 and 26. In terms of perjury, the sanction is less in the Bill proposed by Senator Ó Céidigh than it is in this Bill.
Does the Minister of State mean the legislation proposed by Deputy Kelleher?
No, it is separate. Deputy Kelleher's legislation specifically seeks to establish an insurance fraud. There is a difficulty in terms of sections 25 and 26.
What legislation is the Minister of State referring to when he mentions sections 25 and 26?
The Civil Liability and Courts Act 2004. The difficulty is that one has the civil courts with a criminal sanction, which creates a problem and I am not sure it can be overcome.
Can the Minister of State propose some form of amendment that would allow-----
We have analysed sections 25 and 26 and found the sanctions to be sufficient. The sanction in section 25 is ten years in jail or a fine of €100,000 or both.
In order for sections 25 and 26 to be used, who can bring the matter forward? Is it the Garda or insurance companies?
The issue has been the referral pathway from the civil court where the independent person is a justice of the State. In a civil court if that person suspects fraud then it is not for the Director of Public Prosecutions, DPP, to investigate but the Garda. Another issue is the crossover between the civil courts and the criminal courts. We have improved the pathway and expect that the pathway will reap rewards.
If somebody goes into a bank, tries to rob it and gets caught, then he or she will be prosecuted and will probably suffer jail time and so on, albeit perhaps not as much as some people would like. There is a sanction if the perpetrators of the crime do not get away with it. People make false insurance claims week in and week out. It is good that insurance companies are fighting them and, thankfully, judges have thrown out some claims. There are people who repeatedly make spurious, fraudulent or exaggerated claims. All of a sudden the claims are withdrawn because it has been discovered that the claimants were doing mixed martial arts, skiing or whatever.
Nothing happens to them and they go off and do it again.
I made the point that the era of insurance fraud and insurance exaggeration being a one-way bet is coming to an end. It will come to an end and people who are chancing their arms will be sanctioned. As I said, the sanctions are sufficient. They are actually higher than those proposed in Senator Ó Céidigh's Bill.
The Minister of State has one issue with Deputy Kelleher's Bill, but he is not against its thrust.
I am not sure it can work.
I do not want to go over the ground other members have touched on. I will continue on from what the Minister of State has said, particularly in respect of the PIAB. When claims are made, people making claims write in at no cost to themselves whereas the person holding the insurance has to defend the claim all the way up. If it is then found to be a fraudulent claim, nothing is done to the claimant and the claim has not cost him or her any money. It has, however, cost the person defending the claim a lot of money to defend him or herself and his or her premium may well rise. That should be looked at.
The Senator says there is no cost, but there is if the matter goes to court.
There is a cost if the claim goes to court, but if there is a settlement with the PIAB at any point along the process, there is no cost at all involved. There is, however, a cost to the insurance holder because he or she has to defend him or herself the whole way up along. He or she has to employ a solicitor or barrister.
There is an issue but it has to be said that not all claims are fraudulent or exaggerated. While we speak a lot about fraudulent and exaggerated claims, most claims are legitimate. The biggest issue in respect of insurance is the level of awards for lower level claims. That is the bigger issue by a country mile. While I know people want to talk about the fraudulent or exaggerated claims, the issue is that people pursue claims much more because of the level of the award. If Mr. Justice Kearns's analysis is that awards are 4.4 times higher than they are in the UK, then somebody getting €10,000 in the UK would get €44,000 here. It is therefore very lucrative and very worthwhile for people to pursue a claim whereas they would not put the same effort and energy into claiming or pursuing a €10,000 claim. That is just the way of it. The level of award is encouraging people to keep progressing and pursuing claims.
With regard to the ten year old cars, has the Department found out why the insurance companies have decided on that age? Why is it not eight, 12, 15, or 20 years?
I put that question to all of the insurance companies and they all say that their analysis and data show that cars aged ten years or older produce higher claims.
Is that because they are insured on third party or comprehensive policies or because of some other reason?
There are a multitude of reasons. They tend to be driven by older drivers, but also younger drivers. There are a number of other factors. They have also said that older vehicles may present a greater risk of injury due to their lack of safety features. New cars with airbags and new technology tend to suffer less damage. The costs are also higher.
When we were doing our report into insurance, the issue of high legal costs was raised. Has the Department come up with any suggestions in that regard, because the legal people refuted everything the committee put to them?
