I call on Deputy Michael McGrath, who I understand is sharing time with Deputies Niall Collins, James Lawless, Dara Calleary, Eugene Murphy, Marc MacSharry and Jack Chambers. Is that ten minutes each?
Insurance Costs: Motion [Private Members]
I believe the Acting Chairman already has to hand notification of the division of the slot, of which I am not entirely certain.
It is 40 minutes in its entirety.
I intend to take ten minutes at the outset.
I move:
“That Dáil Éireann:
is concerned that:
— consumers have been faced with an increase of over 60 per cent in the cost of their motor insurance since January 2014, with a 34 per cent increase in the last 12 months alone; and
— commercial users have also experienced large increases in their motor insurance premiums;
notes that:
— there is an obligation on the State to act when motor insurance premiums become unaffordable and put families and businesses under severe pressure;
— when the issue of industry profitability was previously examined by the Motor Insurance Advisory Board in the 1990s, it was found that the Irish insurance sector had profitability levels that were multiples of the United Kingdom;
— up to 80 per cent of personal injury claims lodged with the Injuries Board are not subsequently settled through them;
— greater transparency regarding the cost of settling claims or awards in personal injuries cases that do not go through the courts or the Injuries Board is needed; and
— a reduction in resources for the Garda Traffic Corps puts lives at unnecessary risk;
welcomes an emerging trend where cases of suspected insurance fraud are being successfully contested in the courts by insurers; and
calls for:
— the establishment of a task force along the lines of the successful Motor Insurance Advisory Board, which led to a considerable fall in insurance costs up to 2013:
— to tackle rising motor insurance premiums;
— review the role of the Injuries Board; and
— examine the reasons for the current turmoil in the insurance market;
— improved transparency of insurance industry profits and the establishment of a national claims register and a motor insurance database to record data across the sector;
— enhanced disclosure for consumers around policy renewal notifications including an obligation on insurers to inform customers of the change in their premium from the previous year;
— legislative reform to increase the penalties for false and exaggerated claims;
— greater clarity as to the respective roles of the Motor Insurance Bureau of Ireland and the Insurance Compensation Fund;
— a review of road traffic legislation to prevent the use of technicalities to avoid a conviction for motoring offences;
— improved regulatory oversight domestically and at European level, including the filling of vacancies in the Central Bank of Ireland Enforcement Directorate which deals with insurance firms; and
— action to protect low-income and vulnerable customers from unfair practices by insurance firms, including a refusal to quote for older cars which have a valid National Car Test (NCT) certificate.
I welcome the opportunity to raise the vital issue of motor insurance premiums in the House by way of this Fianna Fáil motion. I acknowledge the work of my colleagues, Deputy Niall Collins, our spokesperson on enterprise and jobs, and the Acting Chairman, Deputy Troy, who is the party's spokesperson on transport. Today's motion coincides with the launch by the party of a policy paper on motor insurance premiums.
As the Minister of State knows, since the beginning of 2014, motor insurance premiums have gone up by 60%. In the last 12 months alone the increase has been 34%, according to the CSO's monthly statistics. The current situation is completely unsustainable and action is needed now to address the issue and deal with spiralling motor insurance costs.
The motor insurance premium increases we are witnessing are having a particularly hard effect on younger and older drivers, as well as those driving older vehicles. No one is immune from these effects, however. Since we publicised this motion in recent days, we have been inundated with constituents telling us their own stories. Increases in the last year of the order of €200 seem typical from the feedback I am getting from constituents, while increases of over €300 are not uncommon. In some cases, far greater increases are occurring in the marketplace.
The insurance industry is defending its own position and that of its members, while the legal profession is defending its members' interests. The Central Bank seems to be preoccupied with the underlying financial health of the insurance industry and insurance companies, which is an important issue that cannot be ignored. The Injuries Board is defending its position and says it is doing a good job. I have to ask, however, who is looking after the consumers? Who is looking after the motorists who are getting motor insurance renewals through the door with increases of several hundred euro? It is not just an issue for private motorists; it is also one for the business community. It concerns not only hauliers, but also many other businesses throughout the country for which transportation is a key cost, as is insurance.
This is an important economic issue for the country, as well as being a vital one for individuals affected by the current level of premium increases. The thrust of our motion is to call for the establishment of a task force along the lines of the Motor Insurance Advisory Board, which operated successfully for a number of years when it began in the late 1990s. At that time, motor insurance premiums were also increasing rapidly, but they are now increasing at an even faster rate.
We really need to get a handle on the data. The insurance industry says the main reason motor insurance premiums are rising is the number and cost of claims. We cannot validate that, however, because at least three quarters of all motor-related insurance claims do not go through the Injuries Board or the courts for final settlement. The vast majority of claims are settled privately by insurance companies with individual claimants. While the insurance industry, and individual companies, issue aggregate reports to the Central Bank, we do not have a national claims register. This country is crying out for such a register whereby all the data on settled claims are properly recorded. Lessons could then be drawn from an analysis of those data. That is what is really lacking at the moment.
It is startling to think that there is no public record of 75% to 80% of claims, which would allow them to be assessed and analysed and have policy lessons drawn from them. Having spoken to journalists today, I gather that the Government will not oppose the motion tomorrow. I welcome that, but more important is the need to act on what this motion says. It would be unacceptable for the Government not to call a vote on a motion but then to ignore its contents. If the Government is supportive of this motion then it will have to implement its aims.
Along with my colleagues, I have consistently raised this matter with the Minister for Finance, Deputy Noonan, and his Government colleagues over the past year. The Minister's response has been to establish a Department of Finance-led review. That is an inadequate initiative, however, as well as being an inadequate response to the scale of the problem that motorists are currently facing due to motor insurance premium increases. We therefore want to see a new task force established, which will listen to the industry and the Central Bank. It will also involve a number of Departments, including Finance, Transport, Tourism and Sport, and Jobs, Enterprise and Innovation. In addition, it will involve the Garda Síochána and the Injuries Board, but, most importantly, it will listen to the end consumers, including motorists and families who are no longer able to fund the cost of cover for younger family members.
In recent days, dozens of individual examples have been brought to my attention. One person said that last year their insurance was €540 but this year the insurer quoted a renewal cost of €880, which is an increase of €340. Another person said their premium was increased by 70% despite a full no-claims record. The typical increase seems to be of the order of €200 to €300.
I fully acknowledge the fact that there are many reasons behind the level of increase we are witnessing in motor insurance premiums, including false, fraudulent or exaggerated claims. That needs to be dealt with, and when people present such claims they need to be punished. I am not sure we are going far enough with them at the moment, but I welcome the fact that some such cases have been brought before the courts.
The collapse of Setanta Insurance was over two years ago, yet the fallout from that is still being played out in the courts. It is going to the Supreme Court because the Motor Insurance Bureau of Ireland is not accepting the High Court decision. Essentially, we have the Insurance Compensation Fund and the Motor Insurance Bureau of Ireland at each other's throats. In that case, the 70,000 Setanta customers are losing out, including thousands who have outstanding claims in the system. That is a measure of a dysfunctional approach to the insurance market which needs to be dealt with. We therefore need greater clarity on the respective roles of the aforementioned bodies.
Through a reply to a parliamentary question, I have discovered that the enforcement division of the Central Bank, which is responsible for supervising the insurance sector, has a staff vacancy rate of 25%. That matter also needs to be urgently addressed.
The Injuries Board has been successful and has dealt with about 100,000 cases since its inception in 2004, but its role needs to be reviewed. The motor insurance industry acknowledges that improvements could be made to that particular system, even though it has worked well.
I acknowledge that there was under-pricing in the motor insurance market for a number of years, and we are now seeing the fallout from that. We had the collapse of Quinn Insurance, as a result of which every policyholder is paying a 2% levy. They will be doing so probably for another 12 to 15 years on every single policy that is renewed annually. The Road Safety Authority has had significant problems as well.
