As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. The Deputy will be aware that neither I, nor the Central Bank of Ireland, have the power to direct insurers on the pricing or provision of insurance products. Indeed, the EU framework (the Solvency II Directive) for insurance expressly prohibits Member States from adopting rules which require insurers to obtain prior approval of the pricing or terms and conditions of insurance products. The provision of insurance cover and the price at which it is offered is a commercial matter for insurers and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks. These are considered by insurers on a case-by-case basis, including with regard to community events, whether large or small, that may be organised.
In light of the above, I would be cautious about the introduction of a publicly funded insurance scheme that would provide insurance cover to such events in this jurisdiction. There is no reason to believe that the State would be any better at managing this risk than private insurance companies, and as a result there potentially could be a large financial exposure to the State if significant losses were incurred.
In addition, any such insurance scheme would be required to comply with the same prudential rules as private companies, thereby meaning that the cost of that insurance would still have to reflect the risk involved. Also, while it may appear that such a scheme might alleviate problems in the short term, the introduction of such a scheme could ultimately decrease competition in the Irish insurance market over the longer term, as some insurers may stop insuring particular risks completely if there is a view that the State/local authorities are insuring these risks instead, particularly those lines of business that are considered to be unprofitable. This could mean there would be even less of a choice for those seeking cover which could result in the cost of insurance becoming even more expensive than it is now. Such outcomes would be of detriment to consumers, community groups, voluntary organisations or businesses.
In view of these issues, I am not convinced therefore that a State/local authority-backed insurance scheme, whether it be to insure community events or other risks, would be a solution to the current problem regarding the cost or availability of insurance for such events and initiatives. Instead, I think that we need to continue to implement the recommendations of both reports of the Cost of Insurance Working Group (CIWG). Indeed, the reforms already introduced by the CIWG’s work are having a significant impact with regard to private motor insurance (CSO figures from April 2019 show that the price of motor insurance is now 24.4% lower than the July 2016 peak) and I am determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant in this case.
Notwithstanding this progress, it is widely recognised and accepted that the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs particularly for small businesses, or event organisers, is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. In that regard, the Personal Injuries Commission, which was established under a recommendation of the CIWG, has highlighted the significant differential between award levels in Ireland and other jurisdictions, and has made a number of recommendations to address this issue, in particular the establishment of a Judicial Council to compile guidelines for appropriate general damages for various types of personal injury.
Both I and Minister of State D’Arcy believe that this awards gap needs to be significantly closed and we are working with the Minister for Justice and Equality, Mr Charlie Flanagan TD, to ensure that this happens at the earliest opportunity. The Judicial Council Bill has recently completed Committee Stage in the Seanad and the Government has approved the drafting of amendments for Report Stage in the Seanad, which will provide for the establishment of a Personal Injuries Guidelines Committee whose sole purpose will be to develop such guidelines which will fall to be adopted by the Judicial Council. With the cooperation of all members of the Oireachtas, it is hoped that the Bill can be enacted as soon as possible.
In addition, arising from another recommendation of the CIWG, the Law Reform Commission (LRC) has commenced its work to undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries, as part of its Fifth Programme of Law Reform. It is hoped that if there was a significant move in this area, it could have an impact on insurance pricing and could also help attract new entrants into the market. Such outcomes would be of benefit to all concerned.
Finally, I would like to assure the Deputy that the Cost of Insurance Working Group will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. I am hopeful that the cumulative effects of the completion of the two Reports’ recommendations will include increased stability in the pricing of insurance for the citizens of this State and a more competitive insurance market.