Thursday, 26 September 2019

Questions (2, 3)

Pearse Doherty


2. Deputy Pearse Doherty asked the Minister for Finance his plans to implement further reforms in view of the increasing costs of insurance for many sectors and the escalating crisis in the market; and if he will make a statement on the matter. [39204/19]

View answer

Michael McGrath


3. Deputy Michael McGrath asked the Minister for Finance the steps being taken to protect businesses and voluntary organisations from increasing insurance costs; and if he will make a statement on the matter. [39207/19]

View answer

Oral answers (12 contributions) (Question to Finance)

There is a full-blown insurance crisis in every part of the State. We see it in the experience of customers through escalating premiums, which is putting pressure and a squeeze on their incomes. We see it with companies closing throughout the State due to increasing premiums or, indeed, the fact that certain sectors will simply not be quoted for an insurance premium. This trend of businesses closing is happening on a weekly basis and, in some cases, on a daily basis. What is the Government going to do to address the fact we have a full-blown insurance crisis in the State that is hampering jobs, closing businesses and putting a squeeze on the pockets of consumers? Is it not time the Government stood up to this industry and ensured that workers and families were given a break?

I propose to take Questions Nos. 2 and 3 together.

Neither the Central Bank of Ireland nor I 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 rules that 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. A further constraint is the fact that, for constitutional reasons, Government cannot direct the courts as to the award levels that should be applied. In summary, therefore, there is unfortunately no quick-fix solution to this matter.

I wish to re-emphasise, however, that this issue remains a priority for the Government. The cost of insurance working group, established three years ago, is continuing to work to implement the recommendations of both of its reports. Its most recent progress update was published in July and shows that the vast majority of recommendations and actions due by quarter 2 of 2019 have been completed.

Looking to the future, some further measures will be carried out by Government over the next few months. These include the following the commencement of the remaining parts of the Judicial Council Act 2019, 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. This is an essential step if award levels are to be reduced. We will have the completion of the Central Bank’s feasibility study into adding employer and public liability insurance to the national claims information database, which is due by the end of the year. We will have the completion of the CSO's feasibility study into tracking the cost of business insurance, as it does with other forms of insurance, including motor. The CSO is due to report back to my Department by the end of the year. There is also the Law Reform Commission's work to undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages a court may award in respect of some or all categories of personal injuries. It is expected that there will be a public consultation on this by the end of the year. We will also see the furtherance of measures necessary to implement pre-action protocols for personal injury cases, beginning with medical negligence cases.

I have been engaging with insurers to seek a commitment that they will reduce premiums and widen their risk appetite should there be a recalibration of award levels downwards once the new personal injury guidelines are introduced. In this regard, I am encouraged by the comments made by a number of insurers at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in July that they would be prepared to pass on such savings in such circumstances. The Deputy should also note that a number of UK insurers that have recently exited the Irish market have also expressed a willingness to re-enter it in the event of a recalibration of awards downwards.

I hear what the Minister of State is saying on the issue of the Judicial Council Act and its execution. Implementation is crucial and we need to make sure that next step is taken. However, I fail to believe he fully grasps the magnitude of what is happening. Every week companies are closing. This summer, community festivals that had been running for decades did not run because of insurance premiums. Leisure centres, play centres and swimming pools have closed, and that is just over the summer months, and we only hear of the ones that make the headlines in the national media. A public participation network has conducted a survey showing 83% of its sector faced higher premiums over the past three years, a significant number had seen their premiums double, and more than 30% are paying on average €1,500 annually for insurance cover. This is damaging communities, jobs and the local economy. Worse than that, we have entire sectors, to which thousands of jobs are linked, including the inflatables, archery and paintballing sectors, in which companies simply cannot get a quote in Ireland or Britain. They are going to be out of business.

The Minister of State referred to the issue of awards. Awards have been reducing since 2004 and the number of claims that have been resolved through PIAB and the courts has come down since 2004. The only things going up are the premiums and the €227 million profit that these companies made on the back of Irish consumers.

