Dáil Éireann Debate, Tuesday - 21 May 2024
65. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will provide an update on, or detail the progress of, the Office to Promote Competition in the Insurance Market; to outline his Department’s engagement with insurance companies; and if he will make a statement on the matter. [22711/24]
View answer94. Deputy David Stanton asked the Minister for Finance to report on any recent interaction by his Department with the insurance industry; and if he will make a statement on the matter. [22729/24]
View answerWill the Minister for Finance provide an update on, or detail the progress of, the Office to Promote Competition in the Insurance Market, outline his Department's engagement with insurance companies and make a statement on the matter?
I propose to take Questions Nos. 65 and 94 together.
I thank Deputies O'Sullivan and Stanton for their very timely and pertinent questions. As they will be aware, insurance reform remains a key priority for this Government and is being delivered via the action plan for insurance reform. As per the most recent action plan implementation report, published in February 2024, the vast bulk of the actions it contains are now either delivered or initiated. The importance that the Government places on this issue is evidenced by the fact that implementation is overseen by a Cabinet committee subgroup on insurance reform, chaired by the Tánaiste. Nevertheless, the Government is aware that certain groups can face difficulty in terms of affordability and availability of certain insurance lines. Accordingly, we continue to prioritise the delivery of the action plan, which will bring benefits to individuals, businesses and households alike.
Since assuming my current role a few weeks ago, I have been in the process of meeting the main insurers in the Irish market to set out the Government's expectation that savings arising from this whole-of-government reform agenda will be reflected via reduced premiums, as well as increased availability of cover. Major international insurers have indicated that they are impressed with the pace and scale of our reforms to date and point to Ireland as a positive example of Government action in this sector. Indeed, we have recently seen several new entrants to the market, with further positive indications in this space. I was particularly delighted to welcome OUTsurance and its creation of 300 jobs in the market just last week.
Last year, one of the key asks of both the insurance industry and reform campaigners was put in place – the rebalancing of the duty of care. The amendments to the Occupiers Liability Act 1995 will deliver major benefits to businesses, sports groups and community and voluntary organisations, in particular. This legislation should help to reduce frivolous claims proceeding to litigation. In time, cost savings from reduced claims should also help to lower premiums for businesses, particularly those engaged in activity-based or heavy-footfall areas, where claims associated with slips, trips and falls are more prevalent.
Other key reforms include the introduction of the personal injuries guidelines, with data from the Injuries Resolution Board indicating that the overall average award has fallen by 35% compared with awards made in 2020 under the book of quantum. Another key, complementary action is the Personal Injuries Resolution Board Act 2022, which aims to increase the number of personal injury claims settled through the Injuries Resolution Board, thereby reducing the expense and time associated with personal injuries litigation. Further actions aimed at lowering costs include measures to reduce fraud, and legislation placing perjury on a statutory footing for the first time.
In my engagement with the industry, including its representative body, Insurance Ireland, I have impressed upon it the importance of insurers increasing their risk appetite, especially to provide cover for small and niche sectors that may be experiencing issues with affordability and availability.
The Office to Promote Competition in the Insurance Market, which I chair, is in regular contact with areas that are experiencing insurance issues. It has become clear that the market is responding positively to the Government reform agenda, with insurance now available in previously difficult areas, such as equestrian activities, inflatable hire, ice-skating, sports clubs, play centres and SMEs. The office continues to assist in the connection of various groups experiencing insurance difficulties to relevant stakeholders and will maintain its engagement with IDA Ireland to help leverage the ongoing insurance reforms with the objective of targeting new entrants to the Irish market.
I assure the Deputies of the Government's intention to ensure the ongoing implementation of the action plan for insurance reform will continue to secure the availability and affordability of this key financial service.
I have no doubt that the Minister of State is acutely aware of the considerable costs faced by businesses in the current environment. The price of energy and the costs of purchasing and processing materials are considerable. It is no different with insurance premiums. Recently, Brian Hanley of the Alliance for Insurance Reform said insurers told the group that reforms were necessary for premiums to come down and that reforms were introduced but that, instead, we were seeing record-breaking insurance company profits while premiums continue to rise. The chairman of the Consumers' Association of Ireland, Michael Kilcoyne, said insurers were being unfair to policyholders and that they were certainly not passing on the benefits they had received from the reforms. The Minister of State rightly outlined the benefits of all the reforms undertaken. Given the number of reforms achieved or at least initiated, we are 95% there. Although a considerable amount of reform has been achieved, how has the Office to Promote Competition in the Insurance Market specifically performed in this area? He mentioned OUTsurance as one example. Does he anticipate that many other insurance companies will be entering the market in the short term?
