asked the Minister for Industry, Trade, Commerce and Tourism the number of complaints received by the insurance section of his Department during 1982 and 1983 concerning insurance generally; if he will give details of the type of complaints received; and the steps he has recommended to the insurance companies to provide a comprehensive service to policy-holders and an improved consumer service which might be provided by the Irish Insurance Association.
Ceisteanna—Questions. Oral Answers. - Insurance Business.
7.
The insurance section of my Department handled almost 2,000 complaints or inquiries in 1982, and approximately 1,800 in 1983. Over 80 per cent of the complaints or inquiries received in both years related to motor insurance, with the balance being divided more or less equally between miscellaneous other classes of life and non-life insurance. Most of the motor insurance complaints or inquiries related to the premium rates being charged.
The Irish Insurance Association already provides a comprehensive complaints service and advertises the existence of this service. The Federation of Insurers in Ireland will also provide a comprehensive inquiries service for those who wish to avail of it.
I have put the view to the insurers that a high level of consumer service is in the interests of the insurers in attracting policy-holders and they have assured me that it is their aim to provide such a service, and that the views expressed by me will receive close attention.
Will the Minister of State accept that 2,000 complaints in one year with regard to insurance is a sizeable number considering that the vast majority of people are not aware of the mechanism available to them to make a complaint? Will the Minister make available a more efficient way for the public to make their complaints known? Will he consider improving the complaints procedure?
I emphasise it is in the best interests of the industry itself to provide the most comprehensive complaints service possible. If policy-holders complain about their policies it is the company concerned that will lose those holders. The prime responsibility must rest with the industry to provide a comprehensive complaints service. The people who make complaints to my Department receive close attention and I can assure the House that will continue to be the case in future. However, I emphasise that it is primarily the responsibility of the industry to provide a comprehensive complaints service.
I appreciate it is in the best interests of the insurers to provide a comprehensive service for the selling of insurance but I am not so sure they would see it in their best interests to provide an open complaints service. I am asking the Minister of State to publicise for the benefit of the public that there is a mechanism whereby they may convey their complaints and that they will get satisfactory attention. It is not evident to the general public that there is such a service. Will the Minister of State contact the Irish Insurance Association and the others involved and ask them to formalise a proper complaints service to cover all types of liability cover?
I have already brought to the notice of the industry my dissatisfaction with their response. I have asked them to consider improving the complaints service. I agree with the Deputy that the industry has a great responsibility to the general public in relation to this matter.
8.
asked the Minister for Industry, Trade, Commerce and Tourism the amending legislation to the Insurance (No. 2) Act, 1983, that he proposes to make now that the PMPA crisis has been resolved.
I have no proposals for amending the Insurance (No. 2) Act, 1983. I would remind the Deputy that the Act is of general and continuing application.
Will the Minister agree that it is apparent now from media reports that the crisis which was the reason for the introduction of the Insurance (No. 2) Act, 1983, has passed and that from public statements made by the administrator it is obvious that they are on the road to recovery and that it might be possible to have appointment of the administrator it is obvious that they are on the road to recovery and that it might be possible to have the appointment of the administrator terminated?
In relation to the specific case to which the Deputy is referring, that is not the case. It will take some time, possibly a number of years, to ensure that the company in question is back on a sound commercial footing. In relation to that case, there is no intention on my part to take any action in relation to the removal of the administrator. In relation to the general thrust of the question, the Act is of continuing application and it may well be used in future years in other cases to ensure that any company that gets into difficulties will not have to be wound up as was the case under the 1964 Act. The 1983 Act could be used to appoint an administrator through the courts to ensure the continuation of a company and the security of the policy-holders.
Is the Minister of State aware that the administrator appointed by the courts to the named company has indicated and published that a new executive will take over the operation in his place? Would that not seem to indicate that as far as the administrator is concerned they have now reached a satisfactory way of dealing with business on a continuing basis? Would that not indicate that the appointment of the administrator could be terminated?
