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Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Wednesday, 4 May 2022

General Scheme of the Judicial Council (Amendment) Bill 2021: Discussion

I remind members and witnesses to turn off their mobile phones. Apologies have been received from Deputy Matthews. At our earlier meeting, the minutes of the joint meeting of 27 April were agreed.

The purpose of this meeting is our detailed scrutiny of the Judicial Council (Amendment) Bill 2021, which is a Private Members' Bill. I welcome Mr. Peter Boland, director of the Alliance for Insurance Reform. In the first of today's two sessions, he will make his opening statement, after which we will get into a broader discussion.

I remind everyone of the situation regarding privilege. Those appearing remotely do so with limited privilege. Those attending the meeting who are on the campus have full privilege. They are also reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Before calling Mr. Boland, there is an important group in the Public Gallery that I wish to acknowledge. They are from the CBS in Kilkenny. Mr. Jonathan Murphy is the teacher. We are joined by Andrew Corbett, Adam O'Sullivan, Oisín Farrell, Robert Ciortan, Aaron Fenlon and Joel Matthew. The fourth year class are welcome. They are learning about democracy and Leinster House. I wish them well in their visit. They are in good hands with the usher, who will give them plenty of history and information. I thank them for attending today.

I call Mr. Boland to make his opening statement.

Mr. Peter Boland

I echo the Chair's welcome for the group from Kilkenny. It is great to see democracy in action.

I thank the committee for its invitation to contribute to its scrutiny of the Judicial Council (Amendment) Bill. The Alliance for Insurance Reform consists of 47 civic and business organisations from across Ireland, representing more than 55,000 members, 700,000 employees, 622,000 volunteers and 374,000 students. Our single aim is to get insurance premiums down to affordable levels and keep them that way.

The alliance recently carried out a policyholder survey to mark the first anniversary of the implementation of the pivotal judicial guidelines for personal injury damages on 24 April 2021. Among other findings, 42% of respondents said that insurance costs were threatening the future of their organisations. This figure was not materially different from the response to the same question in research that we carried out in 2018 and presented to this committee in May of that year. Some 31% said that insurance costs were preventing them from providing certain services. This was up from 26% in the 2018 survey.

Our ongoing survey of insurance policy renewals since the implementation of the judicial guidelines indicates that liability premiums have increased by 16%. It must be noted that this increase is on top of the savage increases experienced by many policyholders each year since 2017.

The most recent survey shows that 73% of organisations have also had additional excesses or exclusions imposed on their policies since 2019. These are stealth increases pushing additional risk and cost onto policyholders. Worryingly, that percentage is up from 65% in the 2018 survey. Ultimately, 90% of respondents to the survey said that the Government is not doing enough to address the issue of insurance costs.

This final figure requires some context. While reforms to date are having an impact on motor premiums, which our survey shows are trending at minus 9% since May of last year, they are not having an impact on the liability premiums paid by businesses, voluntary and community groups, sports and cultural organisations and charities, which continue to increase and with additional excesses and exclusions as outlined. In addition, as we highlighted to this committee in December, increasing numbers of sectors and sub-sectors cannot get cover or are reduced to one underwriter, which inevitably results in huge increases in premiums. A current list of 44 such sectors and sub-sectors is included in appendix 3 of our presentation. The crisis is existential in many of those sectors.

While it is widely acknowledged that the correct reforms have been targeted, much of the frustration evident in that statistic is about the delays and extremely slow progress on key reforms and the reluctance of insurers to pass on the benefits of the reforms already in place such as the judicial guidelines, the new Garda insurance fraud co-ordination office and the perjury Act, while appearing to be willing to do so in the more competitive private motor insurance market.

To restore policyholder faith in the insurance reform process, the Government must do everything in its power to make sure incumbent insurers pass on the benefits of reforms. It must move quicker on getting additional competition into the market and must speed up key promised reforms. An office within the Department of Finance to encourage greater competition in the insurance market was established in December 2020 but has still not announced any additional market entries. For this office to be successful, the attractiveness of the Irish market to new insurers must be protected and further developed through rebalancing the duty of care, reforming the Personal Injuries Assessment Board, PIAB, and protecting the new judicial guidelines.

The duty of care obligations imposed on businesses and voluntary groups must be rebalanced. The current legislation, as it is interpreted in the courts, often places an unfair absolute responsibility on occupiers while exempting claimants of any responsibility for their own safety. The Cabinet subgroup on insurance reform action plan of December 2020 committed to a deadline of June 2021 for submitting proposals to Government to implement any changes deemed necessary. However, these proposals have still not been submitted to Government.

PIAB must be reformed if it is to remain in any way relevant. Legislation to address this is moving slowly through pre-legislative scrutiny. While the alliance welcomes much of the content of the draft legislation, an enhanced role for PIAB was scheduled for June 2021 by the Cabinet subgroup on insurance reform so this initiative is now well behind schedule.

The implementation of the judicial guidelines has seen the value of assessments by PIAB tumble by 42% compared to those using the old book of quantum. However, the acceptance rate of these assessments has reduced from 50% to 37% as more claimants move to litigation so the attitude of insurers that settle the vast majority of litigated liability claims before they get to court and the approach of the Judiciary once such claims finally get to court will be extremely influential on the success or otherwise of the guidelines. Additionally, the State must robustly defend the multiple constitutional challenges to the guidelines being pursued by the legal profession intent on protecting the revenue stream generated by personal injury litigation. Ultimately, the Government must get liability insurance premiums down to affordable levels with reforms that keep them that way.

Where does the Judicial Council (Amendment) Bill 2021 fit into this? The proposed legislation seeks to require insurance providers to provide information to the Central Bank of Ireland relating to the effect of personal injuries guidelines and related matters and in particular, as we understand it, to compel insurers to report on what they charged for insurance policies impacted by the judicial guidelines compared to what they might reasonably have been expected to charge if the judicial guidelines had not been implemented.

The Alliance for Insurance Reform welcomes any attempt to increase transparency and accountability. As policyholders are either legally or morally obliged to buy motor and liability insurance, which places insurers in a very privileged position and makes policyholders particularly vulnerable, this sector needs special scrutiny. In this context, the introduction of the national claims information database, NCID, by the Central Bank has been a pivotal development in addressing the current crisis and the alliance has strongly supported its development. However, the NCID is only of value if the data are timely, robust and beyond doubt. The same must apply to any data produced via the Bill under scrutiny today and in this regard, we do have some concerns. In particular, we have a concern that the meaning of the words "might reasonably have been expected" in subsections (4)(b), (4)(d), (4)(f) and (4)(h) of the proposed new section 100 might be open to interpretation and vary from insurer to insurer. Also, given the potential complexity of the data, we would be concerned that there will be a time lag between the measured events and the publication of the data, which may weaken the value of the data from a policymaking perspective. We assume that the Central Bank has or will be consulted in detail on the viability of this legislation given its central role in the provision of the data and its ongoing experience with the NCID. We further assume that it has been asked whether there are other ways of measuring insurers' delivery of the benefits of the judicial guidelines within the current NCID framework. For example, we understand that the upcoming NCID fourth private motor insurance report scheduled for October will have data on insurer settlements pre and post the judicial guidelines, as well as premium costs per sector.

In conclusion, we warmly welcome any additional transparency in this sector, particularly on the delivery of much-needed reductions in premiums, but the primary focus must remain on the real reforms that will deliver those reductions. Of all the major challenges facing Ireland right now, insurance is the one that Government can fix quickest but reforms are not moving fast enough. It is clear that neither the Irish economy nor the fabric of society will fully recover from Covid-19 unless insurance is sorted. Government has a golden opportunity to make the cost of insurance affordable now and forever but only if it gets reforms into place now before the opportunity is lost. This concludes our formal presentation. As an alliance, we are intensely aware of how urgent this issue is for our members and their employees and volunteers. We hope the committee can help us in getting meaningful action quickly and we are now happy to take questions.

I thank the Chairman for facilitating me, as sponsor of the Judicial Council (Amendment) Bill 2021, to make opening remarks before I proceed to questioning Mr. Boland of the Alliance for Insurance Reform, whom I welcome to the meeting. I also wish to welcome Ms Moyagh Murdock of Insurance Ireland, who will be appearing before the committee later. Before we start, it is important to give my perspective on the legislation.

The personal injuries guidelines have been in effect for just over a year. This was a direct result of the Judicial Council Act, which received cross-party support in these Houses in 2019. These personal injuries guidelines had a very specific objective, namely, to drive down award levels for personal injuries and, in turn, to drive down insurance premiums. This was a reform that the insurance industry lobbied for over many years. Some of the largest players gave cast-iron commitments before this committee that they would pass on these savings to their customers euro for euro.

Since guidelines came into effect, award levels through PIAB have fallen by 42%. This will pass through to the courts in due course. Unless these savings are passed on to consumers, these guidelines provide a windfall for the industry. There is no mechanism available to the Dáil, the Government or indeed the Central Bank to monitor whether these savings are being or have been passed on to consumers. While the NCID provides granular and highly valuable data on price and claim trends, it does not detail the relationship between these trends or attribute one to the other.

This point was made clear by representatives of the Central Bank at this committee on 8 December, where they said that while the national information claims database can monitor premium trends, it cannot disentangle premium trends to specific reforms or attribute them to specific reforms, nor can it create a counterfactual scenario. That is precisely what we need if we are to ensure that consumers see the benefits of the personal injury guidelines and the Judicial Council Act 2019. That is the purpose of this legislation before us.

What would the legislation do? It would require individual insurers to provide annual reports for a period of four years to the Central Bank and it would require them to outline the amount paid in third-party personal injury claims and how much would have been paid had the personal injury guidelines not come into effect. It would also require them to outline the average premiums charged and what would have been charged had the personal injury guidelines not come into effect, with this information audited by a qualified auditor. This information would then be presented to the Central Bank and the Minister and laid before both Houses of the Oireachtas. This would ensure transparency and accountability.

As to whether there is a precedent for this, yes, there is. Under regulations now enforced in Britain, AIG, AXA, Alliance, Aviva, Zurich and RSA, which are all the biggest players here in Ireland, will be required to provide similar information to the Financial Conduct Authority, FCA, with respect to whiplash awards. Are these provisions stronger? Yes, they are but that is a good thing.

I recognise that broader reforms are necessary in the insurance sector, including through reforms in the duty of care which Mr. Boland has mentioned in his opening statement, reforms to PIAB and increased competition. However, this legislation would provide a mechanism, which does not currently exist, to hold individual insurance companies to account, to ensure that the personal injury guidelines in whole or in part do not provide a windfall in savings to insurance companies but instead benefit consumers, individuals and businesses through lower insurance premiums.

That is my opening statement outlining, as we begin detailed legislative scrutiny on this legislation, the intentions behind the Judicial Council (Amendment) Bill 2021 as its author. I will now turn to Mr. Boland with regard to the survey that the Alliance for Insurance Reform carried out with quite a number of respondents. I think there were 954 respondents. What was the average decrease since these guidelines have come into effect with regard to insurance for businesses?

Mr. Peter Boland

There was no decrease. It was an increase of 16% on average.

How, after awards falling by 42%, are we seeing increases in insurance?

Mr. Peter Boland

It is a very worthwhile exercise to have a look at the two main sectors impacted by the reductions in personal injury awards, which is the private motor sector on one side and the liability sector on the other. The circumstances which have driven private motor insurance down by an average of 9%, a figure that is accelerating according to CSO figures and is at minus 12% here to date, are exactly the same circumstances that apply to the liability insurance market. Insurance is calculated on future risk. The future risk applicable to both sectors has dropped because of the judicial guidelines, the establishment of the Garda insurance fraud co-ordination office and the perjury Act. Moreover, much other activity is slated on the horizon. It is moving too slowly but it is coming.

What we have on the motor side appears to be a decent level of competition and because of that competition, the benefits are being passed on to consumers. While it is fair to say that there are quite a few underwriters underwriting liability insurance, when one drills down to individual sectors or sub-sectors, typically policyholders are left with only one underwriter. That is not healthy competition. In many cases, accidental monopolies are being created where only one underwriter is prepared to offer cover. Typically, what our members find is that when they get to that situation the cost of the policy rockets and when they query the cost they are told that is just the market. It has nothing to do with risk and everything to do with a lack of competition.