Consumers want action to deal with this situation. The Minister has taken some action but it is insufficient. A Department of Finance-led review is not the way to go. We need an independent task force in this regard. We do not need to reinvent the wheel. We had a successful Motor Insurance Advisory Board, which should be reconstituted as a matter of urgency. It should be given the task of identifying the underlying reasons behind the spiralling cost of motor insurance. We can debate what those reasons are, but let us get the data. We urgently require a national claims register. Before the Minister for Finance came to the Chamber I pointed out that in the region of 80% of all claims are now settled without any public record being kept through the Injuries Board or the judicial process.
We are in the dark, so when the industry tells us it is all about the cost and number of claims, we cannot independently validate that and deal with it. We need a task force, as a priority, to get to the bottom of what is causing the rate of increase in motor insurance premiums and to make recommendations for dealing with that. I am sure the House would not be slow in acceding to those. The current situation is untenable. The forecasts are for further increases of 25% to 30% in the next 12 months, so we must deal with this issue. The motion is intended to be positive and constructive and to chart a way forward for dealing with a very important issue for families and businesses throughout the country.
I am sharing time with Deputy Lawless.
It is timely to discuss this issue tonight. There are a staggering number of vehicles on our roads in comparison to the population. There are 2.1 million vehicles on our roads every day. Unlike other types of insurance, it is mandatory to have motor insurance. Some parts of our economy are entitled to self-insure, and they do that and police it rigorously. However, people must have motor insurance and the market is dictating very onerous terms to them. This does not only affect the car insurance industry. Employers and small businesses must pay employer, public liability and other insurance, so there is a knock-on impact there. The practices of the insurance companies in how they deal with claims and the lack of visibility of the payouts and the data surrounding those claims are also the case with employer, public liability and fire insurance and the entire suite of insurance products.
Most of the agenda this country has been pursuing over the last number of years has been towards increasing our competitiveness to allow us to compete on the international stage. This issue is damping down our competitiveness. Consider what the haulage industry has been saying about motor insurance. The role that industry plays in the supply chain for getting our products from our island economy to the UK and mainland Europe is immense. I hope the Minister will have something substantial to say on this issue. I am reminded of similar debates we have had in the House on the variable mortgage interest rate, where we pay a higher rate than our nearest neighbours and people in Europe. In that case, the Minister said he, as Minister for Finance, does not have the power to dictate but that he does have the power to influence. It is questionable whether he has the power to influence the main banks in determining the interest rate, but in this instance we must take a proactive step to try to address the underlying issue.
As my colleague outlined, the fact that 75% to 80% of claims are settled outside of the courts or the Personal Injuries Assessment Board is staggering. We must deal with it. It is worth noting what happens with one's health insurance, be it with VHI or Aviva. When one is renewing a policy or, indeed, at any point during the year, one can get a great deal of information and data from the companies. They will give a full list of the payouts under the insurance policy, including all the doctors, consultants and hospitals that were paid. We do not get that with our car insurance.
This is a serious issue for young drivers. They are faced with huge premiums. There is also the issue of older cars. The insurance companies are finding reasons to refuse insurance for a car that has a valid national car test, NCT, certificate simply because the car is older. That should not be acceptable. If the State mandates a company to run the NCT programme and it certifies cars as roadworthy, that should be the end of it. It should not be up to the insurance companies to second-guess it or to allow that to happen.
Another issue has come to people's attention. Legislation provides that 12 penalty points will put a person off the road. However, if one has six, seven or eight points, some insurance companies will refuse to renew one's insurance. Potentially, six or seven penalty points is now the new 12 penalty points. Again, the insurance companies are adopting this policy on an à la carte basis. There is no transparency or consistency about it, and it is damaging the consumer.
I will describe the example provided by a business in the mid-west. I will not name the business or the person behind it, but the Minister will know it well because it is in Limerick city. The man runs a taxi business with a fleet of eight taxis. He has an 11-year no-claims record. There have been no claims against him, not even for a windscreen. There have been no minor payouts. In 2013, he paid Liberty Insurance €7,000 for his fleet renewal premium. In 2014, he paid €14,000, which was an increase of 100%. He was asked to pay €56,000 in 2015 so he found an alternative provider, a new company, and paid it €31,000. That provider is now leaving the Irish market and nobody is willing to insure this man's fleet of taxis. I realise the taxi business is a high-risk industry and that there have been many high-profile cases involving taxis, but this man has an 11-year no-claims bonus.
We seek, primarily, the re-establishment of the Motor Insurance Advisory Board, MIAB, to give people a degree of transparency and certainty. People must have certainty about what they will have to pay for insurance and business must have certainty about its insurance costs.
I welcome Fianna Fáil's motion on insurance costs and affordability. There are two facets to this - competitiveness in the market and the issue of affordability and cost for the consumer. The price of motor insurance has increased by approximately 60% since 2014. During Fianna Fáil's last Private Members' business we championed mortgage rates. Today we turn our attention to motor insurance, again in an attempt to cut costs for consumers and individuals caught up with this issue.
Car insurance is compulsory, unlike health insurance, house insurance and other insurance products. One does not have a choice. If one drives a car, one must take out insurance. The figures we have mentioned place stress and strain on many people. In essence, it puts them off the road. I will first discuss the cost for younger drivers, who are known as millennials. These are the younger generation, people in their twenties, who are being squeezed on multiple fronts. They are prone to insecurity. They find it difficult to save for rent for housing or deposits for rents. They cannot aspire to home ownership. Beginning to plan for a family is so far down the line it is not even on their radar. Work is insecure. To add insult to injury, what was once the freedom that young adulthood brought to being on the road is now taken away as well, because the costs are prohibitive for young adults trying to enter the insurance market.
I have encountered a number of situations in my clinics which are pertinent to this debate. One is the situation of emigrants returning from abroad. Thanks to the putative economic recovery we are beginning to see some people returning home. Many people spent the recession abroad, including in the EU. One individual approached me recently who, on his return from spending six years in Spain, found that he was unable to get insurance cover in Ireland. He has a clean driving history and a full no-claims bonus, but it is non-transferable even within EU states. That adds to the cost of insurance. He is currently unable to get insurance and is taking it up with the declined cases committee. Surely within the EU we could align our no-claims bonus provisions and driving history to the extent that we should be able to address such cases. I ask the Minister to examine that issue. Hopefully, it will be presenting more frequently as many more people return home after working abroad.
At the other end of the scale, there is the issue of cars over 15 years old. People are on the road with older cars which have NCT certificates and are therefore certified for roadworthiness. However, when they seek insurance at least two companies, Aviva and Allianz Ireland, have refused cover. There are 250,000 such vehicles and they account for 13% of the entire fleet. This issue tends to affect older people and people whose means are limited. Again, it is pricing people off the road and putting an anti-competitive layer into the market.
Another difficulty is where an individual has had a claim or disputed claim. The principle of innocent until proven guilty does not appear to apply here. Unlike in every other walk of life, if a claim is hovering the premium is hiked until that is resolved. I was dealing with an individual recently who has been waiting five years for the outcome of such a claim. He maintains his innocence but he is being priced out of the market while this continues.
The solutions appear to be relatively simple - put the advisory board in place, establish the task force and examine the uninsured vehicles.
The industry suggests that it is not sure that uninsured drivers are a key contributor to the cost. If that is so, why can we not compare the insurance databases with the vehicle registration database? It would appear to be a quick win. The book of quantum needs to be revised. The penalty points database needs to be correlated with the insurers' databases in an attempt to address the matter.
In respect of fraud and end-of-life vehicles, vehicles which have been certified as end of life in other jurisdictions are entered into the Irish market and put on the road under false pretences. They are, therefore, a risk to other drivers, which is not doing the insurance market or road safety any good at all. I will return to this issue on another occasion.
This is a very positive step. We need this task force and we need to investigate the different scenarios that arise and address this crippling cost for families and individuals in respect of such a basic requirement.
