Thursday, 11 March 2004

Questions (33, 34, 35)

Damien English

Question:

32 Mr. English asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of recommendations of the motor insurance advisory board that have been implemented; the timeframe for implementation of those outstanding; and if she will make a statement on the matter. [8007/04]

View answer

Eamon Gilmore

Question:

35 Mr. Gilmore asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress made to date with regard to the implementation of her action plan for the insurance industry; the elements of the plan yet to be implemented; the timetable for the implementation of the different elements of the plan; and if she will make a statement on the matter. [8075/04]

View answer

Written answers (Question to Minister for Enterprise)

I propose to take Questions Nos. 32 and 35 together.

The insurance reform programme that I announced on 25 October 2002 comprises a comprehensive set of inter-related measures designed to improve the functioning of the Irish insurance market. I chair a ministerial committee established to drive the co-ordinated implementation of this reform programme across the relevant Government Departments and other bodies concerned. Substantial progress is being made on a range of measures that will radically overhaul the functioning of the insurance market and help tackle the high cost of insurance.

One of the key measures in the reform programme is the implementation of the recommendations in the motor insurance advisory board action plan within a target timeframe. To date, 32 of the recommendations have been fully implemented, four partially implemented and work is in progress on the implementation of the other recommendations. Precise information on each of the recommendations is shown in the table.

Another key measure is the establishment of the Personal Injuries Assessment Board. As the Deputy will be aware, the Personal Injuries Assessment Board Act 2003 was signed by the President on 28 December 2003. The provisions of this Act will be commenced in the near future. A CEO designate has been appointed and commenced duty on 2 February 2004. The proposed structure and staffing levels of the new body are finalised and a recruitment campaign commenced in February. The board will be operational when the necessary staff and IT systems are in place, which is expected to be in the second quarter of this year. The PIAB interim board has made significant progress in this regard.

In addition, my Department and the Competition Authority are undertaking a joint study into the insurance market. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. It aims to make recommendations to ensure that competition works well for consumers in the Irish market. It will also make recommendations for changes in the case of problems identified at EU level. A preliminary report and consultation document on competition issues in the non-life insurance market was published in February. Following a two month consultation process, which will end on 18 April 2004, a final report will be published containing recommendations resulting from the findings.

Significant progress has been made by the Department of Transport on the implementation of the road safety strategy. The Minister for Justice, Equality and Law Reform published the Civil Liability and Courts Bill on 11 February. This Bill contains measures to streamline the law on personal injury claims including measures to deal with fraudulent and exaggerated claims.

Indications to date are that the reform programme is having its desired effect. The CSO publishes monthly indices of costs for a number of classes of insurance. These statistics show that there was a reduction of 11.8 index points,11.1%, in motor car insurance between the months of January 2003 and January 2004. Further, the CSO noted a significant contribution from insurance to the recent reduction in inflation. As implementation of the reform programme continues, I expect further reductions to occur in all forms of insurance. I am also confident that the measures the Government is putting in place to reform the Irish insurance market will attract new players into the market and lead to further downward pressure on premia.

Summary Report on MIAB recommendations March 2004.
In summary: of the 67 MIAB recommendations, 32 have been implemented; 4 have been partially implemented; 21 are being actively progressed; 1 cannot be further progressed at present; 9 are under consideration.
Recommendations Relating to Department of Transport

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

1

Further road safety improvements.

That priority be assigned to achieving the objectives set in the Government’s Strategy for Road Safety for a wide range of reasons, which extend far beyond the cost of insurance.

2

Penalty Points system now in operation.

New strategy statement has been brought to Government.

2

Provisional Licences, Road Safety Driver Education in schools.

That the current system of unsupervised driving by provisional licence holders be reviewed and consideration be given to the introduction of a road safety and driver education syllabus in schools.

3

This has been agreed in principle, and will be introduced following completion of a review of the provisional licensing system currently underway. Driver education syllabus is for the Dept of Education and Science. The report commissioned by the NCCA on the introduction of a road safety and driver education syllabus in schools, has been completed and is with the Minister for Education and Science.