However, insurance companies are supposed to price on the basis of risk. Is this just blatant price gouging given the lack of competition? They know there are competitors out there and businesses are stuck with the businesses that are offered and therefore, regardless of the reduction in rewards, they are simply gouging.

Mr. Peter Boland

We fail to see any other explanation other than that the benefits of the work that the Oireachtas is doing is ending up in the back pockets of insurers.

Mr. Boland talked about the difference between motor insurance and public liability and business insurance and community groups, which are very much struggling. We will not just focus on the competition, which is a major issue that has to be addressed in terms of the new office that is being established and whether it is working or achieving its objectives. However, I just want to look first at awards versus premiums. Is it not the case that award levels make up a substantial amount of the costs for insurance with regard to liability and a lesser share for motor insurance?

Mr. Peter Boland

We have fairly definitive data on motor at this stage. Some 42% of every private motor premium is taken up by compensation alone. We do not have definitive figures from the NCID liability report because the data are not complete enough. We are working on it. However, we would not be surprised if the proportion on liability insurance was higher.

Let us take for example one of the biggest players in the industry, which is Zurich. It is one of the top seven both here and in the UK. When the CEO of Zurich, Mr. Anthony Brennan, came before this committee in October 2019, he made the point that "if we consider motor insurance, roughly 30% of our claims are personal injury-type or soft tissue damage and we are four times the UK average". He then went on to say, "For liability, where the vast majority of claims are injury related, it would be a higher percentage". Is it not the case that even though we do not know the data, we know that personal injury awards are 42% of the cost of motor insurance but it would be correct to assume that it actually makes up a larger award with regard to public liability?

Mr. Peter Boland

That would be fair enough given our experience to date.

If we are seeing reductions, although not sufficient in terms of motor insurance, we should have been seeing greater reductions with regard to public liability. Is that the case?

Mr. Peter Boland

That is precisely it. I agree with the Deputy on motor insurance. We should be seeing deeper reductions than those we are getting. They are just not moving fast enough. It is extraordinary that in fact we are going in the opposite direction on liability when we should be seeing very strong reductions at this stage.

Mr. Boland raised concerns about the wording of the legislation which is "might reasonably have been expected". He questioned whether this would be open to interpretation and vary from insurer to insurer. That is a fair comment. Is Mr. Boland familiar with the regulations introduced in Britain under which the companies here have to operate in Britain?

Mr. Peter Boland

We are aware of them.

This wording is exactly, word for word, the wording in Britain. We do not unfortunately as an Opposition party have the benefits of the guidance of the Attorney General but this is why we have detailed legislative scrutiny. This is exactly what Zurich, Aviva, Alliance, AXA and all the other companies have to do with regard to their accounting. They have to have it audited for the FCA in Britain.

If they have to do that for policies they are issuing in Northern Ireland and Britain, should that same type of transparency apply here?

Mr. Peter Boland

It should where it is timely and, therefore, usable from our perspective. We have an ongoing issue, for example, with the national claims information database, NCID, liability report. There is quite a time lag that is at least in part attributable to the complexity of the information. We will, for example, get a good oversight of what is happening with the new judicial guidelines on the motor insurance side by October this year. This October's NCID report on the motor side will cover 2021, which is the first year the new guidelines were in place. We will not get the same level of insight on liability until July 2023 because there is a lag which, as I said, is at least in part due to the complexity of the information. That is our concern.

We welcome all the engagement the committee has had with the Central Bank, which will be pivotal in making sure not only that it can put its hand on its heart and state the information is robust but that it can be processed in a timely manner.

It is because of its timely nature and the need for this information that this legislation is stronger than the equivalent across the water, which requires these companies to provide one report by 2023. That would leave too much of a time lag and that is why I am looking for an annual report.

I will turn to consider the NCID and the information with respect to motor insurance, in particular, that will be available to us when it reports. We will see the levels of awards that have been paid and we will see the cost of premiums. There will be no way to look at any of those data and assess whether, euro for euro, the reductions and rewards have been passed on. Is that not the case? For example, the data we will have next year will cover 2021 but they will also cover periods of lockdown when fewer cars were on the road. Premiums should have reduced as claims reduced, even without the Judicial Council Act and a reduction in awards. That is difficult to disentangle. It would be difficult to say what is a result of a particular policy and whether the commitment to pass on the savings, euro for euro, has actually happened.

Mr. Peter Boland

That is precisely the case. There are examples within the NCID where a certain amount of estimation has to be done. For example, investment income is attributed across motor, public liability, employer's liability and property insurance in a way that is not directly attributable. It is an estimate based on the work of individual insurers and consultation with the Central Bank. There are many moving parts in an insurance premium. I suspect there will be an amount of estimation involved in putting together numbers which show what premiums are like because of the judicial guidelines and what they would have been like without those guidelines. As I said, the oversight of that process by the Central Bank is critical in order to keep it solid.

We will hear from the insurance industry later. There is always a reason premiums will be reduced at a later date. Some of those reasons may be valid but when things are moving in the other direction, there is never a reason to delay it and premiums go up straightaway. We know that insurance is priced on the basis of looking forward. There is a test case relating to the guidelines of the Judicial Council. Are the insurance companies over-provisioning? The insurance companies are stating that there is a test case and awards are falling but that may unravel in the courts so they need to make provision for that and, therefore, cannot reduce premiums. In a way, it will keep their profits down and may result in larger profits at a future time. Are they over-provisioning?

Mr. Peter Boland

With all due respect to the insurance industry, and we all acknowledge it has to make a profit, the High Court challenge applies equally to motor insurance. Companies are in a position to give reasonably substantial discounts at this stage to private motorists. When it comes to liability insurance, the industry is, frankly, running out of road with respect to the excuses it has put forward. The Oireachtas is delivering on what it said were the issues. We heard the mantras about claims driving costs. We heard that fraud was a massive issue. That has been addressed. We are not seeing delivery on the back of those commitments that the Government has followed up on.

As somebody who represents a wide spectrum of Irish society, from students to sporting organisations, businesses, community groups and not-for-profit organisations, can Mr. Boland address the seriousness of the premium increase, which is putting pressure on businesses, and the lack of availability of insurance in some sectors? There are some sectors that may be wiped out. We have been discussing the turf issue in these Houses recently and, in a similar vein, we may not see thatched cottages in Ireland in the future because they cannot be insured. The whole industry of thatching will be wiped out. How serious is the lack of available insurance cover in some sectors?

Mr. Peter Boland

It can be difficult to get transparency in this area because when a sector gets to the point where it cannot get cover, some are faced with the difficult decision as to whether to continue operating without cover or not. That is not the kind of information that is often made public. I fear there are organisations in this country that have had to choose to operate without cover because they cannot get it.

What the Deputy said about thatched cottages applies doubly with regard to thatched pubs, for example, which are often part of the currency we use to sell this country abroad. Such pubs are in real danger of no longer being viable purely because of the cost of insurance. There are whole other sectors of society that are fundamentally threatened. The area I have a particular concern about is anything to do with children. Play centres, playgrounds, bouncy castles and many types of educational establishments, particularly in the early years sector, are threatened by the cost of insurance or the lack of the availability of cover. This is not a challenge that other countries face. If we want our children to grow up as robust individuals with a good understanding of risk and we want them to be able to socialise, to play actively, to be outdoors in either organised or unorganised environments, we must get insurance sorted. That is just one sector I have picked but there are plenty of other sectors that have the same sort of existential threat around them at the moment. This is unique to Ireland. It is not happening elsewhere in Europe. Many of our member organisations have recounted European meetings where it has taken them quite some time to explain the predicament they are faced with in Ireland because it does not exist anywhere else. That is why it needs to be sorted. Even at a macro level, that affects our competitiveness in sectors where we are competing directly with other countries, for example, in tourism, where price can be important. We need to get insurance sorted. From a societal point of view, much of the stuff we currently take for granted will not be around in the longer term if we do not get insurance sorted.

I thank Mr. Boland for coming before the committee. I noted his comments about the legislation we are considering. I will ask a number of questions about the survey that the alliance conducted because, as I am sure is the case from his point of view too, it is frustrating and alarming from the point of view of policymakers that one year after the guidelines were introduced, the survey shows that liability premiums have increased by 16%. Was that a surprise to Mr. Boland and the members of the alliance?

Mr. Peter Boland

Anecdotally, we were getting some feedback on that, but the scale of it surprised me to some extent and certainly frustrated me. We would have expected quite the opposite.

Obviously, I am not asking Mr. Boland to empathise with policymakers or politicians; however, can he understand that from the point of view of parliamentarians and members of the Government, a huge amount has been done to try to reform the insurance sector to reduce premiums? We enacted the perjury legislation, introduced the judicial guidelines and established the Office of the Legal Costs Adjudicators of the High Court, the Garda insurance fraud unit and the database. Every time we introduce something, the premiums do not come down. Are the insurance companies taking us for a ride here or what?

Mr. Peter Boland

I think the Deputy will have to ask them that.

What does Mr. Boland think?

Mr. Peter Boland

As I said, we would have expected premiums to be coming down at this stage. In fact, they are going up. As I said to Deputy Doherty, the only place the money goes is into the pockets of insurers if it is not put forward in terms of reductions to liability insurance policies.

I want to think about where we, as policymakers, could go. Repeatedly, issues are identified by the insurance industry as the problem but when we resolve that problem we are told it is not the problem and that there is another. Ultimately, is Mr. Boland saying to this committee that the major issue is the lack of genuine competition within the Irish insurance sector?

Mr. Peter Boland

Absolutely, particularly on the liability side. The Government recognised that quite some time ago. Getting additional competition into the market was included in the Action Plan for Insurance Reform, published in December 2020. I will be honest and say that three years ago, I would not have fancied the job of selling Ireland as a destination for-----

An insurance company

Mr. Peter Boland

-----global underwriters, but a lot has happened since then. We regularly acknowledge the amount of work the Oireachtas has done on transparency and meaningful reforms in this area. The reforms have to be delivered but they are not because there is not enough competition.

Regarding the attractiveness to global competitors in the insurance market, would Mr. Boland's concern three years ago have been about the size and number of payouts on foot of awards from the Irish courts and PIAB?

Mr. Peter Boland

Absolutely, because they are by far the biggest element of every policy. I am referring not just to their sheer scale but also to their unpredictability, depending on what-----

Presumably, there are still profits being made in the Irish insurance sector. Are global insurers not aware that there are profits to be made?

Mr. Peter Boland

To be honest, we are a small market. For an underwriter based in London, it is probably easier and more efficient to set up a second office in Manchester than to come to Ireland. It will therefore take a certain amount of persuasion. I understand the Department of Finance has given that responsibility to the IDA, which has enormous experience in selling Ireland as a destination. We agree with all that but the issue from our perspective is the lack of speed at which what I refer to is happening.

Does Mr. Boland believe the insurers currently in the Irish market are competitive, or is there a lack of the normal competition one would see in other jurisdictions?

Mr. Peter Boland

In the motor sector, there appears to be plenty of competition. One has only to turn on the radio to hear the number of advertisements trying to encourage motorists to change insurer. There is no such competition on the liability side. As I said in my initial submission, very often individual businesses or voluntary and community groups are told there is only one underwriter prepared to quote to them. The pricing is inevitable after that.

Why does Mr. Boland believe there is not the same level of competition in the liability sector as the motor sector?

Mr. Peter Boland

There are several elements to it. Certainly, it is a smaller part of the market. Historically, there have been fewer underwriters prepared to offer insurance. Historically, it has been a difficult market. The market is not as homogenous as the motor market, for example, so it is a little more difficult to read. I have mentioned the unpredictability of that market over the years. A lot of that has been resolved now, however. The next step, as far as we are concerned, is additional competition. Brexit had an impact. We have lost quite a few specialist underwriters, particularly those based in London, and they were not prepared to set up separate offices in Dublin. Brexit happened only quite recently but policyholders have been facing the crisis for a lot longer than that. What we are saying is that the pitch has been levelled. Circumstances have improved, so it is really a matter of selling the Irish insurance market to global operators, because it is a global business, and in the meantime ensuring the other promised reforms are followed through on.

