Insurance Industry: Motion [Private Members]

Deputy Michael McGrath

I move:

“That Dáil Éireann:

notes:

— that almost three years on from the collapse of Setanta Insurance in April 2014, some 1,666 open claims remain unsettled at an estimated cost of up to €95.2 million;

— that the liquidator of Setanta Insurance, which was prudentially regulated in Malta, has said he will not be in a position to meet more than 30 per cent of claims;

— the enormous and lasting damage caused to people's lives by the unacceptable delay in settling claims;

— that while people’s lives are on hold, a Supreme Court judgment is awaited on who will foot the bill for the collapse of Setanta Insurance;

— the collapse last year of Enterprise Insurance, which was prudentially regulated in Gibraltar, affecting 14,000 motor insurance customers with over €6 million in claims outstanding;

— that the failure of foreign-regulated motor insurance firms is directly pushing up the cost of insurance for motorists in Ireland;

— that under European Union (EU) ‘Freedom of Services’ rules an insurance company can be prudentially regulated in any member state and can avail of the 'passporting' provisions to sell insurance business in Ireland;

— that the Central Bank of Ireland has raised concerns about certain motor insurance firms prudentially regulated in Gibraltar and selling motor insurance business in Ireland;

— that the Department of Finance published in July 2016 the Report of the Review of the Framework for Motor Insurance Compensation in Ireland but there remains no agreement with the insurance industry on the implementation of the new proposals including the respective roles of the Insurance Compensation Fund and the Motor Insurers’ Bureau of Ireland;

— that in the event of another collapse of a firm selling motor insurance, there is still no agreement as to who is responsible for meeting the cost of claims and, above all else, no clarity for consumers; and

— that there are 23 insurance firms presently on the Motor Insurers’ Bureau of Ireland membership list as of February 2017 who are listed as ‘Freedom of Services’ firms including ten which are prudentially regulated in Gibraltar;

calls on the Central Bank of Ireland to:

— undertake an awareness campaign to ensure that motorists are fully informed about the different regulatory status of firms selling motor insurance in Ireland and that consumers are aware of the difference between prudential regulation and regulation for conduct of business purposes;

— formally raise any concerns it may have with the relevant European authorities so as to ensure that the system of regulation of insurance firms across member states involves common standards which are applied consistently; and

— address any staffing and resourcing issues which may currently restrict its ability to supervise and regulate the insurance sector; and

calls on the Government to:

— provide the necessary resources from the Insurance Compensation Fund to ensure the liquidator can address all outstanding claims without further delay, pending the Supreme Court judgment on who is responsible for the cost of outstanding Setanta Insurance claims;

— consider taking legal action against the Maltese and Gibraltar authorities for losses arising from inadequate regulation of Setanta Insurance and Enterprise Insurance respectively;

— finalise the Motor Insurance Compensation Framework so that there is absolute clarity on the respective roles of the Insurance Compensation Framework and the Motor Insurers’ Bureau of Ireland in the event of the future collapse of motor insurance firms selling in Ireland;

— provide an urgent update as to when the final bill for the collapse of Quinn Insurance will be known and the implications for the future application of the Insurance Compensation Fund levy of two per cent;

— raise concerns at EU level about 'regulatory shopping' by United Kingdom (UK) based financial services firms seeking to preserve access to the EU following Brexit;

and

— clarify the impact Brexit will have on the motor insurance market in Ireland, including the issue of 'passporting' in from the UK and Gibraltar.

The reason we decided to table the motion this afternoon relates to the collapse of Setanta Insurance in April 2014 and the mishandling of the fallout from the collapse. Following the collapse of Setanta Insurance more than 1,600 people with outstanding claims are none the wiser today than when the company collapsed in April 2014. That is a disgraceful position. The Government sat on its hands and shafted those people. They are the forgotten people.

I spent this afternoon ringing all the individual claimants for whom I had contact details who were in touch with me or the Fianna Fáil Party in recent years. Some of the stories I heard are absolutely harrowing. In one case the accident concerned goes back to October 2010.

Setanta Insurance contested that claim so it was not dealt with by the time it collapsed in April 2014 and it is now caught up in the liquidation of Setanta Insurance and the legal dispute about who is ultimately responsible for settling that claim. Another case involved an accident that happened in December 2012 where a driver was hit from behind. He has been in and out of work since then with very serious injuries and has undergone a number of medical procedures. Again, there has been no clarity for him or his family as to when that claim will be settled. He has not yet received a red cent arising from an accident that happened in December 2012. I have a number of such cases that I could read into the record of this House. We must collectively deal with this situation urgently. It is not acceptable that almost three years on from the collapse of Setanta Insurance, we are awaiting a court decision to deal with the issue.

What we are calling for in this motion is for the necessary funds to be provided by the insurance compensation fund to the liquidator of Setanta Insurance to deal with the outstanding claims and to look after the people who are caught up in this. The Supreme Court judgment will go one of two ways. It could find that the insurance compensation fund is responsible in which case, if the Government accepts our motion, the Government will already have paid out and the people will be looked after. Alternatively, the court could find that the Motor Insurers' Bureau of Ireland, MIBI, is responsible, in which case the insurance compensation fund can recoup those funds from the MIBI.