I would not accept the argument put forward by the Deputy. In the first instance the administrator is responsible to the court and not to me. I do not want to say too much about this because possibly the sub judice rules apply. In relation to the recent appointment of a chief executive, that is a management decision by the administrator in relation to the company in question and does not relate to the position of the company under the administratorship.
The Minister of State stated that this legislation is of a continuing nature and that it may have to be used in future. Is he indicating that the licensing authority for which he is responsible are suggesting that this legislation may have to be used in respect of other companies? Is he aware that it would not have been necessary to talk about the liquidation of this or any other company if the terms of the original Act which allowed inspectors to be put in had been utilised. The Minister of State was not accurate in what he said. Is he suggesting that other insurance companies may be in some difficulties?
I am not stating that. I made it quite clear that I was speaking generally when I said that the Act is of general and continuing application. It will allow the Minister in the future to take certain actions that were not available to him under the 1964 Act.
9.
asked the Minister for Industry, Trade, Commerce and Tourism if he accepts the method of discount schemes as operated by motor insurers to be in the best interest of the consumer; and the steps he proposes recommending to bring about a more equitable system.
I have on a number of occasions expressed my reservations on these types of discount schemes. The Deputy may be aware that on foot of the report of the Prices Advisory Body on motor insurance, the Government indicated in October 1983 that I would seek to ensure that those firms running special discount schemes will not be allowed to subsidise such schemes from the pocket of the general motorist, and such special schemes will stand or fall on their own underwriting results. Scrutiny of such schemes takes place in the context of applications made to me either for price increases on the general motor account, or for increases in the premium rates charged for these special schemes. It is noteworthy that within the past year or so two such schemes effectively ended, and the price increases granted in a number of other schemes — based on the underwriting results of the schemes — were substantially in excess of the increase allowed on the general motor account.
Is the Minister aware that it is the perception of the general public that young drivers are being discriminated against which, in effect, means that it can be more expensive to insure a vehicle than to buy it? Would he agree that this has an effect on a number of individuals who are prepared to run the risk of driving uninsured vehicles? Will the Minister accept my recommendation that it would be more equitable to divide the total amount of people seeking insurance in the under-25 age bracket amongst all the insurers, pro rata to the number of insured they have on their books? Would he recommend that to the insurers?
The question raised by the Deputy is an entirely different one from that he put down. The question on the Order Paper is in relation to discount schemes. I have stated quite clearly that, in relation to any such discount schemes, they must stand on their own underwriting results and that my Department will not allow the general motorist, including the under-25 policy-holders, to subsidise these general schemes. The question of the treatment of young motorists under the age of 25 is not the subject matter of this question.
While it may not be directly mentioned in the question put down, it certainly is related.
I think it would more correctly arise on Question No. 15.
I would like to ask the Minister a final supplementary with regard to the discount schemes. Would he agree that it is showing preferential treatment to sections of the community who are best able to bear the burden of the insurance rate, that perhaps if there was a more equitable system of dividing out the total amount of insurance that has to be written in this country we could have a more equitable and even system and that, consequently, more people would be insuring their cars?
On the contrary the insurance companies' experience with their specialised discount schemes has not been successful. As I said in my reply, two such schemes have been ended. As I said also in my reply, my Department will take every step necessary to ensure that the general body of policyholders on the motoring side of the industry will not be subsidising these special schemes. That would apply also to the younger policyholders. In that way they are secured to a certain extent, in that whatever losses are incurred under the special discount schemes will have to be borne by the discount schemes policyholders.
Would the Minister state what were the two discount schemes that have been suspended and the reason given by the insurers for their suspension?
I would prefer not to do so. I would prefer not to answer that because that would be breaking the confidentiality——
In his reply the Minister said that in the past year or so two such schemes have effectively been ended. It is only reasonable to ask him to specify the two schemes that have been terminated. That is not all that difficult. Perhaps the Minister would indicate the two schemes to which he referred. That is not an unreasonable request.
Rather than give the names of the schemes in public — because I feel that companies are entitled to confidentiality in their dealings with my Department — I will happily give the names of the two schemes to the Deputy in private if that is acceptable.