Gabhaim buíochas le mo chomhghleacaí, an Teachta McGrath, as an seans an fhadhb seo a phlé. When one considers that motor insurance for ordinary drivers has risen by 60% since January 2014 and that freight transport and commercial motor costs are up by between 50% and 70%, one can see that it is a major problem in terms of motor insurance which has dragged the country back into the mid- to late 1990s. Action was taken then in terms of the establishment of the Motor Insurance Advisory Board and this is what we need now because during the very early minutes of a three-hour debate, we are hearing a myriad of reasons as to what may be causing this and hearing about a myriad of impacts on different people and sectors across society.
The difficulty with very different reasons is that very different reasons have homes in different Departments and the silo way of doing business will intervene in terms of us finding a solution and a reduction in these costs. For example, there is a difficulty with legal fees in this country. One of the great failures of the previous Government related to the fact that it introduced the Legal Services Regulation Act in December 2011 and rushed it into law in January 2016 on the cusp of a general election with a view to bringing more transparency and reducing legal costs. It took the previous Government five years to do that, and in the meantime, legal fees comprise €50 of an insurance premium.
The level and incidence of motor insurance fraud are incredibly high. According to statistics from the Consumers Association of Ireland, this is a contribution of €56 per premium because there is a lack of enforcement. It comes back to the point raised by Deputy Michael McGrath, namely, that 70% of personal injury claims are settled outside any formal process where they can be assessed and measured against each other and where we can see some sort of transparency as to the kind of awards that are being given. For as long as that continues and we do not have any common level or sense of transparency, the cost of insurance will rise.
I agree with my colleagues in respect of the impact on cars that are perfectly safe according to the State. Again, this relates to another Department, namely, the Department of Transport, Tourism and Sport in terms of the national car test, NCT. Insurance companies think they are bigger, better and more important and have more power than the Department of Transport, Tourism and Sport so they are telling customers they will not insure them. What good is the NCT if an insurance company does not accept its worth? People coming back from other jurisdictions, be it through immigration or education, find it impossible to get insurance because they are coming from another jurisdiction. In a so-called globalised world, there should be no reason for this. If somebody is a safe driver with a proper driving record with insurance paid in Australia, it should be the same for driving in Ireland, a country whose road network has improved vastly in recent years and where there was a 14% reduction in fatalities on the roads in 2014, yet motor insurance costs are going up by 60%.
The proposal tonight is for the creation of one organisation to which every Department will report and which will be given a deadline to report back and take action so that are no excuses or hiding and we do something in this Dáil to put something back into people's pockets. This is costing jobs. Somebody with a car in rural Ireland does not have an alternative in terms of public transport. If a young person starting off in a job is being hit with €1,500 or €2,000 for their first premium and that job does not pay enough, they will not take that job. This is costing communities opportunities. Deputy Eugene Murphy will give examples he came across. We need action. It has been identified by the National Competitiveness Council as a problem in terms of our competitiveness as an economy. More important, people are being affected by this in their daily working and social lives and in their ability to get around their communities because it is keeping them off the roads and we need to sort it out now.
I congratulate the Minister for Finance on his reappointment and my namesake, Deputy Eoghan Murphy, on his appointment as Minister of State. I get his post sometimes because there is a bit of confusion. I wish him well. I welcome Deputy Michael McGrath's motion because it is extremely important. It is one of the most critical issues we must deal with. We can keep going over the figures but the facts are the facts. The quoted average increase of 30% is incorrect. I have come across situations where the increase in the quote has been over 50%, and in one or two cases premiums have risen by between 200% and 400%. I can provide evidence of this.
We need to bring back something like the Motor Insurance Advisory Board, which was established by a Fianna Fáil Government in the mid-1990s. Unfortunately, it was abolished by the previous Government in 2013. There is no doubt it controlled prices to a degree and kept an eye on the business. Not only is the ridiculous quote system leading to undue pressure and financial strain, it is keeping people from returning to work. Even this weekend, I was approached by numerous young people in respect of this matter. They want to take up employment but they simply cannot afford a car. Many parts of rural Ireland do not have the public transport system found in urban areas, so it is major issue in rural Ireland. If people have to travel 15, 20 or 30 miles for their first job and they do not have transport, they cannot take up the offer.
The inflated quotes and premiums for young drivers are discriminatory. We introduced a rigid system in recent years for people who must get their driving licence, and rightly so. They must undergo a theory test, take a certain number of driving lessons and undertake what I call the grand finale. However, when they go to insure their cars, they are being quoted these massive prices for insurance cover, yet they have committed no offence. This is why I think it is utterly discriminatory.
There are many hardship cases, as Deputy Calleary pointed out. I was recently approached by a taxi driver in a rural area of my constituency who was forced to give up his taxi run. His insurance went from €1,400 to €6,500. He told me that he was better off on social welfare. His business is gone. He also employed two part-time workers, so three jobs have been lost and three families have been affected because of the high cost of motor insurance.
There are also huge problems with inflated insurance costs for small businesses. A constituent came to me recently and told me that her public liability insurance premium quotation was €1,900 the first year. Five years down the road, for her small business, which is struggling in rural Ireland, she is paying €6,280. People are being run out of business because of those costs. There had been no claims or accidents relating to that business. We certainly cannot afford to lose these small business owners who contribute so much to sustainable jobs and rural recovery.
This State has an obligation to tackle this problem. Yes, the collapse of Setanta Insurance and Quinn Insurance is having a huge knock-on effect, but it is only one of the factors adding to the burden. We need more transparency relating to the staggering legal costs involved in settling some claims and the inflated settlements paid. I would like to see the legal costs relating to the average claim that reaches the Circuit Court. We would all welcome greater transparency in this regard in order that the costs could be challenged if need be. The claimant does not receive any knowledge relating to how much their legal team are paid for the handling of their case when responsibility is established. The average payment for a so-called fender bender is €15,000, which is three times greater than the average claim in the UK for a minor accident and five times higher than the awards in Spain or Italy.
I also welcome the introduction of a "care not cash" system where those with bodily injuries will be given treatment packages and expenses rather than a cash lump sum. This will certainly cut out the claim culture for minor injuries.
Fraudulent claims must be highlighted and investigated. The fact that very few cases of insurance fraud are actually referred to the courts shows that the insurance companies are not doing enough to investigate fraud but are quick to add the cost of fraud to the consumer. It may be changing and I hope it does. The facts are there and we have a difficult situation. I congratulate Deputy McGrath on bringing forward this motion. It is vital that this issue be dealt with immediately because it has caused enormous difficulty for many people throughout the country.
I take the opportunity to wish the Minister and Minister of State well and particularly the Minister of State, Deputy Eoghan Murphy, as the Minister, Deputy Noonan, has been there for some time. I had the pleasure of working with Deputy Murphy on the banking inquiry and I am sure he has a long career ahead of him in the Department of loaves and fishes. I just ask that when he decides who gets fed and who starves, he is very careful about doing it and perhaps listens to everybody in the House when he is making those difficult decisions.
Last week, during Private Members' business, or perhaps in the vote afterwards, Deputy John Deasy made a point which is worth noting in the House. I hope the Acting Chairman will bring it to the attention of the Ceann Comhairle and perhaps it will be considered in deliberations on Dáil reform. I spent quite a few years in the Seanad, where the practice is the same: Private Members' motions have no statutory basis and they have no standing. If we passed a motion this evening to travel to the moon by the end of August, the Minister responsible need only note it and put it into the room where these motions are duly stored. If a motion is passed, as this one will be this evening because clearly we have the numbers, it will be of benefit to people outside. There will be genuine expectation from the public at large that something along the lines of the proposals within the document brought forward tonight and within the motion, and the proposals being advocated by Members will, in fact, come into play. In reality, we know that is not the case. As we are undertaking Dáil reform and agreeing new procedures in the era of new politics, it is in the interest of the public's peace of mind and its confidence in our system that we give Private Members' motions more of a statutory basis and more of a chance to become reality than the motions that are often discussed and passed at county councils and local authorities throughout the country. Many of us are familiar with those.