Last year saw the collapse of another firm called Enterprise Insurance. This company had a smaller presence in Ireland but is important nonetheless with about 14,000 policyholders and outstanding claims estimated to be over €6 million. Even today, as we are here on 1 March 2017, there is no agreed framework in place to deal with a scenario where a motor insurance firm collapses. The motorist caught up in the collapse of an insurance firm in Ireland faces a situation where the maximum payout they will get for their claim is 65% under the insurance compensation fund subject to an overall limit of €825,000. The balance is not being provided for and they will be seriously out of pocket. That situation potentially exposes every single motorist in this country because the notion of the collapse of a motor insurance firm is not that far-fetched. It has happened a number of times in this country over the past number of years. The Government published a new motor insurance compensation framework in July 2016 but no agreement has been reached with the industry, there has been no legislation to put those proposals into effect and so we are still in limbo. That is a crazy situation for this Government to stand over and it must be dealt with. The manifestation of that is there for all of us to see in the cases of Setanta Insurance and Enterprise Insurance. Heaven forbid if any other company was to collapse.

The other dimension to this is the fact that Setanta Insurance was regulated in Malta and Enterprise Insurance was regulated in Gibraltar. If one looks at the list of motor insurers on the MIBI list of those allowed to sell into Ireland on a freedom of services basis, one will find 23 firms according to our research. Those firms are prudentially regulated in another EU member state but are allowed to sell business into Ireland. For some reason, ten of them are prudentially regulated in Gibraltar. We know that the Central Bank has raised concerns with the authorities in Gibraltar about the ongoing licensing of firms there thereby enabling them to sell business into Ireland and other EU member states. This EU-wide system of regulation of motor insurance companies will only work if a common standard of regulation is consistently applied across all the member states. There is no evidence that this is the case. Why else would the Central Bank raise such concerns with the authorities in Gibraltar? We have Solvency II and the European Insurance and Occupational Pensions Authority but I am not satisfied that there is a common standard of regulation in Ireland today. This issue needs to be dealt with.

Consumers here are not being made aware of the distinction between firms that are prudentially regulated in Ireland and those that have their regulation passported in. When we all hear the advertisements saying that a motor insurance company is regulated in Ireland for conduct of business purposes, we assume that firm is regulated here, the Central Bank is crawling all over it and everything is okay but that is not the case. If the firm is only regulated here for conduct of business purposes, the Central Bank is not the prudential regulator and is not assessing the underlying financial health of that insurance company, its solvency and whether or not it has put sufficient reserves aside to deal with future claims. The Central Bank needs to conduct an awareness campaign to ensure that motor insurance consumers in Ireland are fully informed of that distinction. It needs to raise at a European level the issue of a common standard of regulation across the EU and deal directly with authorities in Gibraltar and any other member state where it has a concern about the nature and standard of the regulation.

We are calling for the Government to intervene and look after the people who are caught up in the collapse of Setanta Insurance and Enterprise Insurance. We are calling on the Government to finalise the motor insurance compensation framework to ensure that we have certainty and clarity in the event of the collapse of another motor insurance provider otherwise we are all exposed and will be dealing with many more individual cases down the line. We want clarity on how long the insurance compensation fund will require a 2% levy from all non-life insurance consumers in respect of the cost of Quinn Insurance.

The overall issue here concerns people in limbo. They are watching this debate hoping for answers. They are hoping against hope that this Government will finally act and help them. It is completely unacceptable that several years after the collapse of an insurance company, there is no certainty about who is paying out. I have heard of cases where solicitors on behalf of the liquidator of Setanta Insurance have advised Setanta Insurance policyholders that they could be held personally liable for the cost of that claim in the event of there being an ultimate shortfall in the liquidation. It is not good enough and must be dealt with.

Deputy Michael Moynihan

I congratulate Deputy Michael McGrath for putting down this motion. This is a cohort of people who are in limbo. They have exhausted every possible avenue to get answers to this ongoing issue but have not been able to get them. They are in a very precarious position. The Government needs to deal with this very serious issue instead of wasting time without bringing about a resolution. Many people caught up in this are extremely anxious about their position. It has affected the well-being and health of some people in a way I could not possibly describe. It is high time the Government treated this issue with the seriousness it deserves. There is a wider issue regarding insurance costs and the crazy way insurance premiums have increased that needs to be addressed. It is time for the Government to deal with this issue as urgently as possible.

Deputy Margaret Murphy O'Mahony

I thank Deputy Michael McGrath for bringing this motion before the House and commend him for the work he does in the field of insurance. It is very frustrating and disappointing that so many years after the collapse of Setanta Insurance, over 1,600 claims are still outstanding. The lives of the people involved in these claims are on hold. They find it very difficult to move without financial help. When we think of insurance, we are very conscious of the cost of it and how the premiums have increased. Very few of us think about who regulates the firms we insure our cars with. This motion will focus minds on that. It will also bring clarity as to who is responsible if another insurance company collapses. I ask the Minister of State, Deputy Breen, to support this motion.

Deputy Declan Breathnach

I am old enough to remember the PMPA saga, and all of us in this House are certainly old enough to remember the Quinn debacle where we are still paying a 2% levy which is expected to remain until 2037. This is unfair on the taxpayers.