That area is not part of our remit. Part of the national claims information database will involve analysing how much of an award gets to the claimant. The hope and expectation is that the knowledge and information arising from the national claims information database will mean that people will be more likely to settle through the PIAB due to awards being lower. They will not see it as lucrative to pursue claims in court as there will not be a big payday.
I would like to clarify a few points which the Minister of State has made. First, with regard to the market itself, have any new insurance companies come into the market?
No, we have lost four in the past six or seven years.
We have lost four.
There is no interest in the market at present.
Up until two years ago, the market was making a loss.
To go back to the committee's report, at that time we were talking about the fee to access information, which was €10,000. Insurance Ireland confirmed that the full membership fee was €100,000 across all members. Has the Minister of State investigated that with the insurance companies? Have they relented on their approach to collecting these fees?
That is a matter for the Competition and Consumer Protection Commission. I cannot comment.
I am not going to get into an argument with the Minister of State about the 23%. It is an average figure for increases. As the Minister of State said earlier on, he is dealing with facts. That may be a fact, but it is also a fact that insurance for taxi drivers, truck drivers and those who drive vans for their businesses has not decreased. That is a fact relative to a real trading business.
Relative to what?
Relative to those who are trading in business.
Is the Chairman referring to those who drive for a living?
Yes. Their insurance costs have not decreased. If anything, they have found it more and more difficult to deal with insurance companies.
The CSO figures relate to private car insurance.
We should make that distinction. What can taxi drivers, truck drivers and van drivers expect?
As I said, I raised the issue of taxi drivers with the insurance companies. One company is prepared to run a pilot programme if taxis are prepared to use dashcams and a black box to allow analysis of whether drivers are driving responsibly. The issue is the level of awards against full-time professional drivers. Our level of awards is the biggest issue in insurance by a country mile. Claims of a couple of thousand euro would be considered for some small incidents in other jurisdictions, whereas one can get €10,000 or €15,000 for the same incident in Ireland. That is the biggest issue by a country mile.
My background is transport. A great number of people contact me regularly about massive increases in their premiums. These people have no record of claims yet their insurance premium increases. It does not just go up by a small amount of money. We can talk in percentage terms but that clouds the issue of the actual cost in euro. It could be double.
That is exactly why everything we are doing is done to reduce the levels of awards. That is the issue.
I am just clarifying a few points before I get to policy aspects.
The Chairman is bang on, but the issue is that there are more claims against professional drivers than against those in any other sector. Because there are more claims and higher awards, there are unfortunately now only two companies that will insure taxi drivers. We now face a lack of competition.
I will just make a point about public liability because I met two different groups within one sector on that issue: Dublin publicans and rural publicans. It is almost impossible to do business because of the costs of public liability insurance, especially for small pubs.
Whether one had a claim or not, one's insurance and costs are going up within a business that has an extremely tight margin. I am pointing that out as a fact. It is true that they are all in difficulty in terms of their insurance costs and, while we are sharing these facts this morning that have not changed, I am sharing those facts with the Minister of State.
I am aware-----
People are looking to the Minister of State and this committee for some sort of hope, even for the short term.
I am aware of those facts also. The issue here, again, is that somebody can have a small claim for small damage and can claim for very large amounts of money. If they keep pursuing it, and lengthen the process for years during which time the insured individual or premises has that claim on their books, it becomes a commercial reality and is cheaper to pay it. Again it goes back to the level of award. It has been lucrative for somebody to pursue it.
That brings me to the point of policy and the work the Minister of State and this committee are doing, and presenting the committee's document which I believe to be a valuable piece of work which did not get the Government credit it was due for the issues it highlighted.
I want to bring the Minister of State's attention to something. He said earlier that putting information on the renewal forms was costly for the insurance companies. Will he tell me he does not accept that?
I do accept that. Prior to sitting down with the insurance companies-----
With all the technology we have?
I was not aware of this, but the amazing thing is that the insurance sector is paper laden. It is still a paper business, even with all the technology we have. Prior to coming into this job and sitting down with the insurance companies, I would have said exactly what the Chairman is saying. There will be an extra cost if we have to do that and everything the committee is doing and its report, and everything I am trying to do, is trying to reduce costs and not add them.
Is that a bluff, not on the Minister of State's side, but on the side of the insurance companies?
I would have said what the Chairman is saying before I came into the job and before I met all of them. I would have said exactly that, but it is not a bluff. It is a very paper-laden business where each document is treated one-by-one, person-by-person and handled by individuals before going up the line to their underwriters.
