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 re-balanced. 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 sub-group 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 sub-group 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.