34

Insuring the Vehicle rather than the use of the Vehicle. Study needed to see if this would reduce premiums.

That detailed consideration be given to amending the Road Traffic Acts to require insurance on the vehicle, as in mainland Europe, rather than allowing claims to be declined on the basis of the driver’s use but with appropriate measures to address the rights of insurers where premiums have been underpaid.

4

Implementation would involve fundamental changes in the arrangements for motor insurance, in Ireland. The complex risk assessment, civil liability issues and potential costs and advantages of implementation will have to be evaluated before coming to a decision. Also awaiting results of UK preliminary study.

Recommendations Relating to Department of Transport — continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

35

Fourth EU directive on Harmonisation. Irish citizens’ right to sue the insurer direct.

That, when the Fourth EU Directive on Harmonisation of Motor Insurance is incorporated into national law in 2003, Irish citizens are extended rights equal to those of visiting EU citizens to sue the vehicle insurer direct for compensation entitlements arising from motor accidents occurring in Ireland.

3

Direct right of action against Irish insurers provided for in case of accidents to which the Fourth Motor Insurance Directive applies. S.I. 651 of 2003 transposed the provisions of the Fourth Motor Insurance Directive into Irish Law.

S.I. 651 of 2003 signed by Minister on 27 November 2003. An extension of this provision to all traffic accidents will be considered in the context of amending legislation.

36

Motor Insurance Bureau of Ireland agreement to be amended, to ensure victims of uninsured/ defectively insured vehicles get equally favourable treatment.

That the agreement between the Motor Insurers Bureau of Ireland and the Minister for the Environment, Heritage & Local Government be amended to clearly ensure that victims of uninsured or defectively insured vehicles can pursue their claims on no less favourable terms than apply to insured cases as consistent with the jurisprudence of the European Court of Justice lest they be doubly disadvantaged by involvement in such occurrences.

3

A revised Agreement, primarily to take account of cost reduction, is being prepared for signature by the Minister and the MIBI. More detailed review to follow to reflect planned developments in EU Law.

Discussions with the MIBI are ongoing.

Recommendations Relating to Department of Transport— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

37

Road Traffic Act to be amended, in line with EU Directives on harmonisation, to protect victims of defectively insured vehicles;Better clarification on insurance certs.

That the Road Traffic Acts, and other relevant legislation, be amended to fully adopt the Articles of the various EU Directives on harmonisation of compulsory motor insurance so as to clearly uphold the rights of victims under European law in accidents involving uninsured, untraced, defectively uninsured or allegedly defectively insured vehicles or drivers and that the prescribed content of insurance certificates be reviewed for clarity of communication with the addition of wording highlighting that the rights of Third Parties are not affected by cover limitations in the policy document.

5

Legislation to deal with this may be included in draft bill to deal with the withdrawal of unlimited cover by the insurance industry, which is expected to be introduced this year.

The EU commission is preparing consolidated legislation on motor insurance, and certain aspects of this recommendation may be most effectively dealt with in that framework.

61

Access of insurers to National Driver File, after introduction of penalty points.

That following introduction of the penalty points system, and subject to the provisions of data protection legislation, insurers be permitted access to relevant information on the national driver file under provisions similar to Section 28 of the Road Traffic Act, 1994.

3

The Minister is in correspondence with the insurance industry on this issue.

Discussions are currently underway with the DOEHLG with a view to making penalty point information available to the one insurance company which has agreed to reflect “safe driving” records in reduced premia.

Recommendations relating to Department of Transport & Department of Justice, Equality and Law Reform

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

3

Higher Fines, Detaining vehicles, Earmarking of fines for Motor Insurance Bureau of Ireland.

That the sanctions for flagrant breach of compulsory insurance obligations should be fines at a level more consistent with premium charges and should provide for vehicle confiscation, as applies to non-payment of road tax, with proceeds being assigned to the Motor Insurers Bureau of Ireland who are responsible for claims from victims of uninsured accidents.

