At the outset, I would like to put on record that I share the same concern as the Deputy in relation to the recent reporting of the large profits of insurers for 2017 at a time when many small businesses are struggling to get cover in the first place, or to get it at a reasonable price. I consider the current position unacceptable and I have made this very clear to Insurance Ireland when I met them recently. I believe they need to show a greater willingness to broaden their risk horizons and to begin to price their products in a way which recognises the general progress being made to address the cost of insurance problem.
It is important to acknowledge however that this is a difficult issue to resolve for any Government because of the constraints it faces in particular the fact that for constitutional reasons, it cannot direct the courts as to the award levels that should be applied and for legal reasons it cannot direct insurance companies as to the pricing level which they should apply in respect of businesses seeking insurance.
That said however through the work of the Cost of Insurance Working Group, significant progress has been made in beginning to transform the landscape within which insurers operate. This is reflected in the fact that with regard to private motor insurance (CSO figures from May 2019 show that the price of motor insurance is now 24.5% 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.
In relation to your specific query about considering the establishment of a State regulated insurance company, it is important to be aware that any such company 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. My concern therefore with such a proposal is that it would simply compound the existing ‘cherry picking’ of risk within the market by insurers. This in turn could ultimately decrease competition in the market over the longer term, as some insurers may stop insuring particular risks completely if there is a view that a State company is willing to insure these risks instead, particularly those lines of business that are considered to be unprofitable.
In addition, 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 view of these issues, I am not convinced that State intervention of the type proposed would be a solution to the current problem regarding the cost or availability of insurance. Instead, I think that we need to continue to implement the recommendations of both reports of the Cost of Insurance Working Group (CIWG).