Does Mr. Boland believe we have to do what IDA Ireland does to attract foreign direct investment in that we need somebody trying to sell Ireland as a location for insurers?

Mr. Peter Boland

That would certainly seem to be the strategy of the Department of Finance.

Is Mr. Boland aware of how that is being pursued by the Department? Is there somebody selling for us at present?

Mr. Peter Boland

No, I would not be aware of the detail on that.

We were told by the insurance industry that when PIAB was established, it would have a transformative effect. It certainly has had such an effect on legal costs. When one goes to PIAB, the legal costs are significantly lower than when one goes to court. What more does Mr. Boland want to see done in respect of PIAB? His submission states it must be reformed. What does he want legislators to do about PIAB?

Mr. Peter Boland

The legislation currently being scrutinised broadens the remit of PIAB to take psychological injuries and more complex or time-consuming injuries under its wing. The legislation also allows for mediation as a way of preventing the rejection of assessments. The vast majority of assessments are rejected by plaintiffs. Certainly, the view of PIAB is that with mediation, which involves an internal process, it can prevent that from happening in more cases. We would certainly be in favour of all that.

Have the judicial guidelines been applied? Mr. Boland referred to how he is waiting to see the approach of the Judiciary. Have the guidelines on awards by PIAB fed through into the Judiciary yet in respect of when cases get to court?

Mr. Peter Boland

No. As we understand it, virtually no cases have got as far as the courts yet.

It is worth considering the process. Typically, a claim goes to PIAB, then to litigation and then, in a small number of cases, to the courts. We know what is happening within PIAB. We have had three reports from PIAB at this stage. The extent to which it is implementing the new guidelines is very impressive, but the vast majority of claims are settled privately in litigation between insurers and plaintiffs' lawyers. We have no transparency in that area yet. What we do not know is whether the insurers are implementing the new guidelines or, as suggested by some members, topping up a little on what PIAB gives.

Why would they do that?

Mr. Peter Boland

To get cases off their desks, essentially. Everybody lives in fear of going to court because of the cost involved, so there is a financial incentive for insurers to settle while a case is in litigation and before it gets to court.

I thank Mr. Boland.

I will be very brief because I am conscious that others, even during the term of the last Oireachtas, have worked in this area. I want to follow up on two or three subjects, particularly regarding liability insurance, because I have encountered several cases, particularly in the voluntary sector, where there is an extremely negative impact. I have a couple of questions on the impact of the current situation. I also have a couple of questions on the legislation, which perhaps even Deputy Doherty might answer.

Is the sound problematic?

I apologise for the inconvenience, but I am going to come to the committee room to ask my questions because the sound quality is very poor.

Okay. Deputy Doherty might wish to ask some questions in the meantime.

To return to the point on the different forms of settlement, Mr. Boland mentioned that direct settlements between the insurance companies and the claimant constituted a large proportion - 50% - of all settlements in the most recent NCID report. Will we get access to that information? Will the NCID collect more data on the extent to which insurance companies are settling directly and when will we have that information?

Mr. Peter Boland

As I understand it, the motor insurance data will be available in October and that will cover the first nine months of the new guidelines, from April to December 2021. My understanding, although the committee might need to verify this with the Central Bank, is that the data will be in such a form that we will be able to compare them with what is happening at PIAB because we know what PIAB is doing now. We should be able to see what has been awarded compared with what would previously have been awarded under the book of quantum. We will not have those data for liability until July 2023, when the same period will be reported on.

It strikes me that despite insurance being a business that deals in risk and does not produce, manufacture or build anything or engage in any other service except for the management of risk, there have been significant efforts on the part of the State to reduce the risk. The companies pass much of the requirement on to the State to reduce the risk and many efforts have been made to reduce the level of risk for insurance companies and their actions, yet we are hearing these startling figures reflecting the rise in premiums. This might be a question for Deputy Pearse Doherty too. Looking to what the premiums were and what they would have been is a good drilling-down exercise. Nevertheless, it strikes me that insurance companies are focusing less on the actuarial assessment of risk and more on the assessment of opportunity, and that the opportunity seems to be found in a small market, with the State underwriting much of the risk and offering potential for greater profits. In pulling out that information on how the margin of profit on certain kinds of insurance product, particularly in regard to liability, has increased, the return to shareholders and the relationship between that, is that a factor that should be taken into account?

There is also that question of over-provisioning, whereby the companies maintain we need to wait some time to see how this will play out. If it turns out the insurance industry has overestimated for a period, say, from 2021 to 2023 or 2024, should there not be a carryover to some extent of that over-provisioning period to 2024 or 2025, rather than simply beginning to give a different form of assessment in 2024 and 2025? Has the industry made any indication in that regard? It will have had a period in which its calculations expected greater payouts than it was required to make.

I worry that the narrative has often related to the relationship between the duty of care and the claimant. That becomes the dynamic, rather than this question of the margin taken by companies, although I appreciate Deputy Doherty's Bill for refocusing on that. Mr. Boland might comment on this because the alliance has a range of members, not least in terms of liability. There is a risk in allowing the current model of insurance to continue with too many public policy goals. It is not about ensuring just that the insurance companies are not taking up their responsibility in respect of risk. They are, in fact, creating risks, for example, to the State on issues such as the UN Convention on the Rights of Persons with Disabilities, whereby all people are meant to be able to participate fully in public life. Similarly, we have had reports of insurance companies requiring trees to be removed by local authorities even though we have climate and biodiversity targets that those local authorities need to meet through these pre-emptive measures. This element is not just bad in itself but is distorting other aspects of the public policy landscape and the public good landscape, as the alliance’s members will agree.

The State is not just underwriting the risk but also creating opportunities for the insurance companies because it is rightly requiring insurance from those who bid for contracts and those who provide services. In fact, insurance requirements have put many NGOs and voluntary organisations in a position whereby they cannot equally tender for the provision of services or, in some cases, cannot even apply for State grants because they cannot meet the same insurance costs as, for example, a private operator. I do not want Mr. Boland to name specific members, but he might comment on whether they are elements that have been identified.

Mr. Peter Boland

The Senator asked some very comprehensive questions, which I will deal with in the round by focusing primarily on the voluntary and community sector. Our membership is not homogenous. Different circumstances face different sectors but, certainly, when the voluntary and community sector interacts with the State, the State often imposes very onerous responsibilities regarding the level of indemnity and cover required in order to interact with it. That applies not just to service providers but also to sectors such as festivals, for example. If they want to use public land, they have to indemnify local authorities up to, in some cases, a level of €13 million to get access to public ground. A significant insurance cost is involved, therefore, in engaging with the State. I mentioned the obligatory element of insurance in my opening statement. It is not a straightforward market, and considerable power is given to insurers because we are obliged to interact with them. This is a major issue from the point of view of the voluntary and community sector. As for how onerous it is in regard to issues such as the cutting down of trees or the removal of play areas, this is not something that happens elsewhere. It is quite unique to Ireland.

On the question about duty of care, there are many moving parts to this and they have been identified for some time. We are, by and large, in agreement with the current action plan on insurance reform. A core number of reforms therein, including the judicial guidelines and reforms relating to duty of care, are central to getting this resolved, but all the moving parts will have to be addressed to ensure not only that we reduce the cost of insurance now but that it will remain low because we do not want to have to appear before the committee again in ten years and announce there is another crisis. We want it to be resolved now and for the long term.

From the point of voluntary and community in particular, I am concerned that when this reform process is over, there will remain sectors that cannot get cover. The State, whether it likes it or not, will have to consider what to do with certain sectors. Certainly, the Department of Finance is not very enthusiastic about engaging on that right now because it is very focused on the broader issues that apply to the entire market, but the State is going to have to consider the issue in due course.

If we believe a service or organisation is of value to the State, but it simply cannot get going, that has to be considered.

The Senator commented on risk. I suspect that when it comes to pricing policies and liability, the direct relationship between risk and the pricing of insurance has been broken. One often gets a sense from members that it is more about ability to bear prices. Turnover is discussed, even where turnover does not increase the risk. If the average spending in an organisation is increasing, turnover also increases. It will still affect the cost of insurance. As with the example I gave, if an organisation goes from having two underwriters to one, then the price almost automatically goes up. That is an accepted fact at this stage. It is clearly nothing to do with risk. It is just about competition.

I will give Deputy Doherty an opportunity to speak.

To address the Senator's point, we have tried to remain focused in this legislation. Some of her comments reflect the position taken by the Central Bank on price walking or dual pricing. I complained and brought this to its attention, as did others, including in the media. When we initially wanted to ban this practice, we looked at a dual process. One part involved submitting a complaint to and meeting the Governor of the Central Bank, who agreed to carry out an investigation on the back of that. The second part involved drafting legislation to ban the practice, which we were progressing through the House. It did more than ban price walking, since it banned some of the predatory practices used by the insurance industry, so that premiums would have to be based on risk, along with a profit margin, operating cost and so on.

The Senator asked a question about profits. We have information about the sector's profits, which are reported on by the national claims information database each year. It gives a breakdown of public liability and motor insurance. We are able to see the profits across the sector. They were quite high, especially for motor insurance, in 2020, the last year for which data are available. The operating profits were 12% of the income. That is four times higher than the average in the previous decade, which the Central Bank calls hyper profits. Many insurance companies before this committee would talk about trying to have profit margins of about 4%. That spells out the gouging that is happening.

The Senator mentioned reforms that have taken place and more that have to take place relating to, for example, the duty of care. The key thing about this legislation is that, while we have been passing legislation to try to drive down insurance costs, there is no way for us to ensure insurance companies actually drive down costs. We cannot force them to do so. We are trying to introduce transparency. There are commitments to look for fraud and look at awards. Awards make up much of the cost of insurance. This legislation places an onus on these companies that operate in Britain. Mr. Boland mentioned Manchester. For many of these companies, Ireland is like Manchester, since it is a subdivision of a larger British company. They have a responsibility in Britain following changes to whiplash awards introduced by the House of Commons, which were lower than here in the first place and were driven down further. Those provisions sought to ensure that every reduction in awards was passed on to consumers. This would need to be replicated across the board. If we rebalance the duty of care, we need to ensure that it is not pocketed by the insurance industry and does not just lead to more profits because of the lack of competition. Companies cannot be forced to do this but we can collect data, have more transparency and, where necessary, call companies out for not living up to the commitments they gave these Houses when they looked for changes in the first place.

I thank Deputy Doherty and Mr. Boland. I was not pressing the duty of care but pointing out that it is now the area of focus while the evidence about previous reforms has yet to be seen. I welcome that part of the Bill. I have a follow-up question for Mr. Boland which may be outside the scope of this Bill. He mentioned a further discussion that is needed with certain sectors. I know that in some countries, the state has created a collective insurance product to allow smaller companies to participate in the tendering for public contracts. That happened outside the EU so it would not necessarily be an option here. I know there have been similar collective insurance schemes in other countries. Is that the kind of measure we might need to look at? That is a further conversation, beyond this Bill.

Mr. Peter Boland

We will have to face up to it. We have to be realistic about it. We are a small market. There will be sectors around the margins that cannot get cover. This is not something we have looked at in detail yet. As this process continues, we will flag sectors that will continue to be unable to get cover. Some creativity will be required in that area.

It strikes me that measures may be required related to the cherry-picking activities by insurance companies.

Mr. Peter Boland

As Deputy Doherty said, there is very little we can compel insurers to do because of the legislation covering that area. Government is doing what can be done. The work being done in these Houses is important. We have laid the ground and the companies have to follow up on this. They told us that we needed to sort out the level of claims, address insurance fraud and look at the duty of care. All these things are being done, so the companies have to fulfil their side of the bargain.

That brings us to the end of our consideration of this matter for this part of the meeting. I thank Mr. Boland for attending and I thank members and Deputy Doherty for their input.

Sitting suspended at 2.38 p.m. and resumed at 2.48 p.m.