Many of the key points and proposals have been made clear already in the debate. I would like to speak specifically in the context of rural Ireland, which Deputy Eugene Murphy mentioned. We do not have public transportation as in the Minister's city and county of Limerick or the Minister of State's constituency of Dublin, which has the benefit of Luas, DART, regular bus services, late night bus services, and the availability of taxis. Car insurance being obligatory in this country means that every young person who is starting off and purchasing a car to get around, either by raising a loan through the credit union or with savings, must insure their vehicles and they must be compliant with the regulations. When one considers the increases over the last two years in particular, as the Minister has heard already - 34% in the last year according to the Central Statistics Office and 30% the year before - one notes it is simply unsustainable in this society for people in rural Ireland to get themselves around when they are being effectively priced out of the market. The economic downturn has affected the insurance industry with the exit of Quinn and Setanta and the financial figures of other companies seem to be very much under pressure. Notwithstanding that, they cannot just focus on the most vulnerable in society - those who absolutely need transportation to get around and who need insurance - to try to get the quick buck and get back to profitability.
We have heard from others about the Motor Insurance Advisory Board and its relative success over a seven-year period in the 1990s in which it managed to have a reduction in the region of 40%. Once we took down the fence to the hen house, the foxes ran ragged. That is what they are doing again. Over a two-year period, they have gazumped the savings that were made as a result of the interventions of the Motor Insurance Advisory Board in the 1990s and now we have a 60% increase. It is not sustainable and it is not fair. It is time to put that fence back up. It is also time, as the motion proposes, to re-establish the Motor Insurance Advisory Board and give it the resources it requires and, more importantly, to give it cross-departmental reach and influence to introduce the sort of regulations and oversight that is required to ensure people get value for money.
I have a personal view, which is not mentioned in the motion, that we must focus on those people who absolutely depend on owning their own car for transport in the many rural areas and provincial towns that are not blessed with the same public transportation as the constituencies of the Minister and Minister of State.
I thank Deputy McGrath and the Fianna Fáil finance team for putting forward a very important motion. Many of my generation have been particularly affected by the cost imposition, particularly in the motor insurance area, and I am delighted to be able to speak on it. Consumers have been hit, as has been mentioned, with a 60% increase in insurance premiums since January 2014 and 34% in the last year alone. This is very worrying and can no longer be ignored. The problems in the sector have come about through a combination of poor regulation and mismanagement by the insurance sector. There is a requirement now that the Government acts, as has been proposed in this motion.
I read the submission that we all got from Insurance Ireland today and I was taken aback by what its members were saying. It seemed to be a clear deflection strategy to avoid the elephant in the room that is themselves. They came forward with some positive measures including: strengthening the Injuries Board, which we all support; internationally benchmarking awards, which is a prudent thing to do; fixing Setanta and Quinn and the cost legacy issues there; and increasing road traffic enforcement. They are all aspirational measures but they avoid targeting why they have increased so many people's premiums to an enormous extent.
The Department of Transport, Tourism and Sport nailed it in 2015 when it said there are higher premiums for higher profits. That is one of the reasons we are seeing the massive increase in insurance premiums in Ireland today. In 2009, the European Union carried out a retail insurance market study which analysed the 27 EU countries and many of the US states. When one breaks down the data, the study looked at each country individually and the variation of premiums and the income the EU took as a collective. It went from €80 billion to €120 billion in that period. It looked at the market in Ireland at the time and I accept things have changed since. There was a high concentration of international, cross-global and multinational operators in the Irish market which are bonded throughout the world and can take the hit when it comes to increases in the cost imposition in different countries.
We look at insurance through a very basic mechanism. People who have a no claims bonus for years, are safe drivers and have never had an accident are seeing an enormous increase in their insurance premiums. That shows market dysfunction and I am glad we are trying to tackle it today by taking some measures. I hope the Minister accepts the motion and takes some action to address the issues. The study tracked Ireland at the time when Ireland took measures, such as the Personal Injuries Assessment Board and other measures such as reducing the costs in the insurance sector, premiums dropped. The claims ratio also dropped at the time. It dropped to a greater extent than the marginal decrease in the premiums so insurers were still profiteering at the time, even when claims and the cost base was dropping, which shows a very profit focused insurance sector. What we are seeing now is the reverse - possibly increased claims and increased incidence of fraud - but insurers are milking those statistics to massively increase their premiums, as the Department of Transport, Tourism and Sport said, to increase their own profits. We can tackle this by reinstating the Motor Insurance Advisory Board.
In this era of new politics, I hope the Minister does not allow this motion to fall. I also hope he will not just accept the arguments put forward and that he will do something about this issue. Families, and taxi drivers, as Deputies Eugene Murphy and Niall Collins mentioned, have faced an enormous increase in insurance costs and it is important that we tackle this issue to try to reduce premiums.
I call the Minister, Deputy Noonan, whom I understand is sharing his time with the Minister for Jobs, Enterprise and Innovation, Deputy Mitchell O'Connor, and Deputy Farrell. Is it ten minutes each?
I think it is shorter than that, perhaps three minutes for-----
Sorry; it is 20 minutes.
I thank Deputy Michael McGrath for putting forward this motion and his Fianna Fáil colleagues who participated in the debate so far. The Government is not opposed to the motion calling for a task force on motor insurance matters.
It is important that Ireland has an insurance sector that is not only financially stable but that contributes to economic activity. The insurance sector makes a vital contribution to the Irish economy, through employment, attracting global capital and serving the needs of consumers and businesses. I see this motion as a valuable opportunity for the Dáil to discuss the important matter of insurance costs, to highlight the actions the Government is currently taking to address the issues and to reach a shared understanding on the way forward.
Differing reasons have been put forward by various interested parties to explain Ireland's current increasing insurance costs. Motor insurance appears to be particularly affected, with the cost of premiums increasing significantly in the past 12 months. A number of factors drive the cost of insurance. Reasons often presented include the increased level of insurance claims and the increasing value of compensation awards. Others acknowledge that the highly competitive nature of the domestic market for non-life insurance in recent years has begun to impact on firms' underwriting profitability, with underwriting losses reported in 2014 for a number of high-impact firms.
I have been conscious of these issues for some time. To examine them in more detail and to assess the options for the Government, I have established a task force in my Department to undertake a review of policy in the insurance sector. This task force will report to me shortly on the first phase of its work dealing with the insurance compensation framework. Its work will be completed over the coming months. The first phase deals with the fallout from the collapse of Setanta Insurance, which, as Deputy Michael McGrath will recall, was incorporated in Malta. I expect to have that report within the next couple of weeks. The work of the task force also includes an examination of the issues being debated today, namely, the factors which have led to the significant increase in motor insurance costs over the last year. The work is being undertaken in consultation with the Central Bank of Ireland, Government Departments, agencies and interested bodies. The outcome of the review will be recommended measures to improve the functioning and regulation of the insurance sector.
As I have stated previously, the availability of relevant and timely data is necessary to facilitate an in-depth analysis of the insurance sector. The current lack of data presents difficulties from a policy analysis and development perspective. Accurate, timely and accessible information on claims in particular would assist insurers, including new entrants, in assessing the Irish insurance marketplace.
The new risk-based European supervisory framework for insurance, Solvency II, came into effect on 1 January this year. A key aim of Solvency II is improved transparency. For many parts of the European insurance market, this means a significant change in the provision of publicly disclosed information and should provide for greater transparency of insurance industry information. The issues being examined in the review of insurance policy include the issue of data, and the work of the task force will include examining options such as a national claims register and motor insurance policy data. This work will take into account what information is currently available, and what will be provided via the introduction of Solvency II, and identify any shortfalls.
Consumers of insurance are directly affected by the costs of claims - both the costs of using the legal system often used to settle disputes and the compensation awards that result. A number of significant changes have taken place within the motor claims environment in Ireland in recent years, leading to an increase in claims payouts. Claims frequency has increased as a result of rising economic activity and increasing miles travelled per car, and this has not been counterbalanced by a drop in the number of accidents. Average claims costs are also increasing, which presents significant challenges to the insurance sector by making the claims charge per insurance policy significantly higher and more volatile. As I have stated previously, the Government welcomes proposals to reduce the uncertainty and volatility of the claims environment in Ireland and this is a core issue being examined by Departments in the review of insurance policy.
