I thank the Minister for coming to the House to hear the debate on this very serious issue. When the Office of the Insurance Ombudsman was launched in October 1992 it was widely welcomed. Insurance matters impinge on almost all adults and the establishment of an independent person to deal with disputes between insurance companies and their clients was most welcome. Although the Ombudsman and his or her Office was to be funded by the insurance companies, we were assured that the person appointed would be totally independent. I have here the terms of reference for the Insurance Ombudsman and on the cover I read, "providing independent settlement of disputes between policy holders and their insurance companies". Insurers taking part in the scheme were certainly looked on by me, and I am sure by many other consumers, as being a cut above those who were not and at its launch the insurance industry sought and got the approval and endorsement of the Minister for Industry and Commerce.
The scheme consists of the Ombudsman and her Office, a board comprising of executives elected by the insurers taking part in the scheme and a council made up of appointees from within and outside the insurance industry who are appointed by the insurance industry.
The present Ombudsman, Mrs. Paulyn Marrinan Quinn, was appointed at the outset of the scheme in 1992 and all appeared to be going well. I attended the launch of the report of the first five years of the scheme at the end of January. The Tánaiste spoke there and praised the scheme and I am sure all of us felt that all was progressing smoothly in the office.
At that time the Ombudsman announced that she was resigning from her office. In view of her obvious success I assumed that, having succesfully established the office, she was going on to bigger and better things. When re-reading her reports I notice her constant reminders that the independence of the office is vital. In the 1996 report she says:
Whereas the time taken to conclude disputes depends on many factors arising out of the complexity of the issues and causes of complaint the speedy and effective resolution of disputes has been my stated objective from the outset. Plans to reduce the time taken last year were thwarted by the restraints on office space which we had rapidly outgrown. I am, therefore, pleased to report that at the time of compiling the data and information for this report the final steps have been taken by the Board to enable us to re-locate.
Slightly more alarmingly the Ombudsman says:
I am also greatly relieved by the recent assurances given by the Board about the payment of the instalments of my funding for the coming year.
Perhaps one should have been suspicious but I was not.
After the launch, on 5 February 1998, a member of the Council of the Insurance Ombudsman of Ireland, Mr. Bill McLaughlin, resigned and issued a public letter making known the reasons for his resignation. Serious allegations as to the reasons the Ombudsman had resigned were made in this letter. Mr. McLaughlin said:
It is a worldwide truism that "the insurance industry has fine disregard for its customers; its prime concern is to sell, regardless of the consequences" and this perception holds equally in Ireland as elsewhere;. Many people know Paulyn's steadfast stance against this common perception, be it real or imaginary, proclaiming her independent role to insurer and insured alike, but few will have heard of her refusal behind the scenes to compromise the high standards she has so rightly interpreted for her office, despite extreme pressure.
Paulyn's decision to stand down was made following unremitting coercion. From the beginning, she has had to fend for the process and the scheme against its creators. It took four years to overcome persistent internal resistance to house the scheme properly. Despite the obvious savings to the industry, she has had to battle constantly for funds to be paid on time — they have almost always been late. Even last Friday, an enduring and substantial shortfall in funding required yet more chasing up and the continuance of a totally unnecessary overdraft.
Ever since the scheme was conceived, the office it embodies has been under attack. The initial terms of reference, submitted by the Irish Insurance Federation, tried to limit the Ombudsman's jurisdiction to seeing that the particular complaints procedure had been adhered to; Government gave its grudging and conditional approval to the scheme only when these terms were much expanded to include the investigation and decision on a complaint, as at present.
The Government must be concerned that the mandate of the Insurance Ombudsman is upheld. To continue from Mr. McLaughlin's letter:
Paulyn has resisted this unrelenting bullying from the moment she took up her office. It is a classic case where initially trivial points are made, becoming ever greater both in size and in the pressure behind them. The classic types of bully are featured on the council and the board which are in openly admitted collusion; their purpose being to control and subjugate, their methods thriving on secrecy.
Council "unanimously" decided at its meeting on 10 July 1997 not to renew Paulyn's contract from 31 August 1997. I and the two industry members were not at that meeting and, despite repeated requests, I have been provided with no reason for that decision, with which I disagreed. That decision was made despite council's earlier decision to renew her contract, a matter of which she had been informed and to which she had consented. It was also the culmination of a number of matters which had progressed from the silly through the preposterous to being downright threatening to the future of the whole scheme.
Apart from the control of the council by the board already noted (in contravention of the very concept of their separate identities) and the control of the Ombudsman sought to be exercised by the board (by withholding funds) there included the following: infringement of the Ombudsman's independence in attempting to influence the content of her annual reports; further infringement of the Ombudsman's independence in advertising for, selecting and insisting on an extra staff member contrary to the Ombudsman's wishes and outside her management; and a review of the terms of reference, memorandum and articles of association so that the council (effectively the board) would have a formal schedule of matters reserved to it so that the control of the company (The Insurance Ombudsman of Ireland Ltd.) is firmly in its hands.
Further on Mr. McLaughlin asks:
Why does such a powerful and essential industry act in this way? Why, for instance, has it used its undoubtedly influential lobby to have commission disclosure excluded from the new regulations for the sale of life insurance? Does the insurance industry feel so insecure that it must hide as much as it can from its customers? This is not a facetious but a very real question, for bullies are notoriously insecure; that is why they bully. Why is this potent industry not displaying all the signs of self-confidence, ready and willing to be open, based on its important position in our society over many centuries (as exemplified in its valid boast that it supports the Bar today to over 40 per cent of its total income) and, more importantly, based on the concept of mutuality that is its foundation stone?
Mr. McLaughlin concludes by saying that, having made his concerns about the problem with the scheme repeatedly known to the council, the board, the Insurance Federation and to individuals within the insurance industry to no avail, he had no option but to resign.
The terms of reference of the Insurance Ombudsman are noble and worthy but, unless the Ombudsman is independent, they are useless to the consumer. The Minister of State is the champion of the consumer and I am anxious to hear what steps he has taken to establish the veracity or otherwise of Mr. McLaughlin's complaints.