The Deputy should please not question my grasp of the magnitude of this. I have put a significant shift into insurance to try to put us in a position where we recalibrate the awards. The biggest issue is the recalibration of the awards. I have acknowledged everybody's assistance on insurance issues in this House and the other House. Please do not question my grasp of the magnitude of this.

There is a really significant issue. Deputy Pearse Doherty said the awards are reducing. That is correct, but the problem we have is that the awards for minor injuries are increasing. These are the bangs, bumps and bruises that happen in everyday life. I have put on the record of the House that if these were to happen in people's brothers' or sisters' houses rather than a business premises that did not have insurance, they would not make claims. That is the single biggest issue we face and we must deal with it by reducing the awards.

Now it falls to the Judiciary. Deputy Pearse Doherty has heard my time schedule, which I have said I would like to see achieved by the Judiciary. It is to operate in parallel with the establishment of the personal injuries committee within the judicial council. It is a matter for the Chief Justice to select the seven judges he deems appropriate to review the guidelines. That can happen. I have requested that it happen for the five primary areas of personal injury insurance. This will set the barometer for the rest of the market and that can be done by the end of this calendar year if the willingness is there.

The fact that both Deputy Pearse Doherty and I have selected this issue for priority questions is a measure of how serious the situation is. The Minister of State has put great store on the judicial council legislation and the new award levels coming into effect, and he can say it is a matter for the Judiciary and so on, but that does not cut much mustard for those who are directly affected now. Will he restate the timeline he envisages as to when the new award levels will be confirmed and take effect? If he is saying, as the Minister of State in charge, that this is the single most important issue, when does he expect, and when does the Government believe, that we will see these new levels in place?

I must put the "what if" question. This does not affect only the leisure sector but, taking that as an example, as the renewals come on stream and people cannot get insurance, what if we see almost an entire sector not even unable to afford insurance but simply unable to access it? Those operating in the sector will have to shut their doors. This is spreading to other sectors as well, such as hospitality. This is a crisis. The Minister of State has put all his eggs in the basket of the Judicial Council Act, the Personal Injuries Commission and so on, but when will that have an effect?

I must reiterate that the schedule I have is the schedule I would like to see occur. I have the full support of Government on this, but we cannot direct the time schedule, unfortunately. The time schedule I have proposed is that the judicial council will be established by the end of this year. The personal injuries committee within the judicial council can be brought together by the Chief Justice, who has the authority to select the seven judges. He can do that by the end of this year. I have also requested that work be allowed to start on the five primary areas of personal injury. The main one is whiplash, followed closely by soft tissue injuries. I have asked that those five areas be recalibrated by the end of this year. I cannot say whether or not this will be delivered but everything I am doing is pushing for it to happen. This will send a very clear signal to the market that the awards will be reduced in line with the five primary areas. That covers about 75% of personal injury claims in the State. I went to London two weeks ago to meet the underwriters to highlight the work we are doing and the support I have, as I said, in both Houses, from my senior Minister, the Taoiseach and Government to implement this for the very reasons both Deputies have highlighted: the areas where people are not just priced out but getting no quote whatsoever, and-----

Go raibh maith agat. I will take both supplementary questions now.

I have made the point and I make it again: the Minister of State is not grasping or responding to the seriousness of this. We want the Judiciary to do what it wants, but my fear is that the Minister of State is swallowing the spin from the industry, just like he swallowed the spin about fraudulent claims. We know that the insurance industry has reported only 50 suspected fraudulent cases out of the tens of thousands it was suggesting are out there. The reality - facts speak loud - is that awards are dropping. In the High Court they went down from €85 million to €57 million last year; in the Circuit Court, where they went up slightly, by 2.3%, the total amount of awards was €23 million. The full quantum of awards paid out through the Courts Service dropped dramatically last year, yet the Minister of State tells us the solution to this is simply awards. It is not. A multi-agency approach and multiple solutions to this are needed and the Minister of State needs to stand up to the industry.