The introduction of the Personal Injuries Assessment Board in 2004 was an important and positive change to the legal system in Ireland. The board provides an independent assessment of personal injury compensation claims. The objectives of the board are to reduce the costs of delivering compensation by avoiding litigation where possible and also to speed up the delivery of compensation to victims, where legal issues are not in dispute. My colleague, the Minister for Jobs, Enterprise and Innovation, is currently reviewing the injuries board legislation and a general scheme of a Bill is being prepared with a view to seeking Government approval for the drafting of a Bill to strengthen the legislative framework in terms of operational issues. To assess claims, the board uses an extensive set of data on actual litigated cases and cases settled through negotiation, as summarised in its book of quantum. The book of quantum is essential for the successful operation of the injuries board. The injuries board is currently reviewing the book of quantum, which was last produced in 2004, and expects to have a revised version ready as soon as possible.
The Government believes that these measures will help to ensure that the role of the injuries board is optimised to bring about the lowest cost and most efficient resolution mechanism for uncontested personal injury claims and that the book of quantum will provide certainty and clarity around award values. Reducing uncertainty regarding compensation levels should impact the ability of insurers to add precision to their pricing. False and exaggerated claims affect insurance costs, and I agree there is a need to consider as part of the review the proposals that may be appropriate in order to reduce such claims.
Making our roads safer is a key priority for Government. In order to tackle the issue of uninsured driving, it is essential that insurance companies provide accurate and timely information to the Garda Síochána on the insured status of individual vehicles to assist in enforcement. My colleague, the Minister for Transport, Tourism and Sport's Road Traffic Bill 2016 - which is currently awaiting passage through this House having been passed by the Seanad - provides for an amendment to existing requirements and allows for more robust enforcement by the Garda Síochána. This, in turn, should help reduce the number of uninsured drivers on Ireland's roads. Consideration will be given to a review and consolidation of existing road traffic legislation, and this will commence following the passing of the Bill I have mentioned. Improvements in road safety in recent years have been driven by a series of road safety strategies, supported by a partnership approach between relevant agencies and stakeholders. New Garda resources proposed by the Tánaiste and Minister for Justice and Equality will give the Garda Commissioner the capacity to maintain and extend the excellent traffic enforcement work of recent years, and contribute to further reductions in road deaths and serious injuries.
The regulation and supervision of insurance in Ireland is of a high quality. It has been further enhanced with the recent introduction of Solvency II and enhancements to Central Bank supervision, including materially increased on-site inspections and a revised approach to supervising low-impact firms. As of 1 January 2016, the new risk-based European supervisory framework for insurance, Solvency II, became applicable. The key objectives of Solvency II are to ensure financial stability and enhanced consumer protection in the European insurance market.
In view of the high degree of cross-border trade in insurance products, the Central Bank of Ireland has informed me that it strongly supports convergence in supervisory standards, which would contribute in a significant way to the long-term resilience of the financial system in Ireland and Europe.
The Central Bank seeks to continually develop and enhance its approach to supervision and the bank advises me that it is currently undertaking a significant recruitment campaign to fill vacancies in its enforcement division.
The non-life insurance sector is an important sector, both in its own right and in terms of its role in facilitating activity, both commercial and non-commercial, in other sectors of the economy. It is important for consumers that insurance is provided on a competitive basis. Healthy competition within the insurance industry should facilitate this and the National Competitiveness Council emphasised that a resilient and well-functioning insurance sector contributes to economic activity and financial stability. Last year, the National Competitiveness Council considered the commercial insurance market in Ireland as part of its costs of doing business in Ireland for 2015 report. It subsequently set out a range of potential actions that could help facilitate enhanced cost competitiveness in the non-life commercial insurance markets. These were set out in its competitiveness challenge 2015 report and presented to the Government by the Minister for Jobs, Enterprise and Innovation.
Many Departments and agencies are directly involved with the motor insurance sector. The Government is taking a whole-of-government approach to ensuring the correct policies are in place so the cost of motor insurance is addressed. This is being led by the Department of Finance task force. The Government will await the completion in the corning months of the existing Department of Finance insurance task force work, which involves examining the factors contributing to the increasing cost of insurance and identifying what short-term measures can be introduced to help reduce the cost of insurance for consumers and businesses. The Government will them consider what further longer term options may be required, including the possible establishment of a broader structured task force on motor insurance as outlined in the motion. In concluding, I thank the Deputies for their work on this motion and I look forward to hearing the interventions of Members from across the House.
I am pleased the House is having this debate on the important issue of insurance costs. CSO inflation data indicate insurance prices have increased by 55% since 2011. This is well in excess of European Union trends and it is vital for our consumers and enterprise base that Ireland maintains its price competitiveness to continue attracting inward investment and supporting job creation.
Among the reasons cited by the insurance sector for the increase in premiums are increases in claims volumes and the cost of settling claims. The data available to me through the Personal Injuries Assessment Board, PIAB, do not support the sector's claims on the volume and cost of settling claims. Estimates indicate that 70% of cases are now either resolved through the PIAB or settled directly between parties. The statistics for the average compensation awards by the PIAB and the acceptance rate of awards are broadly consistent. They do not reflect what some are saying about increased levels of awards. The existence of the board's model has facilitated the high volumes of cases that settle without the need for any litigation. The awards that are rejected may serve to facilitate a quick settlement, perhaps with some legal costs being paid. There are a number of personal injury cases settled outside the PIAB and the court processes, so they must be settled by the insurance companies.
Greater availability of data from the insurance companies is required for a proper understanding and greater transparency of what is going on in the entire claims market. In June 2014, my predecessor as Minister, Deputy Bruton, commenced a public consultation on the operation and implementation of the PIAB Acts 2003 and 2007 with a view to identifying any areas relating to the scope, powers or operation of the legislation that might require change. My Department is currently reviewing the submissions received and I hope to seek Government approval to draft a Bill later this year. My Department will continue to work with the Department of Finance in its review of the insurance sector.
I thank the Ministers for sharing time with me. As the Minister for Finance knows, this matter was raised in the Dáil by me last week, having temporarily been assigned to the Department of the Minister for Jobs, Enterprise and Innovation in the preceding week. Fianna Fáil is to be commended for raising the matter as it affects the vast majority of constituents in the State, whether it relates to home or car insurance. I read the figures into the Dáil record and the only sector that saw a decrease in premiums was the travel insurance area. It saw a slight decrease. I read into the record last week an example from one constituent not too far from my age. He is 36 and drives a car with a 1.4 litre petrol engine. He has five years of no-claims history and three penalty points, which were on his licence when he got his insurance last year. His policy increased, if I recall correctly, by 85%.
There is no justification for that and if we consider the profit margins of the vast majority of the motor insurance companies, for example, as I have researched it, all of them have made great inroads either in terms of profit or corrections to losses made in previous years due to the reduction in economic activity and the number of vehicle users on the road. One firm had left its deficit at £20 million, when it had been £97 million two years beforehand. The bottom line is that legal costs have increased by only 1% in recent years so these have not pushed insurance premiums up by as much as 35% in the motor insurance business.
This afternoon we all received a briefing note from a lobbyist on behalf of the insurance business suggesting that this was somebody else's problem and it was not profit-gouging but we know better. The research is on the Dáil record and it has been submitted to the Department of Finance. I thank the Minister of State, Deputy Eoghan Murphy, and his officials for writing back to me this morning, acknowledging receipt of the documentation that I sent to them. They included notes for my contribution last week in the House and this fed into the review group that the Minister, Deputy Mitchell O'Connor mentioned when I arrived into the Chamber. It is a welcome move by the Government. I appreciate that this is a very pressing issue and I was originally informed that it would be the end of the year or, possibly, early next year before the process could be completed, meaning it might take even longer for us to see a result. It is encouraging that the Department has recognised the problem, has attempted to address it by verifying the factors that increase costs so significantly to the end user and is considering whether the Government can step in and play its part in reducing the overall cost to the insurance business so it can reduce costs itself, although I believe that to be a tiny percentage of the overall costs involved.
