I propose to take Questions Nos. 51 and 52 together.
I am aware of the issues facing many businesses in the leisure, sports and tourism sectors when it comes to the affordability and availability of insurance. Unfortunately, neither I, nor the Central Bank of Ireland, can compel any insurer to continue operating in the Irish market as this is a matter of a commercial nature, and the company in question has made its decision 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, the Government cannot direct insurance companies to cover certain types of risk, such as those in the leisure, sports or tourism sectors. A further constraint is the fact that for constitutional reasons, Government cannot direct the courts as to the award levels that should be applied.
While there is unfortunately no quick fix solution to this complex matter, I wish to re-emphasise however that this issue remains a priority for the Government. The Cost of Insurance Working Group (CIWG), which was established in July 2016, and which produced two reports, is continuing to work to implement the recommendations of the Cost of Motor Insurance Report and the Cost of Employer and Public Liability Insurance Report. Its most recent Progress Update, the Ninth, was published in July 2019 and shows that the vast majority of recommendations and actions due by Q2 2019 have been completed. To that end, the key achievements to date from the two reports, including the following:
- The establishment of the Personal Injuries Commission and the publication of its two reports, which included a benchmarking of award levels between Ireland and other jurisdictions for the first time. This showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales;
- The enactment of the Judicial Council Act 2019, in July which provides for the establishment of a Personal Injuries Guidelines Committee. It is now a matter for the Judiciary to put in place the Judicial Council and to operationalise the Personal Injuries Guidelines Committee, which will introduce new guidelines to replace the Book of Quantum. While the Government cannot interfere in their deliberations, I would hope that the Judiciary will recognise the importance of this issue and prioritise it accordingly;
- The commencement and prioritisation by the Law Reform Commission (LRC) 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 establishment of the National Claims Information Database in the Central Bank of Ireland (CBI) to increase transparency around the future cost of private motor insurance. The CBI is due to make its first report by the end of 2019, and will also make recommendations to me regarding potentially expanding its scope to include employer and public liability insurance;
- Reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019 to strengthen the powers of PIAB around compliance with its procedures;
- Commencement of the amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to align the timeframes by which claims should be notified to businesses with GDPR time limits on the keeping of CCTV footage to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;
- The reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers, resulting from the failure of Setanta Insurance; 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 July 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, particularly those relevant to businesses.
With respect to insurance for the leisure, sports and tourism sectors, I am aware of the withdrawal of a number of underwriters from the Irish market recently, including the company in the details supplied and that this has caused a problem for a number of small businesses which were or are due to renew their premiums since then. The company is a UK-authorised company and conducted its business in the Irish market on a Freedom of Services basis, and cited Brexit as its primary reason for its departure. Minister of State for Financial Services and Insurance, Michael D’Arcy TD, has met with the company and it is understood that certain parts of the company’s leisure book were not profitable over the last number of years so it is likely that this has played a key part in its decision to exit the Irish market. However, the underwriter remains committed to the other parts of the Irish market it serves.
I acknowledge that the level of awards and the inconsistency in such awards is undoubtedly a factor in many insurers’ decisions not to continue in the Irish market. It is for this reason that I believe it is important to emphasise that the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions, and the establishment of the Judicial Council in the coming months is very important in this regard.
In light of this you should note that Minister of State D’Arcy is due to meet with a number of UK insurers/underwriters in London next week to advise them of these recent legislative changes and promote Ireland as a place to continue to write business. I think this is an important exercise as hopefully it will encourage some insurers to rethink their position about the Irish market.
I believe that Irish based insurers should also reflect on these reforms and in that context Minister of State D’Arcy has been engaging with them in order to seek a commitment that they will reduce premiums and widen their risk appetite to reflect savings made or potential savings, in particular if there is a recalibration of award levels downwards. I am also encouraged by the comments made by a number of insurers at the Finance, Public Expenditure and Reform and Taoiseach Oireachtas Committee in July about the passing on of savings arising from a recalibration of award levels downwards.
In conclusion, I would like to assure the Deputies that important reforms are taking place and that I am confident that if the level of awards are reduced as a results of the operationalisation of the Personal Injuries Guidelines Committee, then the insurance premium and coverage issues that are being experienced by the leisure, sports and tourism sectors and many businesses more generally should recede.