I therefore question him on this, as I have questioned the Minister, Deputy Donohoe, and the Taoiseach. Have they sat down with Insurance Ireland? Have they told it we have a complete market failure here? We have thousands of jobs and an entire sector which cannot get insurance in Ireland or in Britain. Have they had that conversation? When the underwriter that used to underwrite these businesses moved its headquarters from London to Dublin, two Ministers issued press releases welcoming AXA XL. Have they lifted the phone to AXA XL and said, "Thank you for coming to Dublin as a result of Brexit, but why are you screwing over our indigenous business and withdrawing from the market?" They cannot have it both ways. The Minister of State needs to stand up to these companies.

Lastly, does the Minister of State have anything to say about the fact that the State pockets €230 million in taxes and levies as a result of the premiums that are skyrocketing and putting businesses out of business and workers out of jobs?

I ask the Minister of State to bring this down to brass tacks. Will he tell us where we are with the leisure industry? It is currently the most acutely affected sector, in which people are finding they cannot get quotes as their policies come up for renewal, and those businesses are closing every day. This is not a big bang because the policies are coming up for renewal at different times but it is happening across the country and we are seeing events being cancelled because these providers are simply not in a position to offer services because they cannot get insurance. Will the Minister of State tell us in practical terms what is being done to engage with the insurance industry to ensure that cover is available at affordable rates? I do not have any faith that we will see these new personal injury guidelines any time this year and I am not sure we will see them even next year, so I do not see where the hope is for people whose policies are up for renewal.

Finally, has the Minister of State any further information on the insurance fraud co-ordination unit within An Garda Síochána that has been announced? Can he give a reassurance that the necessary funding and resources will be made available in order that it can become operational and effective?

Regarding the Circuit Court figures Deputy Pearse Doherty has, the issue is that two thirds of the cases are for under €20,000. These are the ones doing the damage. They are doing appalling damage to the businesses and festivals he talks about and which everyone here is trying to protect. It is the small damages, the small claims, that are doing the catastrophic damage to businesses and companies.

I have met representatives of all the insurance companies and of Insurance Ireland and, as I said, two weeks ago I went to London to meet the underwriters as well. The message from the underwriters is very clear: reduce the awards and improve the methodology by which claims are presented to the system in Ireland. The best example was one case they presented to me - I did not see any names - in which an award of €8,000 was made with calculated fees of €40,000 clocked up over four years. That era must end. They are very clear that if that system continues in our jurisdiction, they are out and they are not participating.

Perhaps I have all my eggs in one basket, but it is the correct basket and the correct pathway with the Judiciary, the third leg of government in this State. We can get into a row and rock on down the road of perhaps having a referendum. I do not believe that is the way to go. The Judiciary has the opportunity to conclude in this calendar year work on the five main areas of reform for the guidelines. The hundreds more that will follow can happen subsequently, in 2020. Let us deal with the bigger areas that are doing damage and in respect of which the insurance companies are saying if this does not change, they will be out and will not come back.

Deputy Pearse Doherty should make no mistake: I am not pretending I am comfortable with insurance companies taking money from businesses and from people and entering into contracts with them for years and then just exiting and leaving their clients high and dry when it gets tough.

What about the leisure sector? That was the primary question asked by Deputy Michael McGrath and me. The Minister of State seems to have ignored that fact.

Regarding the leisure sector, the reason the schedule I have in place is to the end of this year is that I want the industry to be able to get insurance in the early part of next year for next year. I realise it will not be in time for everybody, which I am deeply saddened by. However, if we can get the Judiciary to reduce the guidelines - I have met all of the insurance companies here, Insurance Ireland and all of the underwriters in London - in order that in 2020 the directional flow of awards will be downwards, the insurance companies will then participate. The era of somebody who gets a bang or has a bruise getting €8,000 or €10,000 and €40,000 in fees is ending.