Dáil Éireann Debate, Wednesday - 17 April 2019
66. Deputy Maurice Quinlivan asked the Minister for Finance if his attention has been drawn to businesses closing down due to the cost, and in some cases unavailability, of insurance; his plans to protect such businesses and the jobs of persons working in them; and if he will make a statement on the matter. [11152/19]
View answer68. Deputy Martin Heydon asked the Minister for Finance the actions he is taking to alleviate difficulties being experienced by business owners, particularly those in the play sector in securing insurance for their business at rates that are sustainable; and if he will make a statement on the matter. [17831/19]
View answer79. Deputy Maureen O'Sullivan asked the Minister for Finance the measures being taken to address the difficulties faced by persons and businesses regarding the high cost of insurance cover; and if he will make a statement on the matter. [17784/19]
View answerI propose to take Questions Nos. 66, 68 and 79 together.
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, as Minister for Finance, 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 explaining why 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, 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 amongst other things award levels in this country compared with elsewhere. The PIC reported in September 2018 and 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 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 with the Judicial Council Bill is that the Minister for Justice and Equality has indicated that he intends having it 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.
In relation to the investigation of insurance fraud by the Gardaí, Minister of State D'Arcy has been in regular contact with the Garda Commissioner. The Minister of State has been assured by the Commissioner that he is working to increase Garda capacity in this area and a public announcement is expected on this matter in the next couple of weeks.
I expect that insurers’ pricing of premiums in general will take account of the measures which have been, and are being, implemented as a result of the CIWG recommendations more broadly and I believe that insurers themselves recognise this. In this regard, I would recall that Justice Nicholas Kearns, the Chairperson of the Personal Injuries Commission (PIC), noted in the foreword of its second report that insurance industry representatives on the PIC repeatedly stated that, as award levels and associated costs account for the bulk of the cost of insurance, if claims costs come down and are maintained at a consistent and predictable level, then premiums will also reduce accordingly. A further public statement by insurers to this effect would assist in efforts to continue the necessary reform.
Finally, it has been suggested that the provision of support packages to businesses like play centres to protect the businesses and the jobs of persons working in them should be considered. However, this would amount to the State in effect becoming an insurance provider. Such a step would likely be in breach of the Solvency II Directive and as it would involve the State providing preferential support to one part of the economy over another, it would run the risk of being consider State Aid and contrary to EU State Aid rules. In addition, if a package of Government support, contained or otherwise available more generally to businesses, was put in place, it is also likely that such a measure could result ultimately in insurers withdrawing from large parts of the overall market. This would end up being counter-productive and bad for such small businesses in the longer term.
