Dáil Éireann Debate, Thursday - 14 July 2022
287. Deputy Ruairí Ó Murchú asked the Minister for Finance the legislative changes that are planned or are underway to ensure a reduction in insurance premiums for customers; and if he will make a statement on the matter. [39165/22]
View answer288. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the work that is being carried out under the action plan for insurance reform; and if he will make a statement on the matter. [39166/22]
View answerI propose to take Questions Nos. 287 and 288 together.
At the outset, it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).
Nonetheless, this Government recognises the concerns felt by many groups regarding the cost and availability of insurance, and has therefore prioritised insurance reform via the Action Plan for Insurance Reform which was published in December 2020. As the Deputy may be aware, the Government published the second Action Plan for Insurance Reform Implementation Report in March this year, which shows that work is progressing well to implement these important reforms, with 80 per cent of the actions already being delivered.
The Action Plan is a whole-of-Government strategy contains several initiatives expected to positively impact insurance costs. For example, the Personal Injuries Guidelines (implemented in April 2021) have significantly lowered award levels for many common injuries, with the latest data from the Personal Injuries Assessment Board (PIAB) indicating that the overall average award has reduced by 42 per cent compared to 2020. Consistent implementation of the Guidelines should therefore lead to a reduction in the cost of claims, which is the main driver of the cost of insurance.
Another key development with regard to home and motor insurance costs has been the Central Bank of Ireland’s Regulations to prohibit price walking from 1 July 2022. This is a form of dual pricing whereby customers are charged higher premiums relative to the expected costs the longer they remain with an insurance provider. This ban is a balanced approach that will protect customers who prefer to stay with their current provider from being subject to a ‘loyalty penalty’, while still allowing customers to benefit from discounts from new providers.
Recent legislation (the Insurance (Miscellaneous Provisions) Act 2022), commenced on 8 July, responds to this development and includes a requirement for the Central Bank of Ireland to submit a report to the Minister for Finance setting out the steps it has taken since regulating price walking. The Act provides for this report to be submitted within an 18-month timeframe from enactment, and for it to be laid before the Oireachtas upon receipt. This will allow for timely oversight of the price walking ban by Government and the Oireachtas, to determine whether further measures need to be taken to address the issue. The legislation also addresses a number of further insurance issues that have arisen since the publication of the Action Plan.
Some of the other achievements to date aimed at reducing costs include:
- the establishment of the Office to Promote Competition in the Insurance Market, which aims to lower costs by promoting greater competition in the Irish market;
- the enhancement of the enforcement powers of the Competition and Consumer Protection Commission (CCPC) through the Competition (Amendment) Act 2022; and
- measures to reduce fraud, including the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021, which places perjury on a statutory footing for the first time.
Work is continuing across Government to drive forward the outstanding aspects of the Action Plan. This includes further legislative changes intended to reduce costs, including:
- the Personal Injuries Resolution Board Bill 2022, which will strengthen the Personal Injuries Assessment Board to ensure more cases settle at that stage instead of proceeding to costlier litigation (this is under the responsibility of the Minister for Enterprise, Trade and Employment); and
- the Courts and Civil Law (Miscellaneous Provisions) Bill 2022, which will contain amendments to the Occupiers’ Liability Act 1995 to rebalance the duty of care (this is under the responsibility of the Minister for Justice).
It is my belief that the overall implementation of the Action Plan should help to improve both the cost and availability of insurance.
Finally, I would also note that recent data from the Central Statistics Office shows that average private motor insurance prices have fallen by 41 per cent since their peak in July 2016, and it is my hope that these ongoing reforms will bolster this downward trend in the wider insurance market, to the benefit of consumers, businesses and community groups.