We are now joined from Insurance Ireland by Ms Moyagh Murdock, CEO; Mr. Florian Wimber, director of advocacy, communications and public affairs; Ms Jacqueline Thornton, director of regulation and policy development and company secretary; and Mr. Michael Horan, non-life-insurance manager.

We will have an opening statement, followed by questions. I invite Ms Murdock to make her opening statement.

Ms Moyagh Murdock

I am delighted to be here today to contribute to the committee's scrutiny of the Judicial Council (Amendment) Bill 2021.

I am the chief executive of Insurance Ireland. I am joined by my colleagues, Ms Jacqueline Thornton, director of regulation and policy development; Mr. Michael Horan, manager of policy and regulation; and Mr. Florian Wimber, director of advocacy, communications and public affairs.

Insurance Ireland is the representative body of the Irish insurance industry. We represent approximately 130 members providing cover to more than 25 million customers in more than 110 countries. The total value of assets of the Irish insurance industry is €489 billion. The insurance sector, including Insurance Ireland members, employs 35,000 people in Ireland and generates approximately €1.6 billion in tax income per year. Ireland is the fifth largest market for insurance in the European Union and the biggest exporter of insurance services.

Insurance Ireland and its members firmly support the agenda for insurance reform and the implementation of the personal injuries guidelines. We greatly appreciate the efforts the Government and Members of the Oireachtas have made to progress these reforms. Many members of this committee have worked on insurance and claims cost reforms for years. Insurance Ireland advocated for the introduction of the personal injuries guidelines, which seek to reduce and ensure consistency in the level of awards for personal injuries. The personal injuries guidelines have the potential to represent a milestone in the Irish insurance market if they are consistently applied. We note the recent PIAB award values report, which confirmed the application of the guidelines by PIAB and the impact the new guidelines have had on the awards levels to date. However, we are concerned about the decreasing acceptance rates of PIAB awards by claimants since the guidelines' introduction. It is reasonable to assume that this trend is leading to more cases going to litigation. The backlog in the courts and the ongoing legal challenges to the personal injuries guidelines present significant uncertainties as to the efficacy of the guidelines.

While Insurance Ireland cannot comment on pricing-related aspects of the guidelines, a commitment to pass on claims savings was given to the Oireachtas by insurance company CEOs when they appeared before this committee. We understand the motivation and interest from political decision makers in monitoring the impact of the personal injuries guidelines and providing transparency to the public. Two proposals have been presented to fulfil this function, namely, the Judicial Council (Amendment) Bill 2021, which this committee is discussing today, and the provisions included in the Insurance (Miscellaneous Provisions) Bill 2022. The proposals in the first Bill follow the example of the UK’s Civil Liability Act 2018, while the Insurance (Miscellaneous Provisions) Bill makes targeted amendments to the existing reporting and disclosure requirements for the national claims information database, NCID. While both proposals might fulfil the envisaged objective, we strongly believe that the provisions proposed under the Insurance (Miscellaneous Provisions) Bill are more effective and that outputs will be delivered more expediently. This Bill, while intended to achieve the same outcome, would duplicate existing and alternative data sources such as the NCID, which already captures granular information on premiums and claim costs over a number of years.

The data sourced from the NCID allow for the monitoring of trends such as the impact of a changing regulatory and economic environment. As it stands today, all insurance firms providing insurance services for private motor and employer and public liability in Ireland already submit to the NCID. The data collected from the NCID undergo rigorous review and enhancement. Moreover, under the Insurance (Miscellaneous Provisions) Bill, a mandate for the Central Bank to collect further data is planned. We also understand the Central Bank is already working on additional reporting requirements to track the impact of the personal injuries guidelines more effectively. The establishment of the NCID and the annual reports produced have served to significantly improve data availability in the Irish insurance market, as well as support policy analysis on premiums, claims costs and deriving trends over a long period. The collection of these data enables the Central Bank to publish an annual report containing analysis of the cost of claims, the cost of premiums, how claims are settled, how settlement costs vary depending on how claims are settled, and an analysis of the various types of costs, such as legal costs, that make up settlements. The NCID is already a comprehensive independent data repository that tracks the performance of the Irish motor and liability markets. The additional improvements to the NCID will enhance its value in improving transparency within the Irish insurance market further. Therefore, the development of the NCID should be prioritised, instead of creating a parallel and duplicative data reporting and sourcing stream.

This Bill seeks to align Irish regulation with UK regulation at times when other jurisdictions are moving in different directions. The UK system will provide its first data in October 2023. At that point in time, the NCID will already have informed the discussion in Ireland for more than three years. The NCID system is up and running and reports have been and will be published throughout 2022 and 2023, long before the UK regulators and public will see the outcome of their exercise. The NCID provides factual and detailed data that enable Members of the Oireachtas to verify whether Irish insurers pass on savings to their customers, and will help inform any public policy decisions that may be needed with regards to future reforms.

We understand the interest in monitoring the impact of the application of the personal injuries guidelines and we support these efforts. We will support initiatives to collect the necessary data to assess the progress of the guidelines and to enable informed policy discussions. We advocate for a proportionate, sound and sensible approach to collecting this information. In our opinion, the more proportionate way of doing this is through the NCID. I thank the committee for this opportunity to present our position. I look forward to answering any questions members may have.

I welcome the witnesses to the committee and thank Ms Murdock for her opening statement. It is fair to say the insurance industry does not like my legislation. Let me rephrase that; it does not like the accountability that would come with my legislation. Its argument against the legislation under consideration today is that the Government's Insurance (Miscellaneous Provisions) Bill provides for the same outcome. Is that a fair statement? Okay. Can Ms Murdock point me to the section in the Insurance (Miscellaneous Provisions) Bill that mandates the Central Bank to collect further data?

Ms Moyagh Murdock

The Central Bank has the power to collect further data. We have been notified that this will be enhanced in the next iteration. It is already enhancing the previous reports produced. As I understand it, it has the regulations to do that and will do that.

Ms Murdock has just confirmed that the reason Insurance Ireland does not want my legislation, which provides for accountability, is that the Government's Bill does the same thing. She says there are enhancements under the Insurance (Miscellaneous Provisions) Bill that mandate the Central Bank to collect further data and she has suggested that these data will allow for the same outcome as my Bill. Where in that legislation is there provision for that?

Ms Moyagh Murdock

It is not that we do not like Deputy Doherty's Bill. I believe his Bill intends to achieve the same outcome but I am trying to suggest that it is not the most cost-effective way of doing things. We are trying to avoid dual streams of information. In terms of the actual-----

Let me be clear. That is exactly what I do not want to do. As long as the data are being collected, I am happy. Insurance Ireland is telling me that this legislation that we are currently dealing with in the House, the Insurance (Miscellaneous Provisions) Bill, already provides for that. I am asking Ms Murdock to point out, and I will hand her the Bill if she wants, which section-----

Ms Moyagh Murdock

I will ask my colleague Mr. Horan to respond as to the specifics and the location of that provision.

Mr. Michael Horan

Section 8 of the Central Bank (National Claims Information Database) Act 2018 confers powers on the bank to establish and administer the database. Section 8(4) outlines the type of data that may be collected by the bank from insurance companies to fulfil its function. The Central Bank has that power under the Central Bank (National Claims Information Database) Act. Head 3 of the Insurance (Miscellaneous Provisions) Bill amends section 8 of the 2018 Act to explicitly allow the bank to collect and publish other types of information. That could also be done for the personal injuries guidelines. The Central Bank (National Claims Information Database) Act 2018 also gives them that information. It is possible for the data to be collected under the national claims information database. That would be the logical place to collect it because a considerable amount of premiums and claims information is collected there and it has been in place for two or three years at this stage. That is our rationale.

Let us dig deep into this. Mr. Horan suggests that the Central Bank (National Claims Information Database) Act 2018 gives the Central Bank the power to collect data from insurance companies. I do not contest that. Does it give unlimited powers to collect insurance data or will further legislation need to be enacted to empower the Central Bank to gather further data?

Mr. Michael Horan

It allows it to collect information it believes is reasonable for its functions to collect.

The Private Members' Bill we are discussing here would allow the Central Bank to collect the information on, for example, the amount paid by insurance providers during the reporting period in respect of personal injuries sustained by third parties. I am sure it could collect that information at this point. However, could it collect the amount that the insurance provider might reasonably have expected to pay in respect of those injuries if the personal injuries guidelines had not been adopted?

Mr. Michael Horan

Operationally, how the information is collected would need to be worked out by the Central Bank. We are getting into the fine detail of what would be collected. In principle, the Central Bank (National Claims Information Database) Act empowers the Central Bank to collect the information it considers necessary.

That is to fulfil its duties under the Act but not to go beyond that. I return to the legislation which Ms Murdoch said does exactly the same thing. Mr. Horan spoke about head 3. Is that right?

Ms Moyagh Murdock

Section 8(4).

That is section 8(4) of the 2018 Act. We are talking about the Government's legislation, the Insurance (Miscellaneous Provisions) Bill 2022, which our guests say is doing the same thing. What section of that Bill does the same as my legislation?

Mr. Michael Horan

Head 3 of the Insurance (Miscellaneous Provisions) Bill 2022 amends section 8 of the Central Bank (National Claims Information Database) Act to allow the bank to collect, for example, other information. Therefore, that can be done by the Central Bank under the Central Bank Act. It is already doing some work on this.

I need to stop Mr. Horan there because his information is so far out of date. We are not dealing with heads anymore. Heads relate to a draft Bill we discuss during pre-legislative scrutiny. This legislation is going through the Houses. What was head 3 is now section 4 of the legislation. Section 4 is very specific. Does Mr. Horan know that we are giving the Central Bank the power to find out how many millions of taxpayers' money insurance companies pocketed in Covid payments? The only additional power that has been provided to the Central Bank under the national claims information database is to find out how much insurance companies pocketed of taxpayers' money in Covid-related payments. It does not do, as Ms Murdoch has informed the committee, exactly what my legislation does. I am asking Mr. Horan if he stands over those comments? Is he familiar with this legislation?

Mr. Michael Horan

I am familiar with that legislation. Under the section the Deputy is quoting, it would be possible to do the same thing for the personal injuries guidelines. I would go on to say-----

It does not do the same thing.

Mr. Michael Horan

I would go on to say-----

Mr. Michael Horan

May I just go on to say that the Central Bank has updated its specification for 2022 to include a flag, identifying personal injuries guidelines in its data request. I am saying that the Central Bank has the power to collect the information and identify the claims that are settled under the personal injuries guidelines. It collects that information, identifies the cost of those claims and also collects premium information. The Central Bank has the ability to do that under the Central Bank Act.

No, it does not.

Mr. Michael Horan

It does.

I am going back. I will not let you dice around this. You should either withdraw the comment or stand over it. Ms Murdock claims that this legislation does the same thing. The Insurance (Miscellaneous Provisions) Bill hands the Central Bank of Ireland the power to collect further data. Does she acknowledge that those data have nothing to do with the provision of my legislation, which is about passing on reduced awards to consumers, and actually the only data it is empowered to collect relate to Covid-related tax-funded payments that went to businesses which are now being pocketed by the insurance industry?

Ms Moyagh Murdock

I stand over that the Central Bank has the power within the Act to do that.

That is not what Ms Murdock said.

Ms Moyagh Murdock

I also point out that the Deputy says that under his Bill, the Central Bank must record and provide the information that would have been paid out previously if the new guidelines had not been applied. The way we interpret it is we have already three years of information in the motor claims database and one year, nearly two years, of information in the liabilities database. Data on all the prejudicial council review award levels were already collected in respect of similar injuries. The information recorded up to now already gives that information on what the award levels were prior to the new guidelines. It would be quite easy to compare post- and pre-data guideline award levels changes. As my colleague said, there will be a flag on any new cases going through and any new award levels being input into the database as to whether they are awards under the new guidelines or awards under the old guidelines because many of the cases are coming through together.

Is Ms Murdock's position that she is going to tell me that black is white? Is she going to tell me that this Bill does exactly what my Bill does? I can read out the section. The Government's Bill, which has already gone through a number of Stages in this House, only allows for the additional collection of the taxpayers' money that was pocketed by the insurance companies in respect of schemes such as the employee wage subsidy scheme and temporary wage subsidy scheme and that was never intended to end up in their pockets.