I thank the Minister of State for his response. Following events like Storm Babet in east Cork, is he aware of delays in payouts to consumers and of the stress that can be caused if people must wait for a long period to have their claims met and indeed if they have to jump through all kinds of hoops to make a claim in the first place and have it accepted? Is there anything we can do to make it easier for people to make claims in the first place and ensure payments are made in a timely manner?
I thank the Deputies for the supplementary questions. I acknowledge absolutely the acute costs facing businesses. This issue is very relevant to my previous role. I have met representatives of the Alliance for Insurance Reform already. We had a recent roundtable event for those in the hospitality sector, which they attended. We expect other companies to enter the market. As I laid out, there are negotiations ongoing involving IDA Ireland, but we are really keen to see an increase in the level of risk taken on by existing insurers. They have indicated that they are starting to move into certain areas. As the Deputies will appreciate, I am loath to name individual companies that have moved into the hospitality sector, including the hotel sector. I can give anecdotal evidence. Several years ago, when my wife tried to set up a childcare facility, only one company was quoting, but now there are three. That is key.
With regard to Deputy Stanton's concern about delays in payouts, I am acutely aware of the importance of addressing this for so many businesses, particularly those in flood-affected areas like Midleton in the Deputy's constituency. I will undertake to raise this directly with Insurance Ireland. We have discussed the future of insurance in floodplain areas at great length, particularly in respect of the use of demountables. This is an area on which I am happy to engage further in due course.
It is great that existing insurers are willing to take greater risks and broaden the number of products they are offering people. That will be most welcome.
I read an article by Charlie Weston yesterday in which it was stated there has been a 35% decrease in the number of claims and the average award is down by 41%. Most of these major reforms were at the request of the industry. I recall members of the industry attending meetings of various Oireachtas committees and the quid pro quo was that if the Government implemented many of these reforms, prices would come down. Unfortunately, premiums continue to grow in a number of sectors. Now that those reforms have been introduced, when will premiums decrease significantly? If they do not, what steps is the Government going to take to ensure they do?
The number of complaints to the Financial Services Ombudsman last year rose considerably. Many of those complaints related to insurance and a number of them related to the delay in making claims and the difficulty in making claims in the first place. Delays in payouts was the big complaint. Will the Minister of State undertake to look at what is available to the consumer? Perhaps a faster and more efficient way can be put in place to deal with delayed payouts. Even the Financial Services Ombudsman is under pressure. If people are left waiting for a payment, and have to borrow money in the interim, that puts considerable pressure on businesses that are already suffering. Anything the Minister of State can do in that regard would be very welcome. I acknowledge the Minister of State's response when he said he will take up the issue with the insurance industry and I thank him for that.
I have a simple question. Is the insurance industry taking a hand at the Minister of State and the Government? For the past six years, the Government and Ministers, particularly Ministers in the Minister of State's party, have been telling insurance companies their expectation that they will reduce prices but prices have gone in the other direction for businesses and community groups. Does the Minister of State think the insurance industry is taking a hand at the Government? The insurance industry has taken all of the reforms that have been passed in these Houses and pocketed them. The profits of insurance companies are now at bumper levels and prices continue to rise, as they have every year since the parties opposite have been in government.
I thank the three Deputies for their interventions. For general premiums, the most drastic example has been the decrease in motor insurance over the past four years. There has been an average decrease of 24% in the cost of premiums in that sector, which is key progress that is extremely welcome. A lot of that is due to the decline in soft tissue injuries.
I will be quite frank and have no problem saying that I am disappointed in the rate and pace at which premiums are coming down. I expect them to come down a lot further. We made that case clearly when we met the insurers in recent weeks.
Premiums are not coming down.
We will continue to engage with insurers.
It is not the pace at which they are coming down; they are not coming down.
I did not interrupt you and I do not know why you keep doing this to Ministers. You asked a question and I am offering a supplementary reply. If that is what you want, we can do it.
Please speak through the Chair.
Premiums are not coming down.
With respect to the Leas-Cheann Comhairle, I would like to address all three points that were made. Deputy Stanton asked about the delay in payouts. I fundamentally agree that it is a key issue for individuals and businesses around the country. It is putting businesses out of action and people are waiting for such a serious length of time that they are unable to meet demands. It is absolutely an issue I will raise. We will have an opportunity to engage further on the next question.