This Setanta saga is another sorry issue. We know the history here. As Deputy Murphy O'Mahony stated, over 1,600 customers are affected. These customers are seriously out of pocket and many of them are living a nightmare.

There are many other companies operating in the Irish market which are registered in another jurisdiction. This motion calls on the Central Bank to conduct an awareness campaign so that consumers are informed as to who regulates the motor insurance firms with which they have their policies. Firms can pass themselves off as being Irish because they are selling their services in Ireland but many of them are only regulated here for conduct of business purposes. This needs to be made known to the consumer, loud and clear. When people hear in an advertisement that such a financial services is regulated here for conduct of business purposes, they assume it means the service is fully regulated here in Ireland. However, this is not the case.

It is planned that the role of the supervisory authorities will be significantly enhanced, including provision for more co-operation between member states. It should make a Setanta-type scenario less likely in the future but it does not solve the problem of those affected. It is important that we get the ruling of the Supreme Court as early as possible, considering that the hearing took place last October.

We also need to increase the powers of injury boards to determine more claims and reduce legal costs. We need more transparency in relation to those claims settled by insurance companies out of court. We also need to benchmark Irish awards against international standards. All too often the high rate of Irish court awards is blamed for the high cost of insurance and this also needs to be looked at. Only 65% of the outstanding claims of Setanta up to a value of €825,000 will be met. What about the remainder? What redress do they have? This is unacceptable.

Deputy Dara Calleary

I, too, compliment Deputy Michael McGrath on raising not only this issue, but insurance generally over a long period of months. It is a matter of enormous frustration, as I am sure the Minister of State, Deputy Breen, is picking up, that insurance costs are rocketing. People are shocked when they go to renew their insurance, yet all they see from this House is debates and reports being published which have no impact on the price of their premiums.

From PMPA to Quinn, Setanta and Enterprise Insurance, we keep wishing misery on ourselves. We keep not learning the lessons. If we had learned the proper lessons from PMPA, Setanta or Enterprise Insurance would not have happened. We need to draw a line under that period of insurance and offer certainty to those who are buying insurance products, particular motor insurance, in this country. We need to offer answers in relation to the ten companies that trade in Ireland but are registered in Gibraltar. What protections will be in place for customers after Brexit in terms of the companies' standing and their responsibilities?

We also need to shine a light on the motor insurance sector. Why are costs rocketing? I looked this morning at yesterday's report from the Central Bank on motor insurance which stated the sector has room to improve. If one is being targeted with a 40% to 50% premium rise, as are many people with no claims histories, full no-claims bonuses and no changes in their circumstances, there is more than room to improve. As the Minister of State with responsibility for enterprise and for employment, Deputy Breen, needs to shine a light on the practices in the same way that one of his predecessors, the former Minister of State, Mr. Noel Treacy, did many years ago, bringing a change to the cost of premiums and certainty to consumers.

We also need to give proper standing to returning emigrants. There is no sense in the Government encouraging emigrants to come back and take up careers in the country when they will be creased by insurance costs and not given any credit for a no-claims bonus from any other part of the world. In fact, insurance is one of the issues that is prohibiting and discouraging emigrants from coming back here to take up positions.

Insurance is a major issue, and a major cause of concern and worry. The Government needs to resolve the outstanding issues from Setanta and give certainty and some sort of balance to what is going on for consumers of insurance at present.

Deputy Frank O'Rourke

I welcome the opportunity to speak on this motion here this evening. I compliment my colleague, Deputy Michael McGrath, on bringing this forward. Indeed, the Deputy has been innovative and creative in bringing forward a host of measures over the past 12 months to deal with the issue of motor insurance and the escalation in premiums that is currently taking place and that is out of control. Deputy Michael McGrath has been working tirelessly in this regard over the past number of years and I compliment him and thank him for that work.

The problem here is threefold. There is no accountability, very little responsibility and no regulation. That is the issue and the consequences in that regard, and the effect it is having on the public, is why we are debating this motion this evening. That is the real problem.

Many people are waiting for this issue to be resolved and it is still not being resolved. We are coming in here, time and time again, as my colleague, Deputy Calleary stated, talking about this while the public is watching. People are looking to this House for hope, to get these issues resolved and to have regulation and policy put in place to stop the unacceptable increase in motor insurance premiums. It is no longer acceptable. We have been speaking about this for a number of years. It has been an ongoing issue since the Motor Insurance Advisory Board was disbanded in 2013 but, over the past year or 18 months, insurance premiums have increased by over 40%. This is unacceptable.

We have to stop talking about this stuff. We need action. The people out there who are looking in are desperate for help. The increases are putting them under serious pressure. Whether it is this issue or motor insurance in general, they are looking for results from this House, from the Minister of State, Deputy Breen, and from the Government which they are not seeing at present. We need to start letting the people see that we mean business and that this issue will be resolved. We need to ensure that the motor insurance issue in general is resolved, premiums and policies are brought under control and people get back the benefits they are entitled to, and that we will stop this happening again. I hope we will stop talking and deliver, and that the people out there watching, who elected us all to do a job on their behalf, will see solutions delivered in this regard.

Deputy Fiona O'Loughlin

I commend my colleague, Deputy Michael McGrath, on bringing this motion forward.