My next issue, the cost to the insurance sector of the Setanta crash, was mentioned by another lobbyist from the Motor Insurance Bureau of Ireland, MIBI. It made a very valid point in arguing that the increase in claims would result in a 150% increase in its overall settlements over 12 months because of the Setanta issue. The court case that was recently decided would inflict the total cost on the MIBI rather than the insurance compensation fund that was previously dipped into.
It set a very unfair playing field for the MIBI, which is there to benefit the consumer and to reduce costs for the industry through settling matters outside of court rather than passing them on to the Insurance Compensation Fund, which, going by its name, is there for that specific purpose. There is something that has to be addressed in that process. I thank the Ministers for sharing their time and I apologise to the Acting Chairman for being out of breath.
I move amendment No. 1:
To delete all words after “Dáil Éireann” and substitute the following:
“is concerned that:
- on average consumers have been faced with an increase of over 60 per cent in the cost of their motor insurance since January 2014, with a 34 per cent increase in the last 12 months alone but that in many cases consumers have received renewal quotes with prices that are multiple times their most recent premium;
- commercial users have also experienced large increases in their motor insurance premiums;
- the insurance industry investment and underwriting losses are directly leading to increased premiums for consumers;
- many young drivers and many people in rural areas reliant on private transport are effectively being forced off the road by unaffordable premiums; and
- the dramatic increase in premiums will lead to a greater number of uninsured drivers on our roads;
notes that:
- motor insurance is compulsory in the State yet not provided by the State;
- there is an obligation on the State to act when motor insurance premiums become unaffordable and put families and businesses under severe pressure;
- when the issue of industry profitability was previously examined by the Motor Insurance Advisory Board in the 1990s, it was found that the Irish insurance sector had profitability levels that were multiples of the United Kingdom;
- up to 80 per cent of personal injury claims lodged with the Injuries Board are not subsequently settled through them;
- greater transparency regarding the cost of settling claims or awards in personal injuries cases that do not go through the courts or the Injuries Board is needed;
- an update of the Book of Quantum is currently being undertaken; and
- a reduction in resources for the Garda Traffic Corps puts lives at unnecessary risk;
welcomes an emerging trend where cases of suspected insurance fraud are being successfully contested in the courts by insurers;
notes that the evidence available points to the failure of the investment policies of the insurance industry as the largest single cause of the dramatic increase rather than any legal or policy decision by the State or State bodies; and
calls for:
- the incoming Oireachtas Finance Committee to examine the reasons for the increase including through an examination of the business model underpinning motor insurance cover in the State;
- the immediate publication of the Department of Finance’s reviews of policy in the insurance sector when it is complete, or the publication of its work on motor insurance if completed earlier;
- a proposal from the Government for legislative action, including through the strengthening of the Financial Services Ombudsman to give greater protection and clarity to consumers in the sector and specifically to prevent consumers whose circumstances have not changed from facing increases completely out of line with industry average increases from year to year without any rationale being presented to them;
- the more timely and detailed publication of data on the performance of insurance companies by the Central Bank of Ireland and an examination of the use of the Central Statistics Office, or another suitable body, to provide independent and full data on the sector;
- a review of the Central Bank of Ireland’s regulation of the motor insurance sector over the past decade with a view to ascertaining if it, as regulator, has protected consumers and acted as necessary to maintain a sustainable motor insurance sector;
- the establishment of a task force along the lines of the successful Motor Insurance Advisory Board, which led to a considerable fall in insurance costs up to 2013:
- to tackle rising motor insurance premiums;
- review the role of the Injuries Board; and
- examine the reasons for the current turmoil in the insurance market;
- improved transparency of insurance industry profits and the establishment of a national claims register and a motor insurance database to record data across the sector;
- enhanced disclosure for consumers around policy renewal notifications including an obligation on insurers to inform customers of the change in their premium from the previous year;
- legislative reform to increase the penalties for false and exaggerated claims;
- greater clarity as to the respective roles of the Motor Insurance Bureau of Ireland and the Insurance Compensation Fund;
- a review of road traffic legislation to prevent the use of technicalities to avoid a conviction for motoring offences;
- improved regulatory oversight domestically and at European level, including the filling of vacancies in the Central Bank of Ireland Enforcement Directorate which deals with insurance firms; and
- action to protect low-income and vulnerable customers from unfair practices by insurance firms, including a refusal to quote for older cars which have a valid National Car Test (NCT) certificate.”
I am very happy to have the chance to contribute. I welcome Deputy McGrath's motion and hope that he and other parties can support the amendment I have put down, which adds to the proposal he has put before the House and focuses the motion on some key elements that may be lacking in the original proposal.
Recently, under a freedom of information request, I received a letter from the Governor of the Central Bank to the Minister for Finance from last August, wherein the Governor states that insurance companies "took a very optimistic view of future economic outlook, built up unsustainable overheads and followed an imprudent pricing and underwriting approach". In a letter to me from the Central Bank, the Governor went on to say that the combination of low interest rates with developments in the claims environment is forcing insurance companies to increase motor insurance premiums to reduce their loss. This combination the Central Bank has identified is where focus needs to be put. Deputy McGrath's motion is very strong in terms of the task force. It is something I support, looking at the claims environment, but it can be strengthened by accepting my amendment, which provides a balance by including measures to look at the insurers themselves and what blame they might carry. We cannot fall into the trap of missing the wood for the trees. In 2005, the Competition Authority produced a report on the issue with a wide range of recommendations. That was 2005, yet we are only today, hopefully, agreeing the motion. Only last year, the National Competitiveness Council recommended going back to that report because many of the key proposals remain unimplemented. Government after Government has ignored some of those recommendations for over a decade. One of those was the transparency in relation to the claims that have been paid out, which is in the motion tonight.
The average figure for increases in premiums last year was 34%, as we have heard during the debate. That is only part of the story. For many, the increase is 100%, 200%, 300% and sometimes even more. Drivers whose driving records have not changed, who have not committed fraud and who have done nothing whatsoever to justify an increased premium, suddenly find themselves facing what can only be called extortionate quotes. This State demands that all drivers have motor insurance, yet it does not provide insurance through any State company. The private sector is left to provide insurance but it can charge whatever it wants. There is competition but not all drivers are empowered enough to know they can haggle with the insurance company and get an automatic reduction or shop around and go to other insurers. This is the nub of the matter. There are other issues around Setanta Insurance, around the book of quantum and how it is being used by judges and around fraud, but none of them, even if they were all put together, could possibly justify a driver's premium being increased by multiples of the previous year's premium. It is not right and the State must intervene to stop it.
What we need is real action, and that is what my amendment seeks to do. At the very least, a person who has not been involved in an accident, has not made a claim and has not had additional penalty points, yet who has seen his or her premium increase by 200% - or 300%, in the case of my sister - should be entitled to a rationale from the insurance company as to why that individual has become three or four times riskier than he or she was on that day 12 months ago. Many of those people would welcome a 34% increase in their premium but these individuals are being put off the road by insurance companies which, in my view, no longer want to insure them.
This State cannot intervene because of European rules in respect of setting the price of insurance but insurance companies have to price based on risk. As discussed earlier, motor insurance is not optional for people and it is not a luxury. It is a legal requirement the State insists on. The State, therefore, has a duty to make sure the price of insurance is fair, transparent and affordable. The EU says the State cannot set prices but it also says that premiums and prices must be based on risk. Where is the evidence that this is happening? How can a quote increase of 100% or 200% be justified on the basis of risk when no factor determining risk has changed? It simply cannot happen. Some people are facing 30% increases and others face 20% increases, but some people face increases of 200% and 300%. It makes no sense.
My amendment proposes that the incoming finance committee take on a thorough examination of the reasons behind these huge hikes as one of its first tasks. That does not take away from the task force called for in the motion. It is the duty of the finance committee, in public session, to start asking questions of the industry. I have called for a review of the Central Bank's role as regulator of the industry, where it was overseeing what the bank now recognises as imprudent behaviour. Those are not my words. I know the Minister said in his speech that insurers are highly regulated and all the rest but the Central Bank is telling us they were involved in imprudent behaviour and conducted imprudent underwriting. The Central Bank has also written to the Department of Finance seeking additional powers to regulate some of this industry. There needs to be a review of the powers of the Central Bank. There are also longstanding vacancies in the Central Bank that have not been filled and I welcome the Minister's comments today that they are to be filled soon.