2

Road Traffic Act 2002 increased fines, but level imposed is up to the Judiciary. Power to detain Vehicles already exists. Discussions with the Garda in progress about activating secondary legislation. The parent department needs to seek Department of Finance approval for the earmarking of fines.

The Department is in discussion with the Garda authorities to address the logistics of the transport and storage of impounded vehicles.

Recommendations relating to Department of Justice, Equality and Law Reform

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

38.

Constitutional balance between rights of defendants and genuine injured parties.

That Court procedures for personal injury litigation be radically reviewed in the interests of both genuine injured parties and premium paying policyholders, the majority of whom have not been involved in any culpable motor accident.

3

Committee on Court Practice & Procedures has sought public comment on court procedures.

40.

Improved access to justice.Independent mechanism for assessing disputes on legal costs.Transparency.Promotion of competition.

That the current Court based system for assessing legal fees be reviewed as to its cost effectiveness in satisfactorily resolving disputes on litigation costs and that consideration be given to a framework which the public might regard as more independent of the legal establishment and from which more transparent information might be available to litigants on the allowable levels of fees.

5

Minister for Justice, Equality & Law Reform is considering an alternative system. This issue also forms part of the Competition Authority's study on the Legal Profession

42.

Abuse of legal loophole.Cost of legal fees.

That the legislation on accrual of 8% interest on legal costs from date of trial should be revised in a manner consistent with the Prompt Payments of Accounts Act 1997 with a significantly reduced rate of interest and a reasonable period allowed from the date of bill presentation for payment or the resolution of legitimate queries.

3

This is included in the General Scheme of the Civil Liability & Courts Bill published on the 11th February 2004.

Recommendations relating to Department of Justice, Equality and Law Reform— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

46.

Public interest.Constitutional balance.Macro-economic consequences.

That consideration be given to the concept of amicus “curiae” for representations from the Office of the Attorney General and/or IFSRA if an issue before the Courts has radical implications for the cost of insurance with consequent effects on the Irish economy particularly where the effect is retrospective.

3

As for Rec. No. 42

47.

Public policy.Claims costs reduction.Consumer protection.

That stringent measures be introduced to tackle fraudulent and exaggerated claims with loss of all compensation entitlements and appropriate criminal sanctions.

3

Addressed in the Civil liability and Courts Bill

48.

Public policy.Promotion of enhanced quality of justice.Claims costs reduction.

That all claims which include allegations of earnings losses be supported by proof of declared earnings history from the Revenue Commissioners and records of benefits sought under social insurance with any earnings from “the black economy” to be excluded from claim assessments or negotiations.

3

As for Rec. No. 47

49.

Restoration of constitutional balance when wrongly sued people have been vindicated.

That awards on costs to defendants are made automatic upon successful defences either on liability or on the extent of loss, to restore equity between litigants while acknowledging that methods of payment enforcement will always be a matter for judicial discretion under Examination Orders.

3

The Dept/ Justice, Equality & Law Reform has asked the Courts Service to consider changes in Circuit Court Rules to bring them into line with Rules of the Superior Courts in relation to costs.

Recommendations relating to Department of Justice, Equality and Law Reform— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

50.

Enhancement of justice and protection for victims.Avoidance of need for victims to rely on the state.

That the system of lump sum compensation payments be reviewed on the basis that the long term needs of the seriously injured may be better served by guaranteed annual payments.

5

This is not being actively progressed at present. The impact on insurance costs is neutral.

51.

Improved compensation delivery for victims.

That a system be introduced to facilitate pre-trial interim payments to the seriously injured in cases where liability is not a substantial issue but there is a financial need to replace lost earnings or seek medical treatment.

5

See R. 50.

52.

Promotion of enhanced quality of justice.

That a system be introduced to facilitate the award of provisional damages where there is a substantial risk that the injured party’s medical condition may deteriorate in the future.

5

See R. 50.

54.

Promotion of enhanced quality of justice.Better consistency between judgements.Speedier disposal of non-complex cases.Reduction in legal costs.

A system of case management be adopted by the Courts, with a panel of judges specialising in injury claims, to secure early hearings of non-complex cases which could be disposed of by a short trial and that the Small Claims Court system be extended to deal with property claims up to £5,000 arising from motor accidents.