Deputy Michael McGrath attended a public meeting in Kildare with me last November where many of the queries from the floor that night related to insurance. They came from concerned motorists, business owners and taxi drivers who described how the increases in premiums had affected their lives and their livelihoods. It is the biggest issue facing motorists today.

When I look at the case of some of my constituents in Kildare who have contacted me over the past 12 months, I can see how this has impacted on them. A gentleman from a haulage and demolition group saw the insurance for his fleet increase by 100% and he had to let staff go. A gentleman from Castledermot, who is 64 years of age, has been driving for more than 42 years, has never made an insurance claim and has no penalty points, saw his quote go up by 33%. A lady from Rathangan, who has been driving for 50 years, has never made a claim and has no penalty points, saw her premium go from €389 to €758. Another lady I know, who is a returned emigrant, had to pay €1,924 in 2016. She had never made a claim on her insurance but had spent three years outside Ireland and did not have a no-claims bonus on her return. That is disgraceful.

There needs to be greater disclosure around policy renewal notifications and robust action on false and exaggerated claims. There needs to be greater consistency in court awards in personal injury cases. Returning emigrants need equitable treatment and their driving experience abroad needs to be taken into account.

There is an obligation on the State to respond immediately to these soaring premiums before they do any further damage to the economy. We have debated it enough. It is time for action.

An Ceann Comhairle

I call the Minister of State, Deputy Pat Breen, who I understand is sharing with Deputy Tom Neville.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy Pat Breen)

I welcome the opportunity to address Dáil Éireann today on this motion. The matters raised are very important and I would like to state that while the Government will be abstaining from the vote on the motion for reasons which I will explain, there are elements of the motion with which we can agree.

There is no doubt that the insurance sector in Ireland has undergone a period of instability. The liquidation of insurers selling insurance into Ireland has had a major impact on consumers. The placing into liquidation of Setanta in 2014, and the subsequent legal action, The Law Society of Ireland v. the Motor Insurers’ Bureau of Ireland, MIBI, highlighted weaknesses with the current insurance compensation framework in Ireland.

Prior to this litigation, the insurance compensation fund, ICF, was expected to have met the third party claims up to a limit of 65% and a ceiling of €825,000 per claimant. However, the High Court and the Court of Appeal held that the MIBI was liable for compensating third parties. Should this decision be also upheld by the Supreme Court, virtually all Setanta claims will be paid in full. The Supreme Court appeal was heard in October 2016, and we are now awaiting its judgment on this matter.

Inquiries have been made by officials to try to establish when the decision will be handed down, but no indication has been given as to the timeframe involved. Until we receive the judgment, it is unlikely that third party motor insurance claims can be processed, as currently MIBI is liable and the industry, which finances this arrangement, will not pay out unless confirmed by the Supreme Court.

The Government recognises the reason this motion has been brought and in broad terms is sympathetic to many of the issues raised by the Members today. The very legitimate concerns about the lack of accountability of the Maltese authorities for the liquidation of Setanta are acknowledged. The delay in settling claims also has been unfortunate. However, it must be stressed that this aspect is completely outside the control of the Government because of the ongoing court case regarding which body should pay the compensation.

From the perspective of the consumer, much of what is outlined in the motion is not unreasonable. However, the Government has two concerns. The first relates to providing the necessary resources from the ICF to ensure the liquidator can address outstanding claims without further delay. The difficulty is the fact that the High Court and the Court of Appeal have found that the ICF is not liable for these claims. Instead, they have found the MIBI liable. Consequently, compensating policyholders from the ICF would be directly conflicting with the decision of the courts and could be interpreted as undermining their authority.

The second relates to giving consideration to taking legal action against the Maltese and Gibraltar authorities. This would involve engaging lawyers in Malta and Gibraltar to seek further information in respect of the failures of the regulators to uphold their legal duties to establish whether a valid claim arises. The advice from the Department of Finance’s legal unit is that there is insufficient likelihood of a successful action to justify the costs which would be incurred in taking this course of action.

In terms of what is being done, there are a number of items in the motion I would like to address. In regard to Setanta, I understand there are 1,658 open claims. It is acknowledged that this figure is decreasing slowly but that is due to the ongoing court case. Once the Supreme Court rules on where liability falls, progress on outstanding claims can be made.

With regard to enterprise, I am advised that a letter has been received from the Government of Gibraltar outlining that there are currently 233 live claims from Irish policyholders with a reserve value of €7.4 million. However, the reserve figure is under review. Wrightway Underwriting Limited has been appointed to manage claims to enable the liquidator to adjudicate and admit them as insurance claims in the liquidation. The letter details the work that is ongoing within the Gibraltar Financial Services Commission to reduce the live claims and notes that the commission maintains a positive working relationship with both the Central Bank and EU authorities. Claims are, therefore, being actively managed.

It is acknowledged that, with the failure of Setanta and the uncertainty that followed, the whole compensation area needs to be reviewed. Consequently, a review of the framework for motor insurance compensation was initiated and a report was published in July 2016. It is expected that a legislative proposal to implement the report will be brought to Government for approval in the coming months and this will bring clarity on the respective roles of the ICF and the MIBI in the event of a future collapse of a motor insurer.