Ms Moyagh Murdock

The Government's Bill will achieve the same outcome that the Deputy desires. The NCID is a robust data collection repository which can be continually reviewed as is being done with it being updated. Having two parallel streams will bring significant cost and resource requirements, not just on the insurance industry but also on the Central Bank. Those costs will need to be absorbed somewhere. I am trying to achieve getting information in as quickly as possible.

I am just trying to have a-----

Ms Moyagh Murdock

I also point out that the UK does not have a database equivalent to the Central Bank's existing database. It is starting afresh and will have one stream of information coming in. That will make a big difference in the workload.

I am just trying to get to the factual position. Honest to God, Ms Murdock is telling me that this Bill does exactly the same as my Bill, which is blatant nonsense, even though I have told her what the section is. I can read it into the record word for word. It is simply untrue, and I cannot sit here and listen to her saying, "No, you are telling me black is white." It is not true. Ms Murdock can change her argument but she should not treat me like a fool and make suggestions about legislation that only empowers the Central Bank to collect additional information on payments made out of taxpayers' funding. Section 4 of the legislation states: "details of the costs borne and provisions made associated with dealing with relevant claims, including details of deductions, in respect of payments out of public moneys, made by insurance undertakings from the amounts paid in satisfaction of relevant claims". That is basically the money that was deducted from awards settled by insurance companies which was reduced because of State payments to those same businesses. It does not do what my legislation does.

Ms Moyagh Murdock

The Central Bank has the powers to deliver the information the Deputy is looking for.

Let us go to that point. I acknowledge that Britain has no national claims information database. I acknowledge that four years of motor insurance data and two years of public liability insurance data have been gathered. However, the Central Bank has informed us that it cannot inform the public or us, as Oireachtas Members, of the premium reductions related to a single policy.

We may, for example, see motor insurance premiums falling, but there is no way to disentangle that from whether it is because awards have fallen by 42% or the fact that there were so few cars on the roads and, therefore, fewer accidents and so on. Is there any way to find out that information?

Ms Moyagh Murdock

Obviously, last year and the year before were exceptional years with Covid-19 and the numbers of vehicles on the road. I would point out, however, that the vast majority of cases going through the Personal Injuries Assessment Board, PIAB, are motor claims and we have seen those premiums reduce dramatically. Since 2017, it is 29%. The speaker from the previous session, Mr. Peter Boland, also acknowledged that is the case this year as well and they are actually accelerating. I believe the benefit of the awards that have gone through the system is feeding through. There is also an element of the Covid-19 impact in there, however, so I will not say this is all-----

Is there any way to find out? When the national claims information database, NCID, reports, is there any way for us as Oireachtas Members or, indeed, the public to be able to see awards dropped by 42% and that is the direct result with regard to premiums? How do we disentangle that it is due a bit to Covid and maybe a bit of investment?

Ms Moyagh Murdock

I would point out that the awards dropping by 42% are the application of the new guidelines by the PIAB, pure and simple. It is applying the new guidelines as per the guidelines when they were issued in April last year. The actual premium reductions are a combination of Covid-19 and new award levels. There is, therefore, definitely a mixture there.

Okay. Let us look at what happened in Britain. Many of Insurance Ireland's members are also the largest insurance companies. The seven largest insurance companies in Ireland are also the seven largest insurance companies in Britain. I refer to AXA, Allianz, Aviva, Zurich Insurance Group, RSA Insurance and those types of companies.

In Britain, when the House of Commons voted through a reduction in whiplash awards, it wanted to ensure that did not benefit insurance companies but that it actually benefited the customers. It drafted regulations that are currently in effect and it puts an obligation on Insurance Ireland's member companies that operate in Britain. It puts exactly these types of requirements to report. Basically, in layman's terms, it says this is the level of awards we paid out last year and this is the level of premiums we charged, and, if the reductions in awards had not happened, this is the level of awards we would have had to pay out and this is the level of premiums we would have had to pay. Why is Insurance Ireland opposed to that type of oversight being introduced in this State?

Ms Moyagh Murdock

I am not saying we are opposed to that level of oversight. I am trying to steer away from having a significant burden of data analysis with very similar confusing dual streams of information going on in parallel. That is the issue here.

If we empower the NCID to seek exactly that type of information, would Insurance Ireland be happy with that?

Ms Moyagh Murdock

Obviously, I cannot speak for the Central Bank of Ireland but we have fully supported and provided any information it has sought to date.

Would Insurance Ireland welcome that oversight?

Ms Moyagh Murdock

We have certainly supported anything that improves the market. We would have no pushback from the members of Insurance Ireland.

Ms Moyagh Murdock

One thing, which the Deputy himself acknowledged, is that we have seen nothing yet from the UK. It is taking a long time to get that information. We are up and running. I know the Deputy has been working on the whole issue of the cost of insurance for a number of years. In fairness to the Central Bank of Ireland, it got on with it with the first iteration of the NCID. I would fully expect it to continue on with that in anticipation of the desire for transparency and clarity. We fully support that. In fact, we depend on it ourselves for our own information.

That is why this legislation is different in one respect from the British regulations. While they require a report at the end of the fourth year, which is 2023, we will require a report annually from Insurance Ireland's members.

Ms Moyagh Murdock

I would not say that could be produced overnight. The Government may request it annually but the problem is having the resources to produce that both at the source with the insurers and at the Central Bank of Ireland. It is quite a significant burden. We want to try to avoid any unnecessary duplication that will have to be absorbed in the cost of insurance in general.

Does Ms Murdock believe that Insurance Ireland's members passed on euro for euro the reduction in awards as a result of the Judicial Council (Amendment) Bill 2021 and the guidelines?

Ms Moyagh Murdock

Where we have seen cases come through, I believe one of the biggest problems is the slow pace of cases coming through the system. I have not seen any court cases underpin the new judicial guidelines. What I have seen is a swathe of appeals and cases being declined. We have heard the PIAB say its acceptance levels have gone from 50% down to 37%. Our experience from the members of Insurance Ireland shows that there are actually a tiny number of cases being accepted either directly or through the PIAB, which gives me grave concern that a wait-and-see approach is being taken by some legal advisers to claimants. That has a risk of undermining what the new guidelines set out to achieve. The Deputy mentioned four appeals that have now been set up where cases were declined in the PIAB and went to the courts and the judges awarded much higher award levels. That is not going to be good for reducing the risk and the certainty we are seeking from the new guidelines and it is a concern.

I will ask again. Does Ms Murdock believe that Insurance Ireland's members have passed on euro for euro the reduction in awards to their consumers?

Ms Moyagh Murdock

The number of awards that have actually been accepted is a tiny percentage compared to what has gone through in the past. They have passed on significant savings in the motor market. The liability market is much more challenging. We have not seen any of the awards coming through in any material numbers. We do not know whether we can pass it on at this point. We also have to have an eye on the solvency of the industry. The liability market, both employers liability, EL, and public liability, PL, has been significantly loss-making over the years. It is not in the consumers' interest and it is not in the whole competitiveness of this market to take-----

It made 3% profit last year. It is not loss-making.

Ms Moyagh Murdock

Over the previous ten years, we saw losses of in excess of 20% and we saw a significant number of underwriters leave the market. According the Central Bank of Ireland's own figures, since 2018, 40 underwriters are no longer on its register of providers. We are seeing exits here.

When they appeared before this committee and lobbied us to bring forward the Judicial Council (Amendment) Bill 2021 and, obviously, asked the Judiciary to bring forward the guidelines, Insurance Ireland's members told us that they would pass on the saving euro for euro.

Ms Moyagh Murdock

They did, and they stand by that.

Does Ms Murdock believe that? Does she stand by that?

Ms Moyagh Murdock

I stand by that. What we said was-----

So, Ms Murdock believes they have passed on the saving euro for euro.

Ms Moyagh Murdock

What we said was that the insurance agenda also requires the duty of care and the PIAB Act to be addressed. The actual awards can only go some way. I fully stand over the statement that the insurers are passing on-----

When we deal with the PIAB and the duty of care, can Ms Murdock tell me where the goalposts will be then? When is Insurance Ireland going to put the consumers first? We told the insurance companies they were talking through their hats with inflated figures in terms of fraud. Then, the awards were the big issue. Now, it is that we are not actually even seeing any reductions in public liability despite the fact that awards have come down. Ms Murdock said she has seen a tiny amount going through. Is it not the case-----

Ms Moyagh Murdock

I do not accept that. Against a backdrop of continually increasing consumer prices, insurance is the one area in which we have seen consistent and continued reductions in premiums. I pick up the point that-----

How much has public liability gone down in the last year?

Ms Moyagh Murdock

In public liability, the comparative figure that was used, which I think Mr. Boland mentioned, was a 16% increase. However, the recently released Central Statistics Office, CSO, figures indicate that since Covid-19 has dissipated, GDP has gone up 13%. That is, therefore, a direct factor of footfall and turnover so-----

Hang on a second. Ms Murdock is telling the committee that insurance is the one area that keeps going down. I am asking her a question. How much has public liability come down in the last year?

Ms Moyagh Murdock

It has not come down.

It has not come down.

Ms Moyagh Murdock

No.

How much has it gone up, though?

Ms Moyagh Murdock

There is no evidence of the actual new awards coming through the system for liability-----

How much has public-----

Ms Moyagh Murdock

-----and we have not addressed public liability. According to the Occupiers' Liability Act, it is still all on the premises owner-----

By how much has public liability insurance increased in the past year?

Ms Moyagh Murdock

I do not have that number with me.

Ms Murdock said there is a trickle of awards going through the system. Some 17% of awards go through PIAB. That is not a small amount. PIAB has reduced its level of awards by 42%.

Ms Moyagh Murdock

In cases it is down to 12%.

On average, it is 42%. Does Ms Murdock accept PIAB's data?

Ms Moyagh Murdock

I accept that PIAB has certainly seen award levels offered come down to 42% but it has indicated that the number of acceptances has reduced significantly, and that is a problem.

There is still a large volume of accepted cases going through PIAB where awards have been reduced by 42% and members of Insurance Ireland are pushing up public liability on businesses, sporting organisations and not-for-profit organisations, which are just trying to survive.

Ms Moyagh Murdock

The actual absolute number of cases going through PIAB is tiny compared with a normal year where we see 60,000 cases going through. So far this year, we have seen only 3,000 cases go through PIAB.

Some 15% of cases are directly settled by the insurance company and the claimant.

Ms Moyagh Murdock

In a normal year, and we have seen only 3,000 cases between PIAB and insurers being settled so far in 2022.

What is the percentage of claims?

Ms Moyagh Murdock

It is between 10% and 15%.

Is Ms Murdock saying that between 10% and 15% of cases are settled?

Ms Moyagh Murdock

No. So far this year, and I am comparing a normal year, only between 10% and 15% of cases have come through.

Is that through direct settlement?

Ms Moyagh Murdock

Yes.

Where are the rest of them going?

Ms Moyagh Murdock

They are in abeyance. We must wait and see. They are going through the courts system. We have not seen the volume of claims come this year that we would normally expect in a normal year.

Has Insurance Ireland not seen the level of claims or has it not seen the level of claims being settled?

Ms Moyagh Murdock

No, we have not seen the level of claims.

There has been a reduction in claims.

Ms Moyagh Murdock

My apologies. We have not seen the level of claims settled.

Is Ms Murdock saying that of the claims that the industry has, only 15% of them have been settled?

Ms Moyagh Murdock

That is at the top end.

Is Ms Murdock giving me last year's figures? Do not give me this year's figures because a claim takes a long time to be settled so that figure can be manipulated. I am talking about 2020 and 2021.

Mr. Michael Horan

Under the new personal injuries guidelines, about 3,000 claims have been settled so far since the guidelines were introduced last April.

What percentage of the claims were direct?

Mr. Michael Horan

About three quarters of those were direct settlements and the remainder were PIAB settlements.

Hang on. That is a whole different statistic. The direct settlements have now increased from 50% to 75% since April.