Would the Minister indicate whether there are any discount schemes continuing to operate and, if so, how many and whether he is satisfied that they should continue to operate?
There are some other discount schemes in operation. But, as I said in regard to the manner in which they will be treated, it will be such that the losses will be borne by the discount policyholders themselves.
Would the Minister be good enough to let me have particulars privately — I do not want him to put it on the record of the House — of the schemes that continue to exist?
If the Deputy would approach me, I would be happy to discuss the matter with him.
10.
asked the Minister for Industry, Trade, Commerce and Tourism the steps he proposes to take to stop the practice of insurers of rate cutting, particularly in liability underwriting; and if he will give an undertaking that this practice will not be to the disadvantage of the insuring public.
There is obviously no objection to competitive quoting for insurance risks, but concern has been expressed to the industry about the practice of excessive price cutting without regard to the risk involved. There are recent indications in liability underwriting, however, that the insurers have taken this matter to heart.
I have no powers under insurance legislation to enforce minimum premium rates and indeed in liability insurance, where rates are complex and the nature of individual risks is important, the setting of minimum premium rates by law would be a difficult task.
Would the Minister agree that considerable losses have been incurred by general insurers in the country in the last year or two, that it is estimated that 25 companies lost money in 1981-82 and that, perhaps when the blue book is available from his Department, it will indicate further considerable losses on the part of insurers, a lot of such losses being in excess of £2 million? Would the Minister indicate what action he proposes taking in order to prevent the possible collapse of some of those writing general insurance in the country?
In fact there are 26 insurers writing liability business. I am concerned that, in recent years, there seems to have been some under-cutting in the market place. But my understanding is that there is recent evidence that insurers are having a change of heart in this insurance area and are returning to more normal practices. What has happened is that there has been a rate cutting below the official guide rates which companies should have used and from which they had departed.
Is the Minister aware that approximately 18 per cent of all general insurance claims goes on fees to specialists and consultants? Is the Minister prepared to take the initiative in so far as improving the flow of legislative procedures in claims processing that exists, for example, the big backlog in the courts, and the whole question of fees——
That is virtually gone now.
Not in certain types of insurance claims. Would the Minister accept that these excessive fees and delays are causing difficulties for these general insurers?
The Deputy will appreciate that I have no responsibility in regard to fees in legal circles nor in relation to delays encountered in the courts. I would wish to see the backlog in the hearing of cases in courts resolved or eliminated. I understand that measures have been taken to eliminate the backlog. I hope this will be resolved some time this year, which is my understanding of the position.
I am happy to hear the Minister at least admit that the legislative procedures are somewhat inadequate in so far as the settlement of all types of insurance claims is concerned. Would the Minister agree with me further that there is a certain amount of selective quoting of insurance premiums taking place and that certain companies are not now prepared to take the risk — because of the location of certain properties, because of the crime rate and so on? But I would have to ask the Minister if he is aware that some companies are actually talking about withdrawing from quoting in general insurance entirely because of these difficulties? What protection does the Minister intend providing for general insurers who find themselves in this dilemma?
The Deputy appears to be going from one end of the spectrum to the other.
That is what Question Time is all about.
The Deputy started with over-competitiveness and now he is going on to worry about somebody dropping out——
It is general insurance quoting and 26 companies have lost money every year for the past five years.
We are talking about companies involved in liability underwriting. There are 26 insurers involved in this business in Ireland.
They are all losing money.
That is not my Department's fault.
This question should be confined to rate cutting and I allowed a discussion about legislation, court cases and many other matters which had nothing to do with it.
There is rate cutting because of the fierce competitiveness in the trade and many of those companies are liable to go down.
The Deputy should not be scaremongering.
Twenty-six companies are losing money each year.
Will the Minister please answer Question No. 11?
The answer to Question No. 10 was most unsatisfactory.
This is most disorderly. I have called Question No. 11 and the Minister should answer it.
I wish Deputy Flynn would not interrupt when I am trying to clarify a question.