At the outset, the Deputy should note that I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to direct insurance companies as to the price or the level of cover to be provided either to consumers or businesses.
However, I acknowledge the general problems faced by many consumers, businesses, community and voluntary groups, in relation to the cost and availability of insurance. I also appreciate that there is some frustration about the perceived pace of reform. Unfortunately, there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises. This is because there are many constraints faced by the Government in trying to address this issue 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.
However, I wish to re-emphasise how important this issue is for the Government. As the Deputy is aware, the Cost of Insurance Working Group (CIWG) was established in July 2016 and undertook an examination of the factors contributing to the increasing cost of insurance in order to identify what short, medium and long-term measures could be introduced to help reduce the cost of insurance for consumers and businesses. The Deputy will recall that the CIWG has produced two reports since its inception and has been working to implement the 33 recommendations of the Cost of Motor Insurance Report published in 2017, as well as the 15 Recommendations of the Cost of Employer and Public Liability Insurance Report, published in 2018. Achievements to date include the following:
- the establishment of the Personal Injuries Commission, and its subsequent recommendations relating to addressing award levels for soft tissue injuries – this has provided the objective evidence we need to be able to address award levels;
- the establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance;
- reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019;
- amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;
- the commencement by the Law Reform Commission of 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;
- the reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers; and,
- various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the recent decision by the Garda Commissioner to develop a divisional focus on insurance fraud which will be guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality.
I believe that these reforms are having a significant impact 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). The Government is determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant to businesses.
While the Working Group will continue to focus on implementing all of its recommendations, I consider that bringing the levels of damages awarded in this country more in line with those awarded in other jurisdictions is undoubtedly the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs. The Deputy will recall that the Personal Injuries Commission 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. In this regard, relevant amendments were agreed to the Judicial Council Bill at Report Stage in the Seanad last week and I am pleased that the Bill subsequently completed its consideration by the Seanad. This is a significant step and both I and Minister of State D’Arcy are hopeful that the Bill can now complete its consideration by Dáil Éireann in the coming weeks and be enacted before the summer recess.
Finally, as I have stated previously, if there is a recalibration of award levels downwards, I would expect the insurance industry to take account of such reductions in their pricing. As you will recall, 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. I would also add that I believe this is not just an issue of lowering the price of insurance, but of increasing cover to areas that the insurers are not providing cover too, thereby broadening their risk horizon. Minister of State D’Arcy has met with Insurance Ireland on the issue. He will also meet with representatives from individual insurance companies on the issue in the coming weeks to reiterate this expectation and to seek commitments. While this is something the Government will continue to pursue, the Oireachtas also can play an important role and in that regard I am happy that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach intends to invite insurance companies to speak to it and seek a commitment in relation to pricing should award levels be reduced.