Mr. Michael Horan

In a normal year, a large number of claims would be settled. Since the personal injuries guidelines were introduced, the settlement rate has ground to a standstill. We are finding that only about 3,000 claims have been settled since the introduction of the personal injuries guidelines. Another factor we are noticing is that the claims being settled are at the minor end of the spectrum. In terms of the severity of injury, we are talking about very minor injuries. We have not seen the larger claims settled yet under the personal injuries guidelines. We have also not seen claims settled in the litigated channel so far to any great degree. Historically, the majority of the claims and the majority of the cost, in particular, are in the litigated channel. We are making the point that we are in a limbo. We are awaiting the outcome of various court cases to see what will happen. When I say we are waiting I am saying everybody, all stakeholders, are waiting. Claimants, solicitors and insurers are waiting to see what happens and everybody is hoping the judicial guidelines will be brought into effect in all the various court judgments that occur going forward and that we see the gradual unblocking of what is happening at the moment.

Why did motor insurance premiums decrease? The same issues that apply to motor insurance apply to public liability insurance. Why has motor insurance decreased yet public liability has increased?

Mr. Michael Horan

We have seen a certain number of minor to moderate injuries claims being settled. Some of those would be minor motor injuries and, therefore, we are seeing a certain reduction flowing through in the cost of motor claims and premiums.

We have seen minor injuries in public liability being settled as well.

Mr. Michael Horan

Until we see a greater unblocking of the backlog in the personal injuries claims system, we will have to see how the situation transpires in relation to the guidelines and how they are implemented in the upcoming court cases. We are seeing a preponderance of minor or moderate injury claims being settled but in very small numbers. The data that have been quoted relate to a very small sample of between 10% and 15% of the number of settled claims we would see in a normal year. That is just the way things have developed over the last 12 months.

Ms Murdock said publicly that "they can't get away from" that, in reference to the commitments the insurance companies, which are members of Insurance Ireland, made to this committee in terms of passing on reductions in awards. I remind her of what the CEO of Zurich Ireland told this committee back in October 2019. He said that if personal injuries or soft tissue damage cases reduced by 50% and insurers had not reduced their motor insurance prices by 15% and liability insurance by 20%, the committee should ask the insurance companies a lot of questions. The price of liability insurance was not reduced by 20% and instead increased.

Ms Moyagh Murdock

We can say that the cost of motor insurance has reduced by 29% since 2017.

Hang on. The guidelines came into effect in April of last year, so that is one year ago. We can see from the CSO figures from that point onwards, claims reduced by about 10% but there is no way of knowing. We need this legislation to see if this reduction was the result of less traffic on the roads during Covid or the result of the awards. We have not seen the level of reductions that the CEO of Zurich Ireland warned committee members that we would need to ask serious questions about if reductions did not happen.

Ms Moyagh Murdock

The Deputy mentioned that the CEO said that about motor insurance.

It was public liability. The CEO went further and said the reduction should be 20%.

Ms Moyagh Murdock

The actual environment in public liability has not changed since then. Yes, the guidelines have improved the level of awards but the duty of care and balance of responsibility are still not fairly dispersed between the policyholder and the public.

The CEO of Zurich Ireland knew about duty of care. He specifically said, because the companies were lobbying here, that we should bring in the Judicial Council guidelines. He said that if we do not see public liability decrease by 20%, members of the committee should ask serious questions. The insurance companies then turned around and jacked up the prices despite the fact that, even with the small number of claims, awards have fallen. Surely to God we cannot get away from that fact or that the price of premiums increased.

Ms Moyagh Murdock

Prices may have gone up but that is on the back of a massively loss-making market where we were seeing exits from the market as firms went insolvent. Under the rules of the Central Bank, solvency is a massive issue for firms. They must be viable. The industry has called for certainty and stability. That is how we can provide more competition and attract more insurers into the market. Insurers have not come into this market. Is it that they do not want to make money? There are other reasons they are not coming to do business in Ireland. The same operators and firms do business in the rest of Europe. Ireland is not an attractive place in which to do public liability and employer liability insurance because of the risk. The risk needs to be addressed through the duty of care and the powers PIAB has to address cases when they arise. That will change the environment.

Ms Murdock said publicly that the CEOs "can't get away from" in reference to their commitment.

That was the commitment I read out to Ms Murdock, namely, that employers liability should be reducing by 20% and, if it is not, to ask serious questions. What are we supposed to do about it when we know they have not just failed to deliver on their commitment but actually gone in the other direction and jacked up prices?

Ms Moyagh Murdock

I think we are making progress.

Who is making progress - the insurance industry or the consumers?

Ms Moyagh Murdock

The Government is bringing forward-----

Insurance Ireland's members' profits are going to go through the roof.

Ms Moyagh Murdock

They have to make a profit to stay in business.

Come on. What is a reasonable profit? The Central Bank has called the profits of the insurance industry hyper-profits. In motor insurance, it was 12%, four times what it was in the previous decade. Insurance CEOs were telling us that the profit they would look for is about 4%. It is 12%.

Ms Moyagh Murdock

The motor sector is passing back the savings to the consumer. The losses in the employer's liability and public liability market have continued. It is not attracting in anybody new to do the business.

I have to pull up Ms Murdock again. The employer's liability and public liability market is profitable. The NCID from 2020 showed a 3% profit margin in regard to those books.

Ms Moyagh Murdock

Those profits are not just derived-----

They are profits.

Ms Moyagh Murdock

The profits are derived from prudent investment of the funds that the insurance companies had. If that was ripped away, which is happening-----

It is part of the insurance market. Ms Murdock cannot just say that we should take that away. If my house did not have walls, it would not be a house. It is part of the market.

Ms Moyagh Murdock

It is not a guaranteed source of income. That is changing and the returns on the investment funds are definitely not what they were before. That covered up the losses from the actual cost of insurance. It has to be a full agenda of insurance reform, including the duty of care and including the PIAB Act.

The CEO of Zurich might come in here and state:

Folks, listen, we have been losing money here. When you reduce awards by 42%, you know what we are going to do? We are going to keep that money to boost our profits because we made a loss in the past. Maybe if you introduce other reforms down the road, we might pass that on to consumers, and probably, by the way, we are going to increase prices instead of decreasing them on businesses, community groups, sporting organisations, festivals, and organisations that cannot even trade anymore because of insurance.

Ms Moyagh Murdock

I cannot speak for the CEO of Zurich. What I can say is that the insurers will try to provide cover where possible, but we have to address the whole issue around the cost of insurance, not just on the size of the award. Ireland is unique, and we heard Peter Boland say that before. It is unique in how insurance costs are out of kilter with everywhere else. It is also unique in that the responsibility lies with the policyholder, and there is no personal responsibility in many cases. In addition, the quantum of award being awarded through the new guidelines is being undermined by the outcomes of the court cases when declined. We need to make sure that does not happen. We need to see cases coming through court underpinning the award recommendation made by PIAB.

Can Ms Murdock guarantee that none of Insurance Ireland's members have settled outside of court for a higher award than that offered by PIAB?

Ms Moyagh Murdock

I cannot speak for individual members. What I can say is that the members are committed and we meet regularly with PIAB to ensure we are following through on our commitment to-----

Has Ms Murdock asked the members that question?

Ms Moyagh Murdock

Yes, we have.

What did they say?

Ms Moyagh Murdock

The initial response is that the actual awards coming out of PIAB are surprising claimants a lot but they will stick to it. In terms of the cases that were undermined-----

There is no top-up by insurance companies in direct settlements.

Ms Moyagh Murdock

I do not know of any, so I cannot speak to that. The feedback is that a lot of claimants and a lot of solicitors are very surprised by the size of the awards as a result of the new guidelines and they are now adopting a wait-and-see approach. They feel they may get a better outcome at court. That is going to take much longer and it is going to undermine the whole guidelines given that if cases are recovered within six months, they fall into the lower bracket. No court case is going through sooner than two years normally and if it goes to appeal, it could be up to four years, and cases are automatically moving up the scale on the quantum of awards in the new guidelines. We will be back to square one, back to the old book of quantum, and that is the last thing we want for the consumer.

On a final point, while the public will make their own minds up in this regard, it is blatantly true that the Government legislation does not do what my legislation does. The Government would not even be as bold as to make that statement, no harm to it. Is it not true that Insurance Ireland does not want this legislation because if the Central Bank had the power to collect this information on what the levels of award are, what the premiums charged are and what they would be if the claims had not been reduced, Insurance Ireland would have nowhere to hide? Its members would be exposed for the price gouging that they are involved in. Its members are willing to submit the same information in Britain on the reduction of awards but they tell us here that would be too bureaucratic, too difficult and would cause time delays and all the rest. Is it not the reality that they would be caught red-handed on price gouging? The CEOs who came before this committee spun us a pack of lies when they told us that the awards would be dropping by 20% on public liability.

Ms Moyagh Murdock

I would not accept that. I am completely agnostic on who asks for the information as long as it is only asked for once. I would suggest that the Central Bank takes on board what omissions there may be or may be perceived. I certainly do not want to end up having a dual exercise conducted here. Whether it is the UK system or the existing NCID system, the objective here is to come out with transparent and informative information so policy can be agreed upon. If measures need to be taken because there is a view that it is not delivering the results, then the Central Bank has the power to do that, and it needs to do its job as well and ensure it has an effective data collection system. Whether it is the Deputy’s Bill or the Government Bill, the Central Bank will end up doing the job. It is down to it to make sure it collects the correct information from the consumer.

Ms Jacqueline Thornton

To be fair, our point is that the transparency is there and the ability for the Central Bank to continue that transparency is there. My colleague mentioned that the Central Bank is implementing a flag to be able to identify claims that are settled under the personal injuries guidelines. The point of that is to be able to compare those to the claims that were settled in the previous years. Yes, we have Covid but the NCID started in 2019 so we have at least one year of normal times to compare with. The point is that the transparency is already there, the transparency is built into the NCID, so the comparison is allowed to be there. As time goes on and as the Central Bank collates this data and publishes it, it will come into the public domain. The politicians, as policymakers, the representative bodies and Insurance Ireland members will be able to see as a whole how the personal injuries guidelines are actually working out.

Unfortunately, until those award levels the Deputy spoke about, which are down 42%, actually start being settled, not just on the lower end of the scale with those minor injuries but also on the higher end of the scale where the main cost of claims is in those litigated claims, we will not see any of that playing through. We have not seen the personal injuries guidelines being applied consistently through the courts, which is exactly what Ms Murdock was talking about earlier. Until we start to see that, it does not send a message to all parties that these guidelines are being adhered to.

As director of regulation, I spend a lot of time with our members and I have done some of that questioning that Ms Murdock talked about. I am fairly confident that, in the main, our members are broadly sticking to the guidelines in their direct payments and in the PIAB payments and whatever comes afterwards because it is in their interest to do so.

Let me make one point. I appreciate the comments, but the transparency is not there. I agree with Ms Thornton on this point. What we will be able to look at in terms of future reports is the level of awards that were paid prior to the guidelines and the level of awards paid after the guidelines. We may see, for example, hypothetically, a trend that awards have reduced by 10% and that premiums have reduced by X amount. However, what we will never have the ability to do unless we pass this legislation is to find out from AXA, Zurich, Aviva or Allianz what amount of money they have saved from the reduction in awards and whether it has been passed on in the premiums. In Britain, they are able to find out that information but we will not have that information under the national claims information database. We will see other trends that Ms Thornton reflected but that is not what this legislation is about. This is about the CEO of Zurich basically sticking to the commitment he gave here, and basically saying, “This is how much we have paid out in awards, this is the premium we have charged and, if it was not for the guidelines, this is what we would have had to pay and these are the premiums we would have charged.” Then, it is simple mathematics as to whether it has all been passed on or not.

That is the intention of the Bill. If Insurance Ireland supports transparency, that is what it is about. I do not want a dual process. I want the national claims information database to collect this information but I want that specific information so we can hold insurance companies to account. By holding them to account, by forcing them to report this, we are hoping it acts as an encouragement for them to actually pass on, euro for euro, the reduction in awards that, hopefully, we will see more and more filtered through the courts in direct settlements and other streams.

