Wednesday, 19 June 2019

Questions (30)

Bobby Aylward

Question:

30. Deputy Bobby Aylward asked the Minister for Finance the measures taken to meet and engage with insurance companies regarding excessive premiums being charged to consumers particularly in counties Carlow and Kilkenny; if he has investigated the possibility of opening up the insurance market here to new providers in order to increase competitiveness in prices charged for motor insurance; and if he will make a statement on the matter. [25241/19]

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Oral answers (13 contributions) (Question to Finance)

I would like to ask the Minister for Finance what measures have been taken to meet and engage with insurance companies regarding excessive premiums charged to consumers, particularly in counties Carlow and Kilkenny, and whether he has investigated the possibility of opening the insurance market here to new providers in order to increase competitiveness in motor insurance. I would like him to make a statement on the matter. I would also like to raise the issue of green cards after Brexit. What will be the situation for people who want to do business in the North?

Many people are not aware that they must have green cards post Brexit. Who is responsible for issuing green cards? If someone wants to do business with a company, will a card issue automatically? What is the position? There should be a campaign to make people aware of what will be required because I do not think they are aware at present.

As outlined to the Deputy in previous responses to parliamentary questions, the stakeholder consultation formed the foundation upon which the two primary reports of the cost of insurance working group were developed. The consultation process involved a wide range of stakeholders representing different voices within this sector, including representative bodies, the major individual motor insurance providers and interest groups. The impact of excessive premiums being charged to consumers from all counties was a feature of the engagement with industry.

Let us put this in context. I recently met representatives of Insurance Ireland. The question about the profits of companies has been raised. The profitability of the 17 insurance companies for 2017 was over €200 million. To date, only three companies have reported profits for 2018 of that level. The other 14 companies have not yet reported their profits. The have already reached or gone close to the full level of profits for the previous year. The sector will be highly profitable to the tune of hundreds of millions of euro. I have stated clearly and openly to Insurance Ireland representatives that they need to correspond and speak with their members. I have said that profitability needs to be passed on to premium holders at every level, including motor insurance and all other premium holders, excluding non-life.

Good faith has been shown in this Chamber by Deputies Michael McGrath and Pearse Doherty among others. We have received co-operation in passing legislation. We passed three Bills last year and one Bill this year. I hope we will get more through. The Minister for Justice and Equality is working on the Perjury and Related Offences Bill and there are Bills proposed by Deputies Michael McGrath and Pearse Doherty. Good faith must flow in both directions. The cost of premiums must be reduced in all of the different areas immediately rather than having to wait six or 12 months to see what happens with the report from the Judiciary and the Judicial Council Bill.

The cost of motor insurance is simply unsustainable. Although the Minister of State provided some facts, I would go so far as to call it daylight robbery of our citizens. Sole traders and small and medium-sized business operators in the taxi and bus transport business are being pushed to the pins of their collars at a time when more people are out spending. They should be experiencing an increase in business.

A car is also important for young people, especially those living in rural areas. They need cars in order to get to college, to work and to social occasions. In addition to NCT costs, the cost of driving lessons and taxes on fuel, they are expected to pay a small fortune on motor insurance. The cost of insurance also affects working families and older people who, in many cases, have never made a claim previously but nevertheless experience increases.

I acknowledge that there has been some levelling out but we need to grasp the nettle and take more definitive action. We must examine the possibility of opening up the insurance market to new providers and increasing competitiveness. That is why I am asking about new providers. Ireland is a part of Europe. Why not open up to new providers and force companies to bring down their insurance costs?

It should be noted that the nature of the EU Single Market is such that insurance undertakings authorised in other member states are allowed conduct business in the Irish market on either a freedom of service basis or a freedom of establishment basis. Consequently, there are no restrictions preventing companies entering the market here if they wish.

I will highlight some facts. Motor insurance is down 24.5% since the peak. Deputy Aylward asked about green cards. I have a concern about green cards. Insurance companies have informed customers who require green cards to enter Northern Ireland that if there is no deal, they should apply in writing and the cards will be sent out. A green card is effectively a certificate. I do not believe that is sufficient. Between now and 31 October, green cards should automatically sent with all policy renewals. I see no reason that cannot happen. For any policy not renewed within that period, the insurance companies should automatically send out green cards. That will deal with the matter once and for all. Subsequently, green cards should be sent with all renewed premiums. That is the way to deal with the matter in order to ensure that people will not end up getting pulled to the side of the road in Northern Ireland and being obliged to admit that they do not have the correct certification.

I do not accept that the cost of insurance policies is coming down. We can see the position on a daily basis from reading the newspapers. Voluntary groups in particular are suffering because of insurance. They are being crippled and will ending up closing down. Last week, the Irish Independent reported that insurance companies enjoyed a profit surge of over 1,300% in 2017. The article stated that new figures for the industry show that the 17 general insurance undertakings in the market made a combined operating profit of €227 million in 2017. That is the latest overall data for the sector. I accept that these figures incorporate insurance cover for homes, drivers and businesses but it speaks to a more important point. These insurance companies are making incredible profits. We are not seeing any savings whatsoever being passed to the consumer. That is the most important point. Consumers continue to be charged premiums that amount to daylight robbery. From 2013 to 2016 the average motor insurance premiums increased 70%. More premiums have fallen recently - I accept that - but they are still 50% above 2008 levels. We can talk all we like but the real action is happening and people are being screwed badly. Whatever form it takes, we need to do something.

The Government has been tinkering around with insurance costs for three years,. To be honest, a snail would be faster in addressing the issues. Young motorists in particular are affected, especially those under 25 years of age who may have been driving abroad. Many have full licences with no claims and so on. People working in family firms here are affected. Many of them are being charged thousands for their annual insurance. There is an extraordinary risk to the social fabric of society. We could see businesses closing and voluntary organisations unable to continue. The Minister of State seems to be merely promising us report after report. If I get an insurance quote at the moment and contest it, pretty quickly on the telephone most of the companies will give a 5% to 10% discount, if not eliminate the entire increase. It is an indication of how much money they are making if a premium of a policyholder increases dramatically but then, after a conversation, it can be dropped.

I am surprised that someone of Deputy Burton's experience knows so little about insurance. She delves in and out but she is never here when we are passing the legislation.

What is the Minister of State talking about?

The Minister of State is answering the question.

He is talking through his hat.

The Deputy delves in and out. The speed at which this is moving is the fastest at which I can bring it along. People may not be happy with that, but we have to deal with the structures that are in place. The Judicial Council Bill is the way forward. If we get it through at the end of this session, it will be a major benefit.

Anyone who accepts the calculations of the data for the increase in motor costs must accept that the same people have calculated the figures on the way down, in other words, a decrease. Deputy Aylward should note that we are doing everything we can. I have thanks those who have provided support from all sides of the House and in the other Chamber. I am thankful to the people who come in and help, but those who come and who want to hinder, like Deputy Burton, I do not thank at all.

The Minister of State is being an idiot once again.

I do not think that remark was really necessary.