The motion asks for an urgent update as to the final bill for the collapse of Quinn Insurance. I understand this is estimated to be in the region of €1.1 billion before any potential recovery from the court action Quinn Insurance is taking against its former auditors. It is not possible to give an exact timeframe for the final bill, but it is unlikely to be before 2020.

The issues which the motion asks the Central Bank to carry out are a matter for the bank to consider. However, the bank has indicated that it is conducting a thematic review and inspection of managing general agents, MGAs, that have been appointed to carry out business on behalf of insurance undertakings from other member states operating in Ireland on a freedom of service basis. This review is of relevance to the request for the Central Bank to undertake an awareness campaign.

The Central Bank has confirmed that it fully participates in EIOPA in the establishment of high-quality common regulatory and supervisory standards and procedures. The Central Bank has an ongoing engagement with relevant European authorities in order to ensure common standards are applied consistently. I am advised that the bank has engaged with EIOPA on the specific issues raised in this motion.

With regard to the issue of regulatory shopping by UK based financial firms seeking to preserve access to the EU following Brexit, this is an issue which the Government has serious concerns about and which has already been discussed in the House. At a political level, we have been in communication with our European partners on this matter. We believe that it is important to have a transitional arrangement to protect the security of our financial system because of its importance in underpinning day to day business. A transitional arrangement would allow negotiations to take place in a calm and safe environment and would ease concerns about other jurisdictions potentially giving consideration to making commitments on the level of regulation and supervision to such financial firms. We must ensure that the level playing field is protected across the EU.

With regard to Brexit, it is important to note that the implications of Brexit are unclear. After the negotiations have concluded, the issue of passporting in from the UK and Gibraltar will be clearer. However, ultimately, should the position of passporting not be satisfactorily resolved, insurers which currently have branch operations or which conduct freedom of business into the State will have the option of applying for an authorisation from the Central Bank to conduct business in the State.

The Government understands that there is frustration with the slow pace of progress on the Setanta liquidation. However, once the Supreme Court judgment is issued, and I hope that will happen in the next few months, it should be possible for claims to be paid out either through the MIBI or the ICF within a reasonable period of time. Unfortunately, as I mentioned already, we do not believe it is possible to pre-empt this decision by paying such claims through the ICF immediately.

Finally, as indicated at the outset, the Government will abstain from the vote on this motion.

Deputy Tom Neville

I, too, welcome the fact this issue has been raised. In my inaugural speech I said it was the issue raised with me by people on the doorsteps. It was highlighted for me when, as a returning emigrant, I was hit with the news that I no longer had a no claims bonus.

I welcome what the Minister of State, Deputy Eoghan Murphy, has done in recent months regarding the generation of the report, the tasks on hand, the priorities set and the timeline that has been put down. We are trying to tackle and change the overall industry so it is a big ship to move, notwithstanding our responsibility to consumers who are feeling the pressure from this in that any disposal income they are earning, with an improved economy and more jobs being created, is starting to be etched away by the rising cost of car insurance.

It must be highlighted that there are a number of discrepancies within the industry in that products can be priced differently when people are seeking quotes on the telephone. A major problem highlighted to me is that an insurance company can take a product, put a different name on it and sell it at a different price. It is the same risk, the same policy and the consumer will get the same return but it is sold at a different price, and the consumer does not know that. That is the first issue I want to highlight.

I find it difficult to get my head around the issue of the cost of insuring older cars. The owners must do an NCT every year but because their cars are ten, 12 or 14 years old they are told they must pay a higher insurance premium. I do not understand the risk with regard to the car because it passes the NCT.

As a result of the improved economy, vehicle sales in the first quarter of 2016 were 68% of what was sold in 2012. That market is much more buoyant.

The final issue I want to raise is non-disclosure of previous claims. It is often the case that people are denied claims because they may not have disclosed previous claims but many of the questions being asked by the insurers are vague. That issue must be tackled also.

I understand there is a responsibility on the Government to drive this issue and that is the reason I welcome the motion, but there is a responsibility on the industry also.

Deputy Pearse Doherty

I welcome this debate and thank Deputy Michael McGrath for bringing forward the motion and allowing us to discuss it. I will be sharing my time with my colleagues, some of whom have yet to come into the Chamber. I understand the Ceann Comhairle has the list of names.

This debate focuses attention on the thousands of customers who have been left in legal limbo after the collapse of Setanta Insurance.

I know some of them personally. Some of them are my friends. Some of them want to start their own businesses but have to wait for the settlement to which they are entitled and are eagerly awaiting the court's decision. They should never have been in this limbo in the first place. It is clear they are innocent victims of a bigger battle and we need to take them out of the battle, which is why Sinn Féin will support the motion. This is a farce which has been rumbling on for far too long and I hope the Supreme Court will soon make its decision. In the meantime, the Government has put forward a proposal to deal with cases such as this, but they are cases which will happen in future.