Ms Moyagh Murdock

We are waiting anxiously for the UK report because we have not seen any evidence that it will do what it says on the tin.

I do not trust insurance companies either. All we can do is ask them to report but we cannot tell them to pass on the cost reductions to their customers.

Ms Jacqueline Thornton

Surely, when the national claims information database information starts coming through and the cost of litigated claims, as we expect, starts to go down, that will come through in the NCID. We will see the cost of litigated claims coming down and we will see the savings that are being made.

Yes but we will not see, as Zurich said, a 20% reduction in employer's liability. How are we supposed to know what we should see in terms of reductions? If claims come down by 42% across all settlement avenues, for example, how would we know what savings that provides to a certain company? The only way we are going to know is if the companies do the counterfactual, which is required in Britain, audited by an auditor and present it to the Central Bank. If insurance companies have nothing to hide, then they should be welcoming this. They should be saying that it is no problem, that they are going to pass on the savings euro for euro and that they are happy to give this additional information to the Central Bank. Then, not only will we see the trends in terms of reductions of awards and premiums but we will also see that the companies did not pocket a part of it. We are never going to know otherwise.

Ms Jacqueline Thornton

I still maintain that will come through in the NCID. Surely the point is that we do not want a dual stream, as Ms Murdock said earlier, because there is no point in reducing the cost of claims and increasing the cost of doing business. One is not meant to subsidise the other. That is the point the Deputy is trying to make, that is, the savings should be passed on to the consumer so there is no point in increasing the administrative and regulatory burden.

There are only two pieces of additional information required under this legislation that are not already being collected, namely, how much the award would have been if the Judicial Council Act had not been enacted and how much premium would have to be charged. Every time we introduce legislation on insurance, including on dual pricing in the industry, which the Central Bank is banning, the industry says that will cost a huge amount and those costs will have to be passed on to customers. Dual pricing will be banned in July, despite opposition from the industry. When I introduced my own Consumer Insurance Contracts Act, the insurance industry said it was overly burdensome, would cost a lot of money to implement and so on. There is a script here. When we deal with this issue and when the courts stick to the guidelines, which is what we all want to see, and when we deal with the duty of care issue, the goalposts will be moved again. We are chasing the industry all of the time and it is not fair. There are people out there who have been put to the pin of their collar.

The witnesses have quoted Mr. Peter Boland a number of times but he has been calling the industry out on public liability. He has said it is price gouging. The industry is taking advantage of the fact that there is a lack of competition in the market. Public liability premiums are not based on risk.

Ms Moyagh Murdock

I would disagree. I still maintain that insurance is one of the few items that has come down in price against the inflationary pressure-----

Public liability insurance has not come down-----

Ms Moyagh Murdock

Public liability has not come down and we have pointed out why that is the case and what we need to do to try to fix that. It is in the mix and we really want to see that happen sooner rather than later. I am confident that we will see the same results-----

In spite of your best efforts, Deputy, I do not think there is going to be a meeting of minds here.

Not today anyway.

For fear that the witnesses might think that Deputy Doherty is the only one with such views on the insurance industry in Ireland, I want to say that I have not experienced decreases for insurance cover, either for businesses that I know that have complained to me, or for individual motorists, although some have. In the main, regardless of what statistics the witnesses quote, I hear more complaints about increases or lack of decreases than about anything else. The insurance companies have an awful lot to do to improve what they are at and to bring about a reduction in insurance costs. There are many events in communities, including sporting events, that are affected and it is not just as simple as the insurance going up. They cannot function and they cannot hold the events.

As I said, I firmly believe that there is a lot to be done by Insurance Ireland members to convince the public that they are doing their best and passing on reductions. There is very little competition in the marketplace. Ms Murdock said that it is not an attractive market. Does Insurance Ireland provide information to possible newcomers to the market? To what extent does that cover all of the issues? Does Insurance Ireland just give them information that will put them off asking for further information or is it eager to get more competition in the market?

Ms Moyagh Murdock

To respond to the first point, I am sorry to hear the Chairman has not experienced the motor insurance reductions that the vast majority of people have experienced so far. The CSO, as well as the NCID, have confirmed that the vast majority of people are seeing quite significant reductions in their motor insurance premiums. It is also important to point out that for small businesses and for businesses in general, the NCID report in July 2021 pointed out that 93% of business policyholders have been able to get insurance for less than €5,000 and 80% for less than €2,500. That is quite a significant number of policyholders, especially considering that the report was based on in excess of 300,000 actual policies.

On the issue of Insurance Ireland and possible new members, we are a trade representative body and we are funded by our members.

I would never have guessed.

Ms Moyagh Murdock

It is in our interest to bring as many new providers into the market as possible. We certainly try to inform them. We have no obligation. We have our own lunchtime meetings and we do try to introduce them to the stakeholders, including politicians. We have brought people into the office to promote insurance competition. We have introduced potential new providers to the Central Bank. Where we can give them guidance and help, we certainly try to do so. We do get mixed messages in terms of the reasons they do not necessarily want to start selling here. There is a significant burden and cost in regulation. There is significant oversight and that does cost small insurance operators quite significant amounts of money in terms of getting set up and selling business. This is the main reason we want to make sure we do not duplicate effort with the information supply. If we can make it a welcoming place where it is easy to transfer business from other jurisdictions by being able to marry into the same sort of regulation and systems, that makes it much easier to make decisions but-----

Have you-----

Ms Moyagh Murdock

The single biggest issue that comes up time and time again is duty of care and responsibility. My colleague, Mr. Wimber from Germany, is an expert on how we compare with other European jurisdictions on general insurance. We are quite unique. As the Chairman has said, all of these firms do business elsewhere in Europe and in the UK but the challenge is how the system works in Ireland and the risk involved. If an insurance company is faced with a claim, the burden is on it and the policyholder. There are so many spurious claims for minor injuries that if they happened anywhere else, people would just get up, dust themselves off and go.

I do not want to get into that now. I want to focus on the reasons we do not have companies wanting to come to Ireland. I want to know why, despite Insurance Ireland's best efforts, they do not respond or come here. Ms Murdock is saying that the cost of regulation is one of the obstacles. Has Insurance Ireland discussed that with the Central Bank?

Ms Moyagh Murdock

We have, indeed. We have continuous engagement with the Central Bank. The UK is a good example in this regard whereby any new interventions or initiatives that are introduced by the Financial Conduct Authority, FCA, undergo a cost-benefit analysis before being embarked upon. There are certain things we would like to see brought into this jurisdiction, whereby before we start on any major exercise that could put off new entrants into the market, we would look at the benefit of what we are doing.

We certainly welcome robust and strong supervision. Ireland has an excellent reputation for this and it is very attractive to blue-chip companies coming here to sell insurance. It is a selling point. However, there is a balance.

Will Ms Murdoch provide the committee with a written explanation of the cost of regulation and what it means? This is so that we can put words around what is generally bandied about or said about the cost of regulation. All of Insurance Ireland's best efforts, according to Ms Murdock, have failed to attract companies to come in. Apart from the cost of regulation, will she set out for us in a note the other issues that are raised by those companies from outside Ireland? At a previous meeting we were told that companies interested in coming to Ireland are not able to get the information on the market itself as clearly as they would like. Has that changed? Who provides this information?

Ms Jacqueline Thornton

I will take this question as director of regulation. The Chair has raised two points. I do not know whether the question specifically relates to the liability market or the wider insurance global sphere and Ireland's ability to act as a global innovation hub for insurance.

I am talking about the basic act of attracting someone in to provide motor cover, public liability or anything else.

Ms Jacqueline Thornton

Perfect. The important thing-----

I do not want it clouded with global issues.

Ms Jacqueline Thornton

Fantastic. Let us stick with that.

I am interested in the customers in Ireland who are telling me that they pay too much.

Ms Jacqueline Thornton

Let us stick with that then. I will take it from the view of a company looking at Ireland's regulations. What is important for any company when it is going into any new market is the level of predictability and transparency in that market. What does it mean for operating their business model day to day? What do they need to do in their relationship with the regulator? The regulator has different categories of risk and will check whether the company is high-, medium- or low-risk. It is very important to have this level of transparency from the regulator. Leaving aside legislation and from a pure supervisory perspective, a company that wants to do business in this country should know what to expect from the regulator. A high-risk firm should be told the regulator will have a team whose job it is to speak to it fairly regularly. It should be told it will be included in all of the information requests. It should be told the approximate levies for doing business and that these may change if the business model changes because the risk model will also change. It should be told what is expected from it in terms of meeting the regulations. There should be a little bit of clarity around expectations, communication and transparency.

Are they getting all of that?

Ms Jacqueline Thornton

Ms Murdock mentioned the UK. I primarily worked in regulation in the UK. I spent a good decade arguing with the Financial Conduct Authority, the Prudential Regulation Authority, and the Financial Services Authority before that, on transparency and predictability and how they do not go far enough. When I came to Ireland I saw the Central Bank has even less. Ms Murdock spoke about bringing in a new regulatory initiative. There is recovery planning and resolution and what companies will have to do. These initiatives are assessed in terms of how much it will cost firms and the benefits it will bring consumers and the market. We do not get that. We would like to get it.

The Central Bank is at fault there.

Ms Jacqueline Thornton

We would like a bit more transparency on that.

Has Insurance Ireland called the Central Bank out on that?

Ms Jacqueline Thornton

We have met the Central Bank and shared these views with it.

Whom did Insurance Ireland meet there?

Ms Jacqueline Thornton

We met the Governor and the director of insurance supervision. We have shared some of these thoughts on what would increase the level of transparency to give a level of predictability and certainty to firms coming into Ireland.

Will Ms Thornton give us a general note on it?

Ms Jacqueline Thornton

I will.

I ask her to include whom Insurance Ireland met in the Central Bank. I ask the witnesses to move onto the next obstacle these companies see when coming to Ireland.

Mr. Florian Wimber

Ms Thornton described examples of something that is very important for us. Ireland is not a gigantic market. The scalability of a new business coming in is an important factor, as is the return on investment in setting up new business, as Ms Murdock described. Insurance usually does not start as a generic new operation. Existing insurance companies invest in setting up in new markets or, as we have the benefit of the free market of the European Union, they export insurance from their major jurisdiction into Ireland.

The question on this is twofold. One element is what we discussed at length with regard to predictability and volatility in certain market segments and certain market data. The other is the extra cost of coming to Ireland and doing business here compared with Germany, France, the Netherlands or wherever the group might originate. There is a good reason for the additional requirements in Ireland. One of them, which we discussed, is the national claims information database, which does not exist in other markets. We all agree it is of benefit. These parts add a layer to what a company must do to do business in Ireland. The question is how much companies can bear these costs to enter a market that is opening up. For example, with regard to the NCID for companies active in the non-life market in Ireland, there is a threshold of €25 million at which reporting requirements start. Below this companies do not face it. From the start, the burden is quite significant compared with the potential market size. The additional element is where a company wants to establish a subsidiary or branch in Ireland. The authorisation aspect of setting up a subsidiary in Ireland is significantly lengthy and we see a challenge there. The attractiveness varies from market segment to segment. It highly depends on the risk side-----

Is the size of the market an issue?

Mr. Florian Wimber

It is about return on investment and how high the hurdle is compared with the potential benefit of doing business in Ireland. It is about the cost of setting up according to regulations.

Do companies ever mention Deputy Doherty?

Mr. Florian Wimber

I think I am free to not answer that question.

I found the answers to the Chair's question about attracting other competition interesting. It would be important for Insurance Ireland to state it was found guilty of breaches of anti-trust law by the European Commission. It was found to be denying access to databases required for competitors to come into the State. This operated from 2009 until today. It had to agree with the European Commission to open the InsuranceLink database to other competitors to make it accessible and fair and not link it to membership of Insurance Ireland. Insurance Ireland has been investigated for fraud-like activity since 2019 and there have been findings against it. Is access to InsuranceLink independent on membership of Insurance Ireland? If so, since when?

Ms Moyagh Murdock

There is an ongoing investigation. Insurance Ireland has not been found guilty of any infringement or wrongdoing. I cannot say anything more than that until it comes to a conclusion.