The Minister of State went on to say that he can ask but he cannot instruct. Is it that the Government or the system, regardless of who is in office, is afraid it will lose insurance companies? Is it a fact then that insurance companies are relying on that fear in order to increase their own profitability and protect a market that is acting like a cartel?
I am not going to comment about markets acting like cartels. As I said, there is an ongoing investigation. I have to also be cognisant that part of the role is to have companies come in and create competition. Part of that is that companies should be profitable. Until, I think, two years ago, insurance companies in Ireland were not profitable. Prior to that, we were losing insurers and that meant that there are some sectors that only have one insurance opportunity and that is not even here because some sectors have to be insured from London. That is a difficulty for the entire sector.
I have a balance to strike between protecting the consumers and having a competitive market. As I said, until a couple of years ago, companies were in significant loss.
Insurance Ireland is charging these types of fees, preventing newcomers from interrogating the information that should be available for them in the context of the market, and the Minister of State can ask but cannot instruct. All of these are real issues that are preventing the market from expanding. The insurance companies are quite happy to tolerate that.
I will not be commenting on that because, as I said, there is an investigation. The national claims information database will be up and running next year and any potential insurer that wants to come in will have access to that.
I will come to that then. Senator O'Donnell was making the point that I am going to make now. Is a customer a relevant party? Is this committee a relevant party? The Minister of State mentioned relevant parties in the context of access to the database and mentioned people who make policy decisions. If that database is to be worth anything, surely it should be a case-by-case, claim-by-claim register? That is what it should be. The Department of Finance seems to be against that. A claim-by-claim register would inform the public as to why their policies are going up. It would inform the industry and potential entrants to the industry in Ireland and it would give greater customer information in a general way. The Department does not want to do that.
We are choosing not to go with a claim-by-claim register because of the cost. We are implementing the national claims information-----
The cost to whom?
Pardon?
Who would bear that cost?
I expect it would fall back on the customer.
All the time the argument seems to be that the Government can ask and not tell and about costs to insurance companies. Quite frankly, it comes across as if the insurance companies are being minded and it is the customer who carries the can, regardless of what happens. Even to go back to the earlier point about cameras and so forth in taxis, trucks and vans, even that cost is borne by the owner. The Minister of State mentioned two pilot projects that pay for themselves. The insurance companies in Ireland, or Insurance Ireland, are making no real effort, it would seem, to engage with the Minister of State.
I disagree with the Chairman, and I will tell him why. This is not an attractive market for insurance. If it was an attractive market, we would have a lot more insurers operational and being profitable. It is not an attractive market because the book of quantum in Ireland is multiple times what it is in the UK.
That is because it is a cartel. Maybe that is the reason.
Former Justice Nicholas Kearns's analysis was that average compensation for whiplash in Ireland is 4.4 times that in Britain. The Department's analysis indicates compensation in Ireland ranges between three and 5.5 times that in Britain. Last week the PIAB analysis said that awards in Ireland are five times those in Britain. If somebody is getting the equivalent of €5,000 in the UK, they are getting €25,000 here, tax free. It is very lucrative even for the best of people who have been impacted who, through no fault of their own, will pursue a case because the book of quantum is at the level of threshold it is at. That is why this market is not competitive. That is why there are not 15 or 20 insurers in this market.
I am not here protecting the insurance companies. On every occasion it comes to my attention that there is an issue, I bring them in and put the hard line to them. The latest occasion was about cars over ten years old. The previous occasion to that was about how insurance companies are dealing with their clients following storms Ophelia and Emma. Consumer protection is high in my threshold for the job that I do in insurance. Make no mistake about that.
To deal with that, and Senator O'Donnell mentioned it earlier, customers and consumers feel now that it is absolutely useless to shop around. He made that comment and I want to agree with him, because I have shopped around.
I have to disagree with that.
The Minister can take out single cases that are not the norm but there are too many cases.
Insurance Ireland and the Department of Finance did not take single cases in respect of the ten year old cars and the mystery shopper. All eight companies were asked and the gap between the lowest and the highest was double the amount. This was an exercise that was done in the past month by the two bodies.
What was the exercise relevant to?
It was on the motor insurance quotes by insurance companies for ten year old cars.
Was it just for motor insurance?
The point is that the rest of them are being ripped off. It is almost a blatant cartel.
What does the Chairman mean by "the rest of them"? Does he refer to non-motor insurance?