This is in large part a mess of the Government's own creation. Not for the first time has the Attorney General provided what two courts have since found to be the wrong answer to the question asked. The Attorney General's advice has been wrong in this case and this is worth noting as another committee is discussing the issue of water charges. The Motor Insurers Bureau of Ireland, MIBI, has appealed twice and at no point was there anything stopping it from paying out these claims without prejudice. It initially accepted it was liable but then backtracked on legal advice, including advice from the Attorney General. Instead of challenging this, the Government rolled over and accepted it. This was back in 2015. I believe that in all likelihood when the Supreme Court makes its decision we will be back in the same position we were when the Minister, Deputy Noonan, told me on 30 April 2015 that MIBI would pay out and it would be the body responsible for making good the claims. As things stand, the High Court and the Court of Appeal have stated they agree with the Law Society that the MIBI is liable. This is the interpretation of the law as it currently stands, and it is law as it stands until the Supreme Court rules one way or the other.

In reality, the motion is asking us to make an exception. I welcome the focus on this issue, which is why I will support the motion. The motion asks that the Government ensures the Insurance Compensation Fund, ICF, pays out. The legislation is quite clear it is the President of the High Court, upon application, who will make this decision, but nonetheless there should have been a remedy before now. For many years we have argued the Insurance Compensation Fund would have been the remedy. While the MIBI and the Insurance Compensation Fund can argue the toss, the fact is that ultimately it is the consumer who will pay for Setanta, one way or the other. The MIBI and the Insurance Compensation Fund are ultimately funded by the industry or the consumer but, at the end of the day, whether it is through increased premiums or a direct levy it will be the consumer who pays. The advantage of the Insurance Compensation Fund paying the liquidator is it can stretch the payments over a long period of time and we can see this with the Quinn Direct bill of €1.1 billion. I note the Fianna Fáil motion speaks about regulatory failures and taking action against regulatory failures. The €1.1 billion which must be paid by insurance consumers for the next 20 years happened on Fianna Fáil's watch. This is why we were labelled the wild west. It was not with regard to the banks but insurance the quote was attributed to this country and it is disgraceful that insurance consumers will continue to have to pay the bill for many years to come.

The motion does not deal with the fact the Insurance Compensation Fund is limited to paying out 65% of a claim or up to €825,000, whichever is lower. There are people with claims against Setanta Insurance which run to multiples of the upper limit because they are in serious life-limiting circumstances as a result of an accident. Full compensation should be paid out. If people are due €100,000 the payment should not be €65,000. We are very clear and for many years we have argued the Insurance Compensation Fund legislation should be altered to allow for 100% of the claims to be paid out in the case of Setanta Insurance. The motion before us does not deal with this issue. It is the core issue on which we should focus because if the Supreme Court overturns the High Court and the Court of Appeal and decides it is the Insurance Compensation Fund which must pay out, let us remember that claimants will receive only 65% of what they are due. In my view this is wrong. While the Department proposes to abolish the cap, it would still apply in cases such as Setanta where a company is in liquidation and insolvent.

I wish to discuss some of the myths in the motion. We reject the notion implicit in the Fianna Fáil motion that this contributes in any way significantly to increases in the cost of insurance. Even if the industry had to pay out the entire €19 million bill tomorrow, it would only be a drop in the ocean of the increases introduced in recent years. This is a myth peddled by the industry. When I met representatives from the industry privately and when they came before the committee it was at the top of their agenda, but it does not stand up to scrutiny and no report commissioned by the Oireachtas committee or the Government stands over this claim. Without doubt, the industry needs clarity on the legal situation, but to present this as a means of tackling the rip-off of recent years is false.

There is also an insinuation it was fully down to lax foreign regulators but this is not the entire story. Setanta Insurance was an Irish company with an Irish director and Irish shareholders right up to the end. The Maltese certainly should have done a better job, but the Irish Central Bank allowed the company to continue to sell insurance for a number of months after it knew of issues. I know this through freedom of information requests. It is not unprecedented that an Irish insurer would behave recklessly and go bust. We have a terrible track record in this country and €1.1 billion is the cost.

I ask Fianna Fáil to let us know whether it no longer supports the passporting of financial firms throughout the EU, because this would be a major shift in policy by the party and it is not clear from the motion. My big concern is nothing will happen. The Government will abstain and the ICF will not pay out. It is good we are drawing attention to it, but this should have been sorted out several years ago. We should have amended the legislation and allowed for the ICF to pay out. Doing it in the mouth of a Supreme Court ruling is not the time to do it, but it is a welcome focus on the issue.

Deputy Martin Kenny

The main focus of the motion is Setanta Insurance and I am very conscious of it because in my constituency I have come across many people who were caught out. Many people who were insured by Setanta Insurance were farmers, people with Jeeps and vans and sole traders. This was mainly the market it targeted and these people have been badly affected.

It must be our priority that claimants receive their compensation as soon as possible and it should be paid out without any cap. It is very strange to have a 65% cap on the Insurance Compensation Fund. It is not sufficient because people in this country must ensure their vehicles. The State makes people get insurance. It is not optional and people must do it, but when something goes wrong the State has put in place a situation whereby people can only receive 65% of what they rightly deserve as part of their claim. This is a huge issue.

It is not good enough that people who are legally obliged to have insurance are not protected when something goes wrong. This is the nub of what this is about. This is not the first time an insurance company has gone bust and left customers in the lurch. As has been stated, there are many instances of this and there need to be safeguards to prevent it in future. Providing these safeguards does not mean the cost of insurance premiums must rise. People are fed up listening to so-called justifications for the rising costs of insurance from an industry which likes to pretend its only motivation is to provide insurance. Its real motivation is profit but it pretends it is not. The increases introduced by the insurance industry in recent years would more than cover the €90 million it would cost and the people do not want to hear any more whingeing from the insurance industry.