3

The Civil Liability and Courts Bill will provide for pre-trial hearings to determine the issues on which the parties differ. The Committee on Court Practice and Procedure is reviewing practice and procedure in relation to personal injuries litigation and will make such recommendations as it thinks appropriate for improvement.

Recommendations relating to Department of Justice, Equality and Law Reform— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

55.

Promotion of enhanced quality of justice.Facilitation of earlier settlement.Reduction in legal costs.

That claimants be obliged to state their minimum settlement terms in litigation, supplementary to the current procedure which permits a defendant to tender their maximum offer whereby they secure protection from liability for further litigation costs.

3

See Rec. No. 42.

56.

Promotion of enhanced quality of justice.Better consistency between judgements.Reduction in legal costs.Transparency.

That information on Irish compensation levels for various injuries be collated, such as a book of quantum or guidelines as produced by the Judicial Studies Board in England, and that this data be published to assist earlier settlements between defendants and plaintiffs.

3

Chair of Interim PIAB currently obtaining and examining data from the courts.

Book of Quantum will be available early 2004.

57.

Prevention of further increases in claims costs and in legal fees.

That the Court Bill 2001, entering the second stage in the Dáil, be amended so as NOT to increase current financial limits of the Courts beyond expressing the existing figures in convenient Euro amounts.

1

In effect, by not commencing the relevant provision in the Courts and Court Officers Act 2002, this recommendation is being implemented, to the extent that the financial limits of the courts are not being increased. Experience gained when PIAB has been in operation for some time will be considered for future action in this matter.

Recommendations relating to Department of Justice, Equality and Law Reform & the Incorporated Law Society of Ireland

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

43.

Consumer protection.Legal costs.Promotion of competition among the legal profession.

That the draft 1998 legislation on advertising by Solicitors be progressed, with the additional requirement that all advertisements quote a revised rule by the Law Society summarising Section 68 of the Solicitors (Amendment) Act 1994 which prevents a percentage being deducted by lawyers from the compensation awarded to claimants. If an entitlement to advertise for personal injury claims is secured under competition law, that sufficient information be displayed to enable consumers to make price comparisons between professionals.

1

Implemented. Changes in the Law Society’s rules regarding advertising by solicitors have been in effect since 1 Feb 2003

44.

Consumer protection.Linked to Recommendation No. 43 concerning advertising by solicitors.

That, aside from legislation, the Incorporated Law Society of Ireland as a service to the public should require all advertisements by their members to state that a lawyer is not permitted to seek a percentage of a claimant’s compensation and that such action is regarded as misconduct under Section 68 of the Solicitors (Amendment) Act 1994.

1

Implemented — see 43

Recommendations relating to Department of Enterprise, Trade & Employment

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

13.

Promotion of competition.Consumer protection.

That a regulation be introduced requiring a minimum period of notice, of not less than 15 working days, to policyholders of the terms upon which renewal is offered to allow sufficient time for consumers to “shop around”.

1

Implemented.

May be reviewed — brokers issue

14.

Linked to Recommendation No. 13.

That a regulation be introduced to prescribe the issuing of “No Claims Bonus” documents with renewal notices to enable clients to market their business elsewhere for comparative quotes.

1

Implemented

As above. CONP to monitor the situation and refer to RED if necessary

39.

Promotion of enhanced quality of justice.Cost-effective, speedy redress.Claims costs reduction.

That an alternative to adversarial litigation be made available to parties where liability for a motor accident is not disputed but independent assessment of compensation is required. The MIAB endorses the model of the Personal Injuries Assessment Board proposed for employer’s liability claims which might be extended to motor claims at an early opportunity.

2

Interim PIAB established. PIAB Bill was enacted on December 28th 2003.

PIAB will begin dealing with cases in mid 2004.

62.

Promotion of coherent and cohesive policy formulation and implementation.

That a forum be established drawn from the various Government Agencies whose actions affect the cost of compulsory motor insurance so that the full financial consequences of proposed legislation or administrative action are understood and factored into decisions.

1

Implemented in the context of the Ministerial Committee.

64.

Promotion of competition.

That, in the context of the Competition Bill 2001, consideration be given to incorporating the principle of “acting against the public interest”.

1

Implemented in the Competition Act 2002.

Recommendations relating to IFSRA from 1st May 2003, formerly relating to Department of Enterprise, Trade & Employment

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

29.

Transparency.Public Information.Informing Policy.

That the format and content, as published in the “Blue Book”, of insurers’ annual Statutory Returns be amended to show clearly the accrual for the current accident year separately from movements in prior years’ reserves.

3

‘Best Practice’ exercise ongoing to compare Irish supervisory regime with those of a number of other states, focusing on the nature and frequency of information submitted.

Best Practice review to be completed by end June 2004. Consultation process to take place in the second half of 2004. Revised returns expected by the Annual Report 2004, due for publication in mid 2005.

30.

Linked to Recommendation No. 29.

That all relevant information in Statutory Returns be shown separately for private car, commercial motor, motorcycles and other main classes of motor business by coverage types.

3

As in Rec. 29. Discussion opened with Industry regarding detail of Recs. 29 & 30

As in Rec. 29

31.

Linked to Recommendation No. 29.

That the format and content of Statutory Returns be reviewed in line with practice elsewhere in Europe to improve the quality and quantity of public information.

3

As in Recs. 29 & 30. Is being addressed as part of’ the Best Practice’ review.

As in Rec. 29

32.

Transparency.Enhanced prudential supervision.Comparison of data between insurance companies.Informing policy.

That the new insurance regulator issue revised guidelines to insurers to ensure more consistent completion of existing Statutory Returns in a manner which facilitates consistent comparisons and eliminates the current variations in practice between companies.

1

Implemented — Guidelines revised: INREG system allowing electronic submission of returns is now in place and provides for the cross-checking of data in returns.

33.

Transparency.Provision of clear record of the cost of uninsured driving.Public information.Informing policy.

That the preparation and publication of Statutory Returns be amended to clearly reflect the cost of uninsured driving recording numbers of cases, amounts of payments and provisions for outstanding claims with other relevant information as deemed appropriate.

2

Discussions initiated with MIBI and relevant Form 8 info to be published in 2003 Annual Report

Recommendations relating to IFSRA from 1st May 2003, formerly relating to Department of Enterprise, Trade & Employment— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

59.

Achievement of the Single Market.Balance between supervision and consumer interests.

That a Motor Policyholders’ Protection Fund be established to pay claimants in the event of the insolvency of an insurer regulated in Ireland.

5

The Insurance Compensation Fund comprising €24.13m of the PMPA levy is available for use in the event of an Irish Insurance Company failing, subject to the approval of the High Court. Meetings at EU level on the question of possible EU-wide policyholder protection arrangements have been attended. Further meetings are planned during 2004.

Department of Finance ultimately have the final word on the establishment of a PPF. The No. 2 Bill opens up the possibility of a PPF.

60.

Linked to Recommendation No. 59.

That a Policyholders’ Protection Fund be allocated an opening balance, estimated at £19m, from the motor insurance levy collected up to 1993 from which sufficient allocation has been made to satisfy administration of the liabilities of the old PMPA.

5

See R. 59.

See Rec. 59

Recommendation relating to Department of Finance

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

58.

Level of premium charges.Adequate funding for enforcement issues.

That the stamp duty (formerly levy) on motor insurance, if not abolished as repeatedly recommended by the Board, should be ring fenced for related matters which include road safety initiatives, such as funding of the National Safety Council and the maintenance of a Policyholders’ Protection Fund to safeguard claimants’ interests in the event of an insolvency of an insurer regulated in Ireland.

5

This was considered but not implemented in the 2003 budget.

Recommendations relating to Department of Finance in relation to IFSRA Legislation

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

4.

Balance between prudential supervision and consumer protection.

That the unique position of compulsory motor insurance should be adequately reflected in the responsibilities of the new Irish Financial Services Regulatory Authority (IFSRA) as the Board are of the view that there is currently no effective regulatory mechanism to balance the legitimate concerns of consumers with requirements for effective solvency supervision.

1

IFSRA now established; CBFSAI Act sets out responsibilities

27.

Enforcement/ redress.Consumer satisfaction.Level of premium charges.

That a Statutory Office of Insurance Ombudsman be established with an extended brief including issues of quotation refusals and denials of policy indemnity for compulsory cover (IIF dissent) and allowing provision for moderate compensation to successful complainants.

3

2nd CBFSAI Bill is before the Houses of the Oireachtas

Recommendations relating to IFSRA

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

5.

Transparency.Accountability.Consumer protection.Gathering a consistent set of data over an adequate period of time to assess equitable charging.

That central gathering of statistics on motor insurance premium and claims costs by driver profile be formalised by IFSRA, including monitoring by the new insurance regulator of data quality, to ensure that reliable information is available to inform public policy in future years and to improve market intelligence as provided for in EU Regulation No. 3932/92.

3

In progress

Data as captured end 2002 has been received from the Industry and work is expected to commence on this in mid-March.

6.

Discriminatory action.Linked to Recommendation No. 5.

That IFSRA supply regular marketwide statistics on motor premium differentials to the Equality Authority to assist in assessing insurers’ compliance with the Equal Status Act 2000 and subsequently its proposed extension.

3

In progress

As above

7.

Public information.Promotion of competition.

That IFSRA publish regular surveys of motor insurance quotations to engender price competition and to educate the public on premium variances within the market and that IFSRA liaise with the Central Statistics Office on assessment of motor insurance inflation.

1

Implemented

Comparative tables released December 2003.

8.

Public information.Promotion of competition.e-Government.

That IFSRA pursue the concept of a “one stop website” to provide consumers with across market information on the motor premiums available for specific risks — the placing of an obligation on insurers to notify their rates does not appear to offend EU law on freedom of services.

1

Implemented

Website live since 26th November 2003.

Recommendations relating to IFSRA— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

21.

Transparency.Independent monitoring of insurance industry behaviour.

That the Declined Cases Committee, currently consisting solely of insurer representatives, should include external representatives to report to IFSRA on the operation of the scheme.

1

Implemented

A representative from Consumer Association of Ireland attends and reports to IFSRA.

22.

Independent standard — setting for insurance industry behaviour.Consumer protection.

That IFSRA agree standards of business practice with insurers governing dealings with private consumers and small businesses.

1

Implemented

Code distributed December 2003.

23.

Consumer protection.Level of premium charges.

That IFSRA set rules for insurers to implement in concrete terms the duty of utmost good faith as it applies to insurers, as a corollary to the consumer’s duty of utmost good faith, to redress the imbalance in bargaining power between insured and insurer. The objectives of these rules should include ensuring that direct clients do not pay for unnecessary or inappropriate cover offered by insurers and to require an appropriate duty of consultation with policyholders before liability payments are made on their behalf.

1

Implemented

Code distributed December 2003.

24.

Consumer protection.Enforcement of Insurance Act 2000.

That regulation by IFSRA of insurance intermediaries should encompass the principle of “good faith dealing” to achieve the objectives as set out in Recommendation no. 23 (on rules — setting for insurers).

1

Implemented

Included in the “Brokers Handbook”. Also included in Code distributed December 2003.

Recommendations relating to IFSRA— continued

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

25.

Public information.Level of insurance costs.Law enforcement.

That IFSRA issue clarification of the Consumer Credit Act 1995, or if necessary introduce alternate legislation, to control premium instalment plans.

1

Implemented

Included in IFSRA Code covering letter.

63.

Public information.Consumer protection.

That IFSRA should be pro-active in responding to media statements by insurers on trends in premium charges and related matters.

1

Implemented

Comparative tables published December 2003

66.

Promotion of: Consumer protection Competition.Social inclusion.

That the proposed Consumer Director in IFSRA would have a duty to highlight at EU level the unacceptable consequences for [segments of] the Irish market of further mergers in the interests of social inclusion, given our island location at the far west of the EU with a small, although rapidly growing, market which may be unattractive to many players.

1

Implemented

IFSRA through the Consumer Director, will fully implement its obligations to monitor competition, but does not have a duty to highlight at EU level, the consequences of mergers.(new section 33S in Principal Act)

Recommendation relating to Department of Health and Children

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

45.

Claims costs reduction.Equal status as regards Irish and other EU nationals.

That the Health (Amendment) Act 1986 be reviewed to the extent that it represents a discriminatory charge levied only on those involved in motor accidents at multiples of the rate charged to providers of health insurance and inconsistent with rates charged to visiting EU nationals in a manner that may offend the Equal Status Act 2000 given that victims of motor accidents represent less than 1% of users of hospital services.

5

Further discussions to be held with the Dept/Health & Children

Recommendations relating to the Irish Insurance Federation

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

9.

Discriminatory action.Accountability.Transparency.Consumer protection.Promotion of competition.

That a regulation be introduced to require insurers who refuse to quote for any particular risk to state their reasons in writing upon request, acknowledging the fact that insurers cannot be required under EU law to provide cover for any particular risk but equally subject to the anti-discrimination provisions of the Equal Status Act 2000.

1

Implementation of Recs. 9, 15, 16 & 19 will be on administrative basis via incorporation into the Code of Practice. Also being addressed in Code of Business Conduct drawn up by IFSRA.

Codes distributed December 2003.

10.

Enforcement of Equal Status Act.Promotion of competition.

That insurers undertake to comply with the provisions of the Equal Status Act 2000 in respect of drivers aged 65 and over including advising them of their rights to freedom of contract and to improve procedures for retirees who have a record on employers’ fleet policies but are now seeking private motor insurance.

1

Introductory NCD for retired fleet drivers implemented. 1/08/02 — IIF’s Code of practice. (Also decision of Equality Tribunal in Ross v Royal Sun Alliance.)

11.

Public policy.Discriminatory action.

That insurers undertake to desist from applying policy terms, limitations or loadings that may be encountered by policyholders with disability issues relating to drivers or passengers unless there is evidence of additional risk.

1

Additional limits on cover restrictions & loadings 1/08/02 — IIF Code of practice.

Recommendations relating to the Irish Insurance Federation

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

12.

Achievement of the Single Market.Discriminatory action.

That insurers operating in Ireland undertake to recognise EU driving experience and “No Claims Bonus” certification presented by other European citizens.

1

Implemented 1/09/02 IIF Code of Practice.

15.

Transparency (cost unbundling).Promotion of competition.Consumer protection.

That a regulation be introduced to standardise renewal notices — detailing the calculation of premium from compulsory cover to the full coverage offered with elective elements clearly indicated and showing any loadings or discounts applied in both monetary and percentage terms.

3

See Rec. 9

See Rec. 9

16.

Transparency.Consumer protection.Promotion of competition.

That a regulation be introduced to tackle potential “confusion of illusion of choice” by requiring insurers who offer motor quotations under a number of business names and product images or through any direct outlets to state the identity of the insurance group of which they are part and that equally brokers should be obliged to provide each client with a list of the motor insurers for which they hold an appointment consistent with the provisions of the Investment Intermediaries Act 1995.

1

Discussions on implementation have taken place between the DETE and IIF in the context of the Tánaiste’s Reform Programme. Also being addressed in Code of Business Conduct drawn up by IFSRA.

Codes distributed December 2003.

17.

Age-related discriminatory action.Promotion of competition.

That insurers adopt rating practices that allow sufficient credit for accident free driving experience rather than filtering out risks solely on the basis of age.

1

Insurers committed to fair rating based on objective assessment of relevant risk factors. Underpinned by Equal Status Act and Declined Cases Agreement provisions on age-related declinatures. Also see case law as in Ross v Royal Sun Alliance

Recommendations relating to the Irish Insurance Federation

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

18.

Promotion of competition.

That insurers desist from any practice of requiring collateral business to be placed with the company before a motor quotation is supplied and that this practice be reviewed by the Competition Authority should it persist.

1

Included in IIF Code of Practice- effective 1/08/02 and IFSRA Interim Code of Practice

19.

Transparency.Consumer information.Promotion of Competition.

That the existing Declined Cases Agreement between the Minister and insurers operating in Ireland, under which a quotation cannot be refused on the grounds of age alone, should be formalised by legislation.

1

See Rec. 9

Codes distributed December 2003.

20.

Linked to Recommendation No. 19

That the number of refusals required under the existing Declined Cases Agreement be reduced from 5 to 3 in light of the market consolidation resulting from mergers

1

Implemented 24/07/02. Observers added to Declined Cases Committee from Insurance Ombudsman’s Office (July 2002) and CAI (invitation July 2003)

28.

Promotion of competition.

That IIF agree a code of conduct with its member companies on anti-competitive behaviour subject to any more formalised measures, which may ultimately be required by IFSRA under competition law.

1

Revised draft prepared for adoption by IIF Autumn 2003.

53.

Prioritisation of genuine victims.

That insurers pursue a policy of seeking to assist in the rehabilitation of injured parties where such action is appropriate.

1 (Subject also to development of legal and medical infrastructure.)

See R. 10 (subject also to development of legal and medical infrastructure).

Recommendation relating to the Irish Insurance Federation & IBEC

No.

Issued Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

26.

Unwarranted nuisance value settlements.Claims costs reduction.Constitutional balance.

That IIF agree with IBEC and other business associations on a set of guidelines for the handling of Third Party claims incorporating appropriate referral to commercial policyholders before compensation payments are made on their behalf.

111

IIF/IBEC Communication Guidelines for insurers and policyholders produced. In effect from 1/05/03

Similar codes are available for business associations.

Recommendations relating to the Competition Authority

No.

Issues Addressed

Recommendation

Status

Progress to date

Future plans/target date for implementation

41.

Promotion of competition.Consumer protection.

That the Competition Authority’s investigations of the professions should assign priority to the fees which impact on the cost of motor insurance given its compulsory nature and the recent high inflation rate recorded for insurance and that, on completion of those investigations, their findings be taken into account in a review of the effectiveness of self-regulation by the legal profession.

3

The Indecon report to the Authority on the professions was published on 20 March 2003. This will be used as a basis for individual papers on all the professions, (including the legal profession) which are expected by the Middle of 2004.

65.

Promotion of competition.

That the Competition Authority would have a duty to review all further insurance mergers in the interests of the Irish economy with appropriate reference to IFSRA and that the process of consultation seek to protect the interests of specific policyholder groups since the effects of mergers may warrant consideration below issues of the market as a whole.

1

The Competition Authority has taken on this responsibility from 1 January 2003, but to date no mergers requiring review have occurred.

67.

Promotion of competition.

That when the Competition Authority assumes the new roles proposed under the Competition Bill 2001 it should review the area of compulsory motor insurance.

2

The Competition Authority published its ‘Preliminary Report and Consultation Document’ in February 2004

Totals
1. Implemented 32
2. Partially implemented and being further implemented 4
3. In progress 21
4. Cannot be further progressed at present1
5. Under consideration 9

Brendan Howlin

Question:

33 Mr. Howlin asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the recent report of the Competition Authority on the insurance market, particularly its recommendation for reform of the broker market which is stated could reduce by tens of millions of euro the amount that consumers and businesses are paying for insurance; and if she will make a statement on the matter. [8056/04]

View answer

I welcome the publication of the Competition Authority preliminary report and consultation document on competition issues in the non-life insurance market. The Competition Authority undertook this study jointly with my Department. This study is only one of a number of measures in the insurance reform programme that I announced on 25 October 2002 designed to improve the functioning of the Irish insurance market.

Based on the information that the Competition Authority has received through its own research and from its various consultancy projects, the authority identifies a number of issues that caused competition concerns including the concerns relating to insurance brokers mentioned by Deputy Howlin. These issues are currently the basis of a public consultation process with a request for views by 18 April 2004. Following the two month consultation period, a final report will be published which will contain recommendations based on its findings. I fully intend that the recommendations made will be implemented.