Yes. What is happening is staggering. Motoring insurance affects people going to work and their families and on the commercial side, taxis included, people will be affected in their pockets. The balance is simply not right. I am not being critical of the work the Minister and his officials are doing but someone has to tip the balance in favour of businesses that are finding it difficult, the publicans, taxis, truck drivers, van drivers etc., because that is what the economy is turning on.
I have been doing the job for 16 or 17 months now. It is the level of award which drives costs.
What kind of co-operation is there between the working group and Insurance Ireland? Is Insurance Ireland forthcoming with all the information the Minister requires or does it drag its heels?
It is average.
Does that not point to where the problem is?
No. Insurance Ireland is a lobby interest group for insurance companies. My role as Minister with responsibility for insurance is to highlight areas where there are difficulties and that is what I am doing. The insurance sector used to keep information hidden and information was only obtained by dragging it out of the people who held it but, with the implementation of the national claims information database and the fraud database, this is changing. The sector is changing for the good but the issue which is driving costs is that of the level of award.
In the committee's report we talk about the period between 2007 and 2012 when insurance companies generally broke even, according to the figures that are available, with profits in some years and losses in others. Between 2012 and 2014, however, insurance companies incurred significant losses, which bears out the Minister's thinking. Taken as a whole, however, insurance companies amassed profits totalling €2.86 billion from 2002 to the date of the report in 2016. The data from the Central Bank's blue book show that motor insurance companies made €3.1 billion in profits from 2001 to 2012.
It is almost 20 years since 2001.
One has to start somewhere. It has not been 20 years since 2012.
Insurance companies deploy capital and capital is very fleet. If a sector in industry is doing poorly, whether it be agriculture, marts or taxis, and the capital required to underwrite it is loss-making, the holders of that capital will decide to close the book and leave. That is part of the problem we have. For a period of time, the level of awards was so high in this country that the insurance companies made losses.
I feel I am representing those looking for insurance, the standard citizen, the people we represent and companies. I am of the opinion that it is a cartel-like operation. According to the Central Bank, the insurance industry has made significant profits and is desperately reluctant to come forward and co-operate with the Minister and the Government to try to achieve a more balanced marketplace. Until it is taken on, just as its members take on the Minister, the Government and all of us, they will continue to do what they are doing. I agree with the Minister of State about the cost of claims but I think insurance companies and Insurance Ireland have an awful lot to answer for. They are getting away very lightly.
Everything we are doing is to reduce premia. A total of 62 out of 78 recommendations have been concluded although some will not be concluded because, upon analysis, they will be too expensive or will not produce the effect for which we had hoped and anticipated. The 22% reduction is welcome and we want to reduce it further and move into other sectors. We are getting to the big stuff now and the role played by this committee, and both Houses, in the coming three to six months will determine the level of competition in the market and how we can get the market onto a strong stable footing, without large profit spikes followed by losses.
The consumer protection side of insurance is very important to me. We have done two reports in the past six months on consumer protection and how the industry operates with its clients, external to fraud, exaggerated claims or high awards. Make no mistake about this - I am on the side of the consumer, along with the Chairman. I hope we will get the national claims information done before the end of the year and get the Judicial Council Bill through both Houses in the same period. I hope we can also get the Personal Injuries Assessment Board (Amendment) Bill done. These last few bits are the really important work.
I suggest that the Minister's officials look again at our report and review their position as of 2016 on each of the recommendations. They might have a different view now of what recommendations might and might not work. At the next meeting of this committee, I will recommend that we write again to all stakeholders who made submissions, such as Age Action, and everybody else affected, just to get their updates on what they now perceive to be the situation out there. We could invite Insurance Ireland back before the committee because nothing much has changed, in spite of the best efforts of the Minister and his officials. We could put further pressure on the industry to focus more intensively on the need to settle the outstanding matters.
We did not do prelegislative scrutiny on the Central Bank (National Claims Information Database) Bill 2018 because we wanted to allow it to progress and 29 November has been set for Committee Stage.
I acknowledge that and I also acknowledge the help of finance spokespersons with the Insurance (Amendment) Act.
Those are the examples of the Oireachtas being helpful. However, I am highlighting that we are in a queue to get into the Dáil and Seanad for other legislation. Filibuster has an effect as other legislation gets shoved backwards.
Members could take initiatives with the Whips on that dilemma because everyone wants this sorted. I thank the Minister of State and his officials for coming in.
The joint committee adjourned at 12 noon until 2 p.m. on Thursday, 6 December 2018.