Setanta Insurance may have been based in Malta but it was an Irish company and there is no justification for blaming poor regulation abroad for this situation. It is not as if Irish companies have not behaved carelessly and gone under previously. The nub of this is the consumers are those who can least afford to suffer and be left without compensation.

We also have the issue, which was mentioned earlier by Deputy Neville, regarding young drivers. They cannot get insurance that does not cost thousands. We have a situation in rural areas where many people with a car of more than ten years of age will not be quoted for insurance, but the car has an NCT and is supposed to be roadworthy according to the State. Many issues need to be dealt with. The no claims bonus issue is a big problem for people who return from abroad. If people are abroad for more than three years their no claims bonus is gone and they cannot bring it home, although they may have been driving in a much more dangerous part of the world than here. These rules have been put in place by an industry which wants to cripple the public with more costs.

Many people who had Setanta Insurance were owners of small commercial vehicles and vans, the loss of which would mean, for some of them, a loss of their business. Not many people with small businesses would have the cash to replace a vehicle while still waiting for the payout of an insurance claim. This is not to mention those who are waiting for the repayment of their premiums, which they bought in good faith but then had to go out and insure their vans again.

It is not good enough for people to be left hanging on while the Supreme Court makes a judgment. The insurance industry cannot be allowed to call the shots and the Government must step up to defend clients and ensure people get their compensation.

Deputy Donnchadh Ó Laoghaire

Cuirim fáilte roimh an rún seo. Is maith an rud é go bhfuilimid ag labhairt ar chúrsaí árachais arís. Is ábhar tábhachtach, conspóideach agus achrannach é le tamall anuas. I welcome Deputy Michael McGrath's motion. I also acknowledge the thousands of people, former customers and claimants, who have been left high and dry and in legal limbo following the collapse of Setanta. They have been shafted, have unjustifiably lost money and found themselves in positions of extreme hardship, with 1,600 open claims unsettled at an estimated cost of €95.2 million. They need this issue to be resolved. The poor handling of this issue has further complicated and aggravated the situation as well as their frustration and the Government is partially to blame. As stated by Deputy Pearse Doherty, the MIBI has appealed twice, having initially accepted it was liable before reversing its decision. It is difficult to understand why the Government did not challenge this. The MIBI could have paid out without prejudice and it is likely that it is liable, pending the Supreme Court action.

I support the motion to provide the necessary resources from the insurance compensation fund to ensure the liquidator can pay out all outstanding claims and I hope this expedites the payment as required. I support the call for there to be no cap, because some people have sustained grievous injuries and are in a position of extreme hardship whose full costs need to be met.

The issue of who underwrites insurance and in which country a company is regulated is important. International companies coming from states with poorer regulatory frameworks than Ireland to provide insurance by passporting it into Ireland is problematic. We have had enough difficulties with locally-based companies and do not want the added problem of people coming from countries with even weaker regulatory frameworks. We do not accept the idea that the Setanta problem was solely the fault of weak foreign regulation - Malta in this case. Setanta was an Irish company with Irish directors who must take responsibility for what happened to that company and for its recklessness, for which consumers have been left to pay. We do not accept that this is the reason for the enormous and outrageous increases in motor insurance in recent years, with drivers seeing average increases of 60% in the cost of premiums since late 2013. There are examples of increases of 200% and 300% and cases such as Setanta cannot be considered as solely responsible for the outrageous increases in insurance premiums. The market is being distorted by the greedy behaviour of insurance companies.

The Minister needs to recognise the driving records of returning emigrants. If we are happy enough to allow companies from states with very weak regulatory frameworks to provide insurance to Irish companies, why are we not willing to allow Irish motorists to have their driving records recognised when they return from abroad? I have come across cases of people being quoted between €4,500 and €6,000 when they come home, having spent a number of years abroad, to set up businesses here and restart their lives in Ireland. One man told me he was practically ready to get back on the flight to Australia after a quote such as this. In a response to a parliamentary question, the Minister said actions were being taken to establish a protocol but that will not be until the end of 2017, effectively the start of next year. These people have already waited far too long for this issue to be dealt with and many more returning emigrants will be faced with outrageous premiums. I ask the Government to ensure the protocol is brought forward as a matter of urgency.

Deputy Sean Sherlock

We support the motion. Setanta's collapse has left in its wake 1,700 open claims for compensation, which remain unsettled at a cost of approximately €95.2 million. The collapse of Enterprise Insurance has left 14,000 motorists with €6 million outstanding. One company was regulated in Malta, the other in Gibraltar. Of the 39 insurance companies listed as members of the Motor Insurance Bureau of Ireland, 11 are domiciled in Gibraltar when one excludes the Lloyds list.

The proceedings before the Supreme Court allow interested parties to hide until such time as the Supreme Court has found in favour of one side or the other. The Government may also be hiding behind the Supreme Court decision because, although it announced the extension of the insurance compensation fund in July 2016, it seems the Minister is now saying a legislative proposal to implement the report will be brought to Government for approval in the coming months. He did not use the words "heads of a Bill" and there seems to be some slippage already in the timelines for legislation to provide certainty in this matter.