That is fair enough. The Commission issued a press release dated 25 February 2022. The witnesses are well aware of it. It states the Commission seeks feedback on commitments offered by Insurance Ireland concerning access to its data sharing platform. It states that in order to address the Commission's concerns Insurance Ireland has offered a number of commitments. It was the preliminary report that found Insurance Ireland guilty of denying and delaying access to the database and reducing competition in the insurance market. The commitment that Insurance Ireland gave is to make access to the InsuranceLink information exchange system independent of membership of Insurance Ireland. Has that happened?

Ms Moyagh Murdock

Market testing has taken place on the proposed commitments. That is an ongoing process.

Under advice, I am not able to give the Deputy any more information at this point in time but we have been working with the Commission-----

Forget about the investigation. Is InsuranceLink, a database held by Insurance Ireland, which is an important database, available to non-members of Insurance Ireland?

Ms Moyagh Murdock

I cannot comment on that here. I cannot pre-empt anything that will come out of the Commission.

It is just a fact. I am not asking-----

Ms Moyagh Murdock

That would be pre-emptive of anything that the Commission may come out with.

It is just a fact. I assume it is not.

Ms Moyagh Murdock

I cannot answer that.

If it was, Ms Murdock would say it is.

Ms Moyagh Murdock

I just cannot answer it. We want to attract as many people into the market as possible. We will be facilitating whatever needs to be done for anybody who is a legitimate user of such a service.

Insurance Ireland is still under investigation-----

Ms Moyagh Murdock

The process is still ongoing-----

-----for anti-trust breaches.

Ms Moyagh Murdock

-----under competition law in Europe.

That sums up a lot of what is wrong.

We can deduct from that. The Deputy asked a question and I want to follow up on it. I will move to the internal workings of the group. Does Ms Murdock just accept the information from her members on any issue, for example, on how much each insurance company spends on legal fees? If she gets that figure, is she able to ask them why the figure is so high and what is the cause of that? Is she able to get down to that type of detail with them?

Ms Moyagh Murdock

We do not take that information. That information would go directly to the Central Bank on foot of whatever survey-----

No. I am asking Ms Murdock what she asks her members. In every group of members, regardless of who they are, there will be those who will fleece a customer, those who might be helpful to a customer, those who might take short-cuts or those who might use an illegal angle to bully somebody out of a claim. When Ms Murdock sees something odd like that happening, is it the type of organisation, and she is representing it, where she can turn around and ask why that is happening?

Ms Moyagh Murdock

The organisation is very open.

No. I am just asking. Does Ms Murdock talk to her-----

Ms Moyagh Murdock

We do not talk about individual cases and costs. That is very commercial.

I am not asking Ms Murdock to talk about individual cases. I am asking her the question because I have come across cases where, in the context of trying to resolve the issue, it has cost more money in legal fees than the solution would have cost. The insurance company and its legal representative do nothing more than use their legal muscle to bully the person who is making the claim off the pitch. If that practice is widespread throughout a number of companies here, I am not surprised legal fees within insurance companies on individual cases, without going into them, are causing a problem.

Ms Moyagh Murdock

There are a number of remedies to that because, obviously, the Central Bank-----

What are they?

Ms Moyagh Murdock

-----has its consumer protection code and can take action if it sees bad behaviour or misconduct. We also have the ombudsman. A consumer can make a complaint and the ombudsman will adjudicate. We see the reports with the outcomes of those cases. There are definitely safety nets there for anybody who feels they are getting unfair treatment.

We will look at Insurance Ireland’s safety net. Does it provide a safety net? Would Ms Murdock say to a member company that it should have a look at that and that it is beginning to drag its heels on it, if it was an exceptional case?

Ms Moyagh Murdock

We certainly help to resolve issues when they come through to us. Consumers ring up seeking advice and we will always try to intervene there.

It is cases like the one I mentioned that are driving up the cost of legal fees.

Ms Jacqueline Thornton

To be fair, it is not in an insurer’s interest to do that. The whole point of personal injury guidelines and trying to reduce the cost of litigated claims is to reduce the cost of legal fees involved in this.

I am talking about the behaviour of not all but some legal firms that decide they are not going to have this and start exercising their considerable muscle to deal with someone who does not have the same muscle base.

Ms Moyagh Murdock

At the risk of being sued, I suggest they should probably be brought in here.

Ms Jacqueline Thornton

To go back to the genesis of the Chairman’s question-----

Ms Moyagh Murdock

The legal profession should be brought in to answer those questions.

No. I want Ms Murdock to answer them because I want to know-----

Ms Jacqueline Thornton

We do not represent the legal-----

-----whether the organisation takes an interest in that level of scrutiny with the companies it represents. That is all I am asking.

Ms Moyagh Murdock

Yes, but a company will always follow its own legal advice. Sometimes it has to make a decision not to do so but we cannot advise it not to follow legal advice.

I am not asking Ms Murdock to do that. I am simply asking whether she says to them that we have had a complaint and that the company should look at it, without influencing it one way or the other.

Ms Jacqueline Thornton

To take a step backwards, if I understand the Chairman correctly, he is saying that, as a representative body, it is our job to represent our members and is asking whether we also take the opportunity to drive good standards through our membership.

Ms Jacqueline Thornton

If activity like that comes to our attention, I am fairly confident, judging the calibre of individual CEOs and downwards with whom we deal in our day-to-day job, it would be an extreme and a rare case because that is not the feedback we get from our members in terms of what they do. In terms of what we do, we are not a regulator and, therefore, we cannot compel our members to give us the information, but if something is being discussed such as a change in policy or in regulation and we want to understand the impact on our membership, then we will ask them to give us information.

I am more interested in Ms Thornton's first comment.

Ms Jacqueline Thornton

On driving good standards.

Does the organisation drive good standards?

Ms Jacqueline Thornton

We do. We have an insurance information service. Consumers ring us every day about struggles they have with insurance firms and ask if we can help. With respect to many of those, we tend to explain how insurance works and why they are experiencing those troubles. On the question of whether, if something more serious comes through, we act as a bridge between us and that insurance firm, it depends on the case, but I have had cases where I will ring up my contacts and the member company and say we have got this case in and we think it needs to be looked at and addressed.

I have another question on general insurance. The organisation's member companies cannot do anything about a person to whom a company sold an insurance policy unless that company is instructed by that person to acknowledge the case or to act on his or her behalf. Is that correct? If I have an accident and I advise the organisation the other party has insurance but will not produce it, it is the policy of insurance companies-----

Ms Jacqueline Thornton

We might need a little more information.

-----not to act unless the company's customer says he or she will allow it to act on his or her behalf. I thought it was a case that insurance companies settle claims regardless of whether the customer of an insurance company likes it or not.

Ms Jacqueline Thornton

There is a principle of subrogation. If it is general insurance and an accident happened, the insurer has the right to be able to discuss and settle that claim in the place of the policyholder.

In the place of the policyholder.

Ms Jacqueline Thornton

The insurer does not have to wait for the policyholder to instruct it to settle or not to do so. The insurer has the power to be able to address. The principle of subrogation is one of the fundamental principles in insurance.

Where that does not happen, and to return to the driving of high standards, Ms Thornton can then mention this to a company.

Ms Jacqueline Thornton

It goes back to what the case is. We take a view as to whether it is appropriate for us because it is very rare that we would get involved in individual consumer cases. It is not our place to do so. We are a representative body. Where we feel we can add benefit or help with particular cases that are not moved on and that are not getting the contact they need, we will give a heads up to the firm to be able to deal with that.

The Chairman is asking whether we follow that through or force firms to do it.

No. Ms Thornton has answered the question.

Ms Moyagh Murdock

We try to promulgate good behaviour. The Central Bank cannot deal with individual companies on a daily basis, but we have our own culture and compliance committee, where we convey the-----

It might not do any harm for Insurance Ireland to make a general comment on the matter to its companies. Perhaps the company causing the problem would pick up on it.

Ms Moyagh Murdock

We can take up this matter after the meeting.

It irritates people when they see the amount of money being spent on legal firms when a bit of common sense could resolve the issue.

Ms Jacqueline Thornton

That is also the feedback we get. Our members do not want to spend large amounts of money getting caught up in years of litigation. We have called for the likes of the personal injury guidelines to try to move this on. That it is not being moved on is an issue for our members. Cases are going through the system and awards are being made via direct offers and PIAB offers, but there is a great deal of wait-and-see because people believe they might get more if they go to court. We do not know what advice claimants are being given. Our members have given their offers. As Mr. Horan mentioned, the volume of cases we would expect to have been settled by this point is down significantly year on year. It is only 10% to 15%.

Is Ms Thornton saying that it is down to 3,000?

Ms Jacqueline Thornton

Exactly. Only 3,000 cases have been settled. They tend to have lower materiality – lower claims – and take the direct settlement and PIAB routes. In respect of material claims, some awards through PIAB in particular are being rejected outright and claimants are instead going to court. The insurer then has to sit and wait for those cases to go to court. Some claimants are not responding to the insurers, which means the insurers do not know what is happening with the cases and provision has to be made accordingly to pay the legal fees and, potentially, the claims if the awards have been declined or settlement offers have been made. Our members would agree that they want to be spending less money on legal fees when that money could be going somewhere else.

I was tempted to name the company and the legal firm under privilege, but I decided not to. The clerk has cautioned me. Sometimes I do not listen to caution. I will do it another day.

Ms Moyagh Murdock

One of the concerns doing the rounds at the moment has to do with the news articles about the threat that the new guidelines pose to the earning capacity of barristers. The purpose of the new guidelines was to look after the consumer, so we have to get over that concern.

I have a question on reducing the cost of insurance in general. Is there a means of determining the risk involved? This matter has been referred to already. For example, is it possible to determine whether a situation is an accident waiting to happen, to quote the old professional phrase?

Ms Moyagh Murdock

The term used is something "reasonably foreseeable" or "practicably foreseeable". Under the Occupiers' Liability Act and duty of care, if something is reasonably foreseeable, then the policyholder and business will unfortunately be held liable for it. Even if the purpose of the activities involved is sporting or high-risk, it was reasonably foreseeable that someone might get injured. It could be an adventure park or a sporting activity. Normally, people get up, dust themselves off and move on. In this jurisdiction, though, there is a culture of submitting injury claims for compensation.

Ms Moyagh Murdock

That is where we are looking for change. We want to reduce the responsibility on the policyholder and people to take personal responsibility for their own actions and to chalk it down to experience.

That is a useful reply. This matter has a bearing on the cost of insurance generally. Once upon a time, a local authority would dig a hole in the road, put a barrel into it and leave the hole there, sometimes for weeks or months. That would obviously be classified as an accident waiting to happen. Someone would fall into it, trip on the barrel or whatever the case may be.

I wish to ask a related question. Has Insurance Ireland advised persons taking out insurance cover of the need for care and the need to ensure that they do not have accidents waiting to happen? For example, a blind spot on a road can cause accidents. I know of a road that saw 19 accidents at the same spot. There had to have been a cause, which resulted in a cost. Is it a matter of policy to alert people to this factor?

Ms Moyagh Murdock

There is an opportunity to work with other stakeholders to try to identify risks like, for example, a blind spot on the road and engineer them out. Transport Infrastructure Ireland is proactive in this area with the Road Safety Authority. They examine the data analysis on collisions. The number of collisions involving serious injuries and fatalities has reduced down the years because action has been taken to reduce risks.

Many risk underwriters engage with businesses and policyholders to try to identify the risks they may have and help guide them in taking initiatives to reduce same, for example, vehicle safety or activities, and building up to a certain standard whereby they have done everything reasonably practical to reduce or eliminate the risk of serious injury to individuals. There are things that businesses can do with their insurers and underwriters to reduce exposure to risk. That will then reflect on their premiums.

I thank Ms Murdock.

That brings us to the end of our meeting. I thank the witnesses for attending and for this exchange, which has been interesting. We will adjourn our meeting until next week. As usual, we will have a private session meeting at 12.30 p.m. That will be followed by a public meeting.

The joint committee adjourned at 4.18 p.m. until 3 p.m. on Wednesday, 11 May 2022.
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