Wednesday, 17 April 2019

Questions (41)

Joan Burton


41. Deputy Joan Burton asked the Minister for Finance his plans for insurance reforms in view of the fact that the issue of rising insurance costs and high compensation has created a market distortion that is now causing persons to lose their jobs across many small businesses; and if he will make a statement on the matter. [17869/19]

View answer

Oral answers (6 contributions) (Question to Finance)

Is the Minister aware that small and medium sized businesses around the country are being threatened with job losses and closures because of rising insurance costs which are only advised to them at the last minute but are not documented and detailed?

I am very conscious of the difficulties being faced by certain small businesses in obtaining insurance and that a number of such businesses have had to close or are facing closure if they are unable to get cover. I believe that the issue of the rising cost of insurance and, in some cases its unavailability, is linked to high award levels particularly for soft tissue injuries, as well as what appears to be an increase in fraudulent and exaggerated claims. The result of this is that in certain parts of the economy, such as play centres, insurers are withdrawing altogether as they argue they are incurring losses in these areas

The Deputy will be aware that neither I nor the Central Bank can interfere in the provision or pricing of insurance products. However, it was recognised that the State could play a role in improving the environment within which insurers operate, thus the cost of insurance working group, CIWG, was established in July 2016.

The CIWG has produced two reports and a series of quarterly progress updates on the various recommendations made by CIWG and endorsed by Government. The difficulties facing the consumer and the voluntary and small business sector from the high cost of insurance premiums are acknowledged in these reports.

A key recommendation of the CIWG was the establishment of the personal injuries commission, PIC, which was asked to examine among other things award levels in this country compared with elsewhere. It reported in September and concluded that soft tissue injuries are significantly higher here than in England and Wales and recommended that action be taken to address this disparity through the establishment of the judicial council. The PIC recommended that this body would become responsible for preparing the guidelines on personal injury award levels, and would replace the book of quantum.

The current position is that the Minister for Justice and Equality has indicated that he hopes that the Judicial Council Bill 2017 will be enacted by the summer. It recently completed Committee Stage in the Seanad. Alongside this, the Law Reform Commission has included the subject of capping damages in personal injuries litigation in its draft fifth programme of law reform and this work will begin shortly.

I have heard about the different measures that are being taken, announced and re-announced and discussed at various committees. At the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach we had the privilege of meeting Ms Linda Murray who operates a play centre. It is one of many which, despite no claims, now face huge increases in their premiums. There is market failure or distortion whereby insurance companies are coming out of the blue and imposing enormous premium increases on people. They have been doing this with car insurance for young people and are now doing it on a widespread basis to businesses.

Effectively it is an attack on our cultural and family life as well as business life because for instance play centres, venues, pubs, music and sports events, all of the things that we enjoy are coming under attack and possible closure in the case of small venues because of the extraordinary premiums being charged to business operators.

I absolutely understand the severity of the issues Deputy Burton is referring to. The Minister of State, Deputy D'Arcy, has outlined the different steps that Government is taking to respond to what I know is a very serious matter in our economy and society. He has been in very regular contact with An Garda Síochána and the Garda Commissioner about many aspects of this issue. He and I have received assurances that the Garda Síochána is looking to increase capacity in this area to deal with some of the issues Deputy Burton has referred to. I and the Minister of State expect further public announcements and developments in this area to deal with some of the issues the Deputy has referred to.

The Deputy will be aware of the recent statement from Mr. Justice Nicholas Kearns who noted, in his second report on personal injuries, their effect on premiums and the various challenges we are discussing this morning, that insurance industry representatives have repeatedly stated that award levels and costs would come down if claims costs come down. The Minister of State and I are calling on the industry to repeat that statement.

We have had discussions about the Garda Síochána perhaps having a dedicated fraud unit. We have seen extraordinary cases repeatedly detailed in the newspapers where many insurance claims made in respect of relatively minor car crashes have failed. Does the Minister know, following his conversations with the Minister for Justice and Equality whether anyone has been charged with fraud in respect of any of these claims? Has any action been taken? It really is affecting every stream of Irish life in a destructive way. Children will not be able to run in school playgrounds, or play in play centres. Water parks are being charged massive increases in premiums. The Minister is talking the talk but we are not getting any sense of a Government that is able to deal comprehensively with this. I have read Mr. Justice Kearns's remarks. He has been very frank and open and willing to reform but is the Government willing to?

The Government is willing to reform. I am aware for example that one sentence has already been handed down for some of the criminal activity that has caused the difficulties facing citizens. I fully accept that this issue is having a very strong effect on the operation of business within our society and the delivery of services and activities that matter to our citizens. I refer to the legislative measures being implemented by Government, the work An Garda Síochána is doing, the expectation of further activity and commitments and when all this will be in place, and this will be in place. Those who lead the insurance industry have given a commitment to adjust their premiums if the issues they refer to are addressed, and a public statement will be made again by the industry on this issue. We will play our part in dealing with an issue that we acknowledge is causing the degree of worry and harm that Deputy Burton has referred to and we are fully committed to doing all we can in that area.