The finance committee has done much work to tackle the issues articulated by Deputies Neville and Ó Laoghaire on the particular circumstances in which motorists find themselves, particularly those who have been priced out of the market by virtue of the fact that they had to emigrate and are now returning home. We require certainty to plug the glaring lacuna in the legislation around this matter. If it is not addressed, there is the prospect of motorists having loading costs on their premiums of up to €80. The MIBI documentation contains estimates that the cost of claims for their members, against uninsured and untraced drivers, is north of €58.4 million. The MIBI states that Setanta poses a liability of €90 million, the impact of which is an additional €52.

The Supreme Court has to iron out how Irish law understands the responsibility of MIBI. Other Members have referred to timelines but this goes back to September 2015 and the first High Court judgment. The latest instalment was the October 2016 reserve judgment. I am delighted that the Government is abstaining on the motion because there is agreement on the broad principles of the motion. The consumer demands are very clear.

They want transparency and easily accessible information on the products they are purchasing. They also want to know, in a simple format, if the liquidity and provisioning arrangements for those insurance houses, from which they are purchasing products, are robust so as to offset the risk of non-payment of claims in the future. Consumers quite simply demand transparency and easily accessible information, which is something that will have to be dealt with.

I acknowledge what the Minister said about the Central Bank conducting a thematic review and inspection of managing general agents or MGAs. However, we need further information and clarity on what that means.

While we support the motion, it is important to have legal certainty on the Setanta issue and other insurance houses. Motorists with legitimate expectations have been waiting too long for justice, despite having judgments in their favour for recognised claims.

Deputy Richard Boyd Barrett

I will probably not take all my time because I have to rush off to a Right2Water meeting at 6 o'clock.

Deputy Michael Healy-Rae

We will take the Deputy's time.

Deputy Mattie McGrath

It is raining heavily outside.

Deputy Richard Boyd Barrett

Yes, I know, and still some people want to charge for it. It is extraordinary, is it not?

I support the proposals in the Fianna Fáil motion relating to the collapse of Setanta Enterprise Insurance and generally unregulated motor insurance firms and the measures needed to deal with the consequences. In particular, I support the importance of compensating those who have been affected. It is reasonable to pursue the authorities of the jurisdictions that did not seem to regulate properly to try to recoup some of the money it will cost us to ensure, as we should, that those who have been affected by this are compensated. They are victims of a failure of the authorities in Europe and here to have a properly regulated insurance industry. That is what it comes down to.

I support the proposed measures but we would go a lot further. This all relates to a race to the bottom that one gets in just about every area, including insurance, as a result of unregulated, free-market globalisation. We got it with banking, multinational corporate tax evasion and insurance. There is always somebody who is trying to get around the regulations for profit by under-provisioning. They have an unsustainable business model which means that when they get into trouble and are not making enough profit, they decide to go out of business. The poor customers, or more widely the general public, pick up the bill when the profit-seeking entity goes bust.

Failures of regulation and the inadequacy of pre-established compensation structures mean that we must deal with the consequences. The problem is that we then move to close the door after the horse has bolted. We keep doing this in the case of insurance. In so far as we must compensate the innocent victims, we create another problem because we must load levies on everybody else's insurance. Insurance thus becomes unaffordable and people get screwed on premiums or are not getting insured at all, as is increasingly the case.

Last week we talked about cohorts of people seeking insurance. Some taxi drivers, who require insurance cover to make a living, cannot get it because costs have risen so much. We cannot get credible information, or in some cases any information at all, from these insurance companies to justify their premium increases. One aspect is the cost of the collapse of other private entities, but they also throw out all sorts of other excuses, including legal costs and, as they see it, the unnecessarily high level of awards. They blame juries or fraud, but we do not really know the truth of the matter because we cannot get the actual information from insurance companies.

How, therefore, do we resolve this matter in such a way that the situation does not continue to get worse? While the proposed measures before us are some response to the immediate situation, are we going to be back here again fairly soon? Following a particular crisis, like the collapse of a few insurance companies or the collapse of the banking sector due to light touch regulation, we say we are going to regulate, let us have more regulation and it will never happen again because we are going to regulate. Shortly after the commitments to regulate, however, we have bleating by the for-profit institutions, be they insurance companies, banks or multinationals, saying we are going to have to lighten up this regulation because it is not viable for them with that level of regulation, or else they will have to jack up premiums. We are in this vicious cycle where we end up toing and froing between picking up the cost of not having enough regulation or the adverse consequences of compensation packages, and trying to regulate these guys. And so it goes on.

Our answer to this conundrum is a State insurance company. That is what is needed. What is the advantage of that? First, we would not need to have committees sitting for weeks on end trying to find out the truth of what is going on in the insurance company. We could actually access the information because we would have it. I am not saying that all State bureaucracies are perfectly transparent in terms of the availability of information, but at least notionally we are entitled to the information.

It would work as long as we did not have this arm's length nonsense whereby we own a bank but have no responsibility for what it does and cannot in any way influence its decisions. That is what we do when we have banks, insurance companies or any other public enterprises, including semi-State companies. We are told that is because we have to maintain the commercial independence of these entities, but that is not what we should be doing, particularly when the public always pