My officials consulted with both the Central Bank of Ireland and Insurance Ireland on the Deputy’s question. From that engagement, I understand that neither body are aware of any models in other jurisdictions by which companies that are unable to obtain an insurance quote can avail of insurance similar to the Declined Cases Agreement. The Bank has also advised that there is no formal cross-European mechanism in place to deal with these situations.
In addition, we are not aware of any public insurance models used in other European jurisdictions. It should also be noted in this regard that any public insurance model, if it existed, would have to comply with the same prudential rules as apply to private insurers, namely the Solvency II Directive. Therefore, in such a scenario the public insurer’s consideration about providing a particular type of cover and the price to offer it are unlikely to be significantly different to that of a private insurer.
The Deputy should note that unlike third party motor insurance, employer and public liability insurance is not a compulsory requirement in Ireland. Consequently, there is no equivalent arrangement in Ireland to the Declined Cases Agreement which operates at an industry level to ensure no motorists are unable to secure the third party motor insurance that they are legally required to hold to operate a motor vehicle. Such a proposal, if put in place, would in effect be a direct intervention by the State to force insurance companies to take on risk that they would not otherwise be willing to accept. A consequence of this is that they would price such risk at what they consider an appropriate level which almost certainly would be prohibitively expensive. It would not be possible in such circumstances for the Minister for Finance to direct that such cover be applied at lower levels, as neither he nor the Central Bank can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept. Another difficulty with such a proposal is that insurers generally operate in niche areas of the business market based on their risk appetite and their understanding of these areas. Therefore, forcing companies to take on risks outside of their expertise may result in them leaving the market and it may also discourage new entrants to the Irish market. On this basis, I believe such a proposal could be counterproductive over the longer term.
In conclusion, the Government is acutely aware of the difficulties that the cost and availability of liability insurance is having on businesses across the country and every effort is being made to implement the recommendations of the second Personal Injuries Commission Report in order to address the awards level differential between this country and England and Wales. It is hoped that once this is done, there should be a significant positive impact on pricing.