For some time, in answer to my parliamentary questions, the Minister has been telling me that a review was being undertaken by his Department and it was due to report within weeks. The Minister now calls this review the task force. He is making a mockery of the Dáil if he is suggesting the review that is being undertaken, which we have been told about in the responses to countless parliamentary questions, is now the task force that is being asked for in this motion. If the Government is going to accept the motion, it must implement it in the spirit in which it is brought forward and agreed by this House. When will the Minister publish the report and will he do so immediately upon receiving it?
I have already brought forward legislation protecting consumers by strengthening the Financial Services Ombudsman and I firmly believe this office can play a greater role in protecting consumers from unacceptable and inexplicable jumps in premiums from year to year. That may require legislation and I note in the legislative programme today that the Bill to merge the Financial Services Ombudsman and the Pensions Ombudsman is imminent. The opportunity to empower the Financial Services Ombudsman must be taken. There has been much talk of transparency tonight, and rightly so. The Central Bank could be doing more to inform customers, as the Competition and Consumer Protection Commission is trying to do. Sometimes the Central Bank hides behind section 33AK as a way of not providing the information that is required and that needs to be examined so that consumers have full information on insurers.
These are the steps we can take on the claims environment, side by side. Hopefully, this will reduce prices or at least prevent another reason for an increase. The Insurance Compensation Fund should be allowed to pay up to 100% and have its threshold increased, alongside clarity on the role of the MIBI in the event of liquidation. This is one of the major concerns. This is why the CEOs of the insurance companies came to Government Buildings and sat with the Ministers, Deputies Donohoe and Noonan. In an unprecedented move, the heads of the industry came together, saying this was causing chaos within the system. It could be resolved easily. The reason claimants want to be paid from the compensation fund is that they get 100% and there is no threshold for the amount of payments. It is the individuals who will end up paying it, whether it is through the Insurance Compensation Fund or the MIBI. If that reduces the immediate costs in terms of what the Central Bank estimates is a 3% cost of insurance, then it should be transferred into the Insurance Compensation Fund, but only with those two changes to the fund, which would allow for 100% payouts and an increase in the threshold.
It is time for a balanced debate on the issues. It is not sustainable to say that prices would tumble tomorrow if only we toughened up on fraud. I have heard during this debate and other debates that we have the most sensitive necks in Europe, as was said in a previous debate, and that we pay out so many times more than counterparts in Britain and elsewhere for whiplash injuries.
That is simply not true. These are exaggerated industry claims that are being peddled to suggest that the rises are all to do with fraud, compensation, legal fees, etc. All of that is relevant and part of the mix which has to be addressed, but they cannot justify the excesses that we are seeing. There are things that can be done in these areas. I believe we can all agree that a claimant should, for example, attend for a medical examination, should the Injuries Board process demand it, but that is not happening in all cases. Unfortunately, there are no straightforward answers and no silver bullets. There is a lack of transparency and information which hinders the consumer - and us, as representatives of the people. That situation could be sorted out if the Central Bank or, as I suggested, the CSO were to take on the role of publishing all the data in a timely fashion. The figures we do have from the Central Bank are clear. There have been no more claims paid out in the last couple of years than in the years before. There is also a deeply worrying question about what the Central Bank called the industry's imprudent pricing and underwriting approach. No amount of tweaks to legislation can change that.
I shall conclude now, and I apologise for eating into my colleagues' time. Information on claims paid out by the motor insurance industry from 2010 to 2014 is published on the Central Bank's website. In 2010 it was €1.17 billion, in 2011 it was €1.5 billion, in 2012 it was €1.069 billion, in 2013 it was just less that €1 billion, and in 2014 it was €1.078 billion. There is no dramatic increase in claims being paid out, yet we have seen a massive decline in underwriting losses and a massive decline in the investments these insurance companies were making from premiums that were gathered from individuals. There has to be a rounded discussion regarding this matter, and I appeal to Deputy McGrath and to the Government to accept the amendment and to actually implement what the House is hoping for. I hope the motion, as amended, will be passed tomorrow night.
I welcome the opportunity to speak on this pressing issue, which has clearly spiralled out of control and shows no sign of abating. It is extremely troubling to note that, on average, consumers have been faced with an increase of over 60% in the cost of their motor insurance since January 2014, with a 34% increase in the past 12 months alone. In many cases consumers have received renewal quotes that are multiples of their immediately preceding premiums. Naturally enough, people are finding themselves in a situation in which it is simply not possible for them to meet these extortionate prices.
The impact of these increases is being felt particularly badly in rural Ireland. Given the dispersed nature of our towns, villages and countryside, and given the inadequate public transport system, an ability to drive is crucial for so many people who are resident in these areas. Many people in rural areas who are reliant on private transport are effectively being forced off the road by unaffordable premiums. The high price of motor insurance is a burden on many families and, most worryingly of all, the dramatic increase in premiums will lead to a greater number of uninsured drivers on our roads. In addition, it would appear that our older people have borne the brunt of what can only be described as a totally ageist approach by motor insurance companies. I have been informed of a case in which an elderly woman’s car insurance premium was increased by €300 per annum. This is an outrageous additional demand on fixed or limited pensioners' incomes. Older people are being viewed as a liability and a soft touch by greedy insurance companies. This is an absolute disgrace. This abuse must be addressed as a matter of urgency. It would appear that the insurance industry is willing to take no responsibility for these outrageous premiums. Instead, the industry has sought to peddle a view that bigger claims payouts, fraud, regulatory costs, etc., are to blame.
Correspondence received from the Central Bank by my colleague Deputy Pearse Doherty pointed to the real reason behind the jumps in premiums: a long-term unsustainable way of doing business. A deeper look at the business model underpinning the insurance industry in Ireland is required. In its amendment to the motion before the House, Sinn Féin has outlined several important and practical additional steps that need to be incorporated in the overall consideration. I strongly urge Members to recognise that these are not only practical but necessary changes, and I join with my colleagues Deputies Doherty and Ó Laoghaire in calling on all Deputies to support this amended version of the motion.
Cuirim fáilte roimh an rún seo atá á moladh ag mo chomhghleacaí, an Teachta McGrath. Is maith an rud é go bhfuileamar ag plé leis an gceist seo. Caithfear dul i ngleic leis an ábhar seo agus srian a chur ar na costais atá de shíor ag fás. The Fianna Fáil motion, welcome as it is, requires strengthening and further detail. I shall be speaking on the amendment proposed by Deputy Doherty.
This afternoon, before speaking this evening, I asked people to contact me via social media about their motor insurance experiences. The response, not surprisingly, was enormous, with hundreds of reactions and dozens and dozens of messages. There is a great deal of anger and frustration out there at what people feel is an insurance cartel, seeking a bigger margin or a bigger profit and mercilessly squeezing motorists, particularly young returned emigrants and those who are over 65 years of age. This is part of a wider cost of living crisis for many families when one takes into account rent, health insurance, third level fees and much more.
Drivers have seen increases of, on average, 60% in the cost of premiums since January 2014. However, I am aware of many cases in which premiums have increased by multiples of that, with some increases in the region of 200% and 300% on quotes from two years previously, as referred to by Deputy Doherty. I know of one particular case of a man who had gone abroad for a couple of years and on returning was quoted €4,500, which was the best price he could get. That person had ten years' driving experience and a four-year no claims record in Ireland, and was able to prove that he was insured and without claims the entire time he was out of the State. He returned to what can only be described as an utterly outrageous quotation. I gcás eile, dúradh le fear a labhair liom go mbeadh táille idir €4,500 agus €6,000 ann. Dúirt sé liom go raibh sé réidh le dul ar ais ar an eitleán agus le himeacht thar lear arís. This is a person who returned to set up an electrical business. He left Ireland due to a lack of work and returned to try to create employment, but this is the obstacle he was faced with.
