Dáil Éireann Debate, Wednesday - 17 April 2019
60. Deputy Martin Heydon asked the Minister for Finance his views on the competitiveness of the insurance section at present; the work he is carrying out in the area; and if he will make a statement on the matter. [17832/19]
View answerThe Irish insurance sector is diverse, comprising life, non-life and reinsurance firms operating across a range of product and geographical markets. As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation of the sector. This framework is mainly governed by the EU Solvency II Directive, which provides for three ways in which an insurance undertaking can operate within the Irish market. These are to:
- establish a head office in Ireland (authorised by Central Bank of Ireland);
- establish a branch in Ireland through Freedom of Establishment (FOE); or
- operate on a Freedom of Services basis, i.e. conduct business in Ireland from another country (FOS).
It should be noted that there are companies operating in each of these channels in the Irish insurance market.
The Solvency II framework is designed to allow for a level playing field across the European Union for insurers, not only in terms of access to markets within the EU, but also with regard to the level of supervision and regulation. Therefore it plays an essential role in facilitating competition in the insurance sector across the EU.
However, there are other factors, beyond the legal and regulatory framework which also inform insurance companies decision making processes as to whether or not to operate or to continue to operate in any country. For example, the level of awards, and the number of claims will be important such considerations for insurers. In this regard, there has been some sectors of our economy such as play centres where because of these aforementioned factors, insurance cover has either become unavailable or prohibitively expensive.
Consequently, in order to create a more competitive environment, the Government is focussing on implementing the recommendations of the Cost of Insurance Working Group (CIWG) including those of the second Personal Injuries Commission (PIC) Report which concluded that soft tissue injuries are significantly higher here than in England and Wales (4.4 times) and recommended that action be taken to address this disparity through the establishment of the Judicial Council.
The current position with the Judicial Council Bill is that the Minister for Justice and Equality has indicated that he hopes to have this Bill enacted by the summer. In this regard, 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 5th Programme of Law Reform and this work will begin shortly.