This is an enormous issue. Numerous people who have contacted me are able to prove that they were insured while abroad and that they had a no claims record which was disregarded by insurers when it came to quotes. Tá an t-árachas éigeantach sa Stát seo, agus má tiomáineann daoine gan árachas bíonn duine i mbaol finéalacha suntasacha agus bheith faoi cosc ar feadh i bhfad.
As we have stated in our motion, it is notable that although insurance is mandatory, there is no State provider. We have reached the point at which people are being priced out of the market, and all motorists have been affected by the increases. The impact of this situation is quite substantial, especially in more rural areas where private transport is an absolute necessity. Older people in particular are at a distinct disadvantage in this regard, particularly after the age of 65. There are plenty of examples in which people have been quoted 70%, 80% or 90% increases over the past two years, and I know Age Action Ireland has been very vocal on this issue in the past.
This prevents younger people from gaining employment, as they may have no other way of getting to and from their place of work. It appears that the benchmark 25% loading on premiums for those who are over 75 years of age and those under 25 has been shelved, and it is a case of "whatever you're having yourself". There are also plenty of cases in which insurance companies have refused to give quotes to people who are deemed to be in so-called higher risk brackets, or have given quotes that essentially tell a person that the insurer does not want their business. This is also an issue for the self-employed and those running their own businesses. I have encountered start-ups that require insured cars. They have found this cost a huge burden, as have professional drivers and taxi drivers. I am aware that some of those drivers have been quoted a €1,000 increase on what they paid last year.
D'fhéadfaí go mbeadh daoine curtha as obair de bharr an méadú mí-réasúnta agus éagórach ina phréimh árachais. I ask Deputies to support the amended motion, to seek the establishment of a task force to tackle the rise in premiums and to tackle legislative action strengthening of the powers of the Financial Services Ombudsman to prevent consumers whose circumstances have not changed from facing increases that are completely out of line with industry averages without any clear basis. It is time for the State to step in to do what it can to stop the rip-off.
The Labour Party will support the motion, which is a good one. I congratulate my colleagues across the floor on putting it forward. It is very badly needed and many in the House will support it. We need it because we need to do something about the insurance industry. It is as simple as that. I have seen this before in other areas also and the industry certainly needs the scrutiny of this House. I welcome the debate because of the critical importance of affordability in transport provision for commuters, motorists and small businesses throughout the country.
The increases of 60% since 2014 and 34% in the past 12 months are nothing short of scandalous. I mean this sincerely because to an alarming degree they are having real effects on people's lives. This topic was discussed recently on my local radio station, Tipp FM. It was said afterwards that very few items discussed on such a show on a rural station had received as much attention. That shows how much the issue has heated up, particularly in rural Ireland, where public transport is not available to the same level and people are very much dependent on the car. This applies throughout the country. It may not necessarily be a priority in Ranelagh, but the Government has stated rural Ireland is a priority and, if that is so, it should tackle this issue because it is central to people living in rural Ireland.
I will not repeat some of the comments of previous speakers, but I have been frightened by some of the examples I have seen. In an earlier life I had responsibility for regulating the taxi industry. Speaking again about rural Ireland, there has been a diminution in the number of hackneys in rural Ireland. They are very much a necessity in getting around and keeping localities vibrant, but because insurance premiums are increasing so much they simply cannot stay on the road. This is a critical issue. I have heard about numerous small businesses that have received incredible quotes for their vehicles. Just as they are trying to move on to get out of the slump, they are hit by this. I really want the Government to act and with the support of the Dáil because the short-sightedness of the insurance industry will lead, regardless of whether we like it, to a number of people driving on the roads without insurance and we do not want that to happen.
I have to be honest. I have a real problem with the insurance industry. I experienced it when it came to managing the effects of flooding in the past couple of years. I found it not to be sincere in the way it dealt with the issue and think it is not sincere in the way it is dealing with this issue either. There is a lack of transparency on data management - this issue comes up across the board when it comes to the insurance industry - and in the way it maps and uses data to justify whatever means it wants to use and whatever decision it wants to come up with for a particular category of people, whether they be the elderly or people who were living elsewhere in Europe or America. It also applies, in particular, to young people, who have been adversely affected.
The industry is peddling yarns. There is no doubt that there have been issues relating to Quinn Insurance, Setanta Insurance, the levels of reserves and undervaluing. However, the industry is peddling yarns when it seeks to justify increases based on the spiralling cost of claims and the corresponding legal fees. Barristers fees have fallen. Therefore, legal costs have changed. The Courts Service and the Injuries Board do not support the statements made by the industry that increasing awards in personal injury cases are a major factor in the cost to consumers. In fact, the increases in the awards made by the Injuries Board are modest at best and in small, single figures. There seems to be quite a gulf between the industry's explanations and what is true. Therefore, we need to get to the bottom of the issue.
In addition, insurers should be obliged to provide information for customers on changes to their charges and the changes should be justified. There is a need for transparency in increases in premiums. We made changes to provide for transparency in a range of other areas, including, for instance, in the sale of houses. Why can we not make changes in order that all increases in premiums will be displayed and justified? If we were to do this, we would get back to the point I made about data being massaged to justify what the industry wants to do and, in particular, how it treats risk.
We know that insurance fraud is a real issue which plays no small part in explaining the rise in premiums. Falsely exaggerated and invidious claims made by a small section of society are giving rise to additional expense for all law-abiding citizens in their premiums. In recent weeks there has been the much-publicised case of a number of individuals. I will not get into the specifics, but it was quite obvious from what the judge had outlined that it was one of a number of cases in which individuals had made fraudulent claims. In such situations it is quite clear that the people involved need to be penalised severely. Not alone that, the Garda also needs to get involved very quickly.
Insurance companies cannot be allowed to act as unregulated bandits. We must ensure the way in which they perform their functions is transparent and that they work within a code. We must ensure the task force to be set up will have real teeth and that the manner in which it will do its work will be quick. We must ensure we can isolate those who have been targeted who include the proprietors of small businesses, younger people, older people and people returning home to Ireland. They also include those who have older cars which have passed the national car test, NCT, but who are still being charged exorbitant premiums, even though their cars have been certified as being roadworthy for a year or two, as the case may be. The Labour Party will support the motion and looks forward to seeing how the Government will ensure action is taken to support people, in particular those living in rural areas.
I wish to raise another issue which has not yet been raised but about which I have a real concern - how end-of-life vehicles are treated. It is an issue for the insurance industry. It is a serious issue in terms of road safety and the insurance industry not wanting to take responsibility. It is my belief that, because of the way the legislation has been set, some end-of-life vehicles end up back on the road. In fact, I know that they do. I have spoken to breakers who have told me about the issue. These vehicles are being driven by young people and others because the legislation dealing with how end-of-life vehicles are treated is not sufficiently robust. I will not get into the detail of the categories, except to say there are four. In many cases, it is not mandatory for insurance companies to ensure end-of-life vehicles are scrapped. Unlike in the United Kingdom, there is no mandatory certification. It is voluntary. In some cases, insurance companies are not following up. Hence, some people ensure cars are sold on. If they have been imported, it is easier to do this and it causes premiums to increase. The insurance industry is not taking responsibility where it should. In many cases, a vehicle is left in the name of the original owner who, when it is involved in an accident, is held responsible. This is completely unacceptable, given that the insurance company involved has already written off the vehicle.
There is a gap in the legislation. I have spoken to officials in the Department of Transport, Tourism and Sport about the issue, yet months later nothing has happened. I ask the Government, through the Minister of State, to ensure it is dealt with because it will have a huge impact on road safety and is having an impact on the premiums charged by the insurance industry.
This is impacting on the insurance industry and on insurance premiums. The insurance industry and not individuals must be responsible for certifying that vehicles written off are written off. Once an insurance company assesses a vehicle it should become the owner of the pathway for the destruction of that vehicle. There are people driving on the roads of Ireland tonight in cars that should be scrapped but have not been because of a gap in the legislation.
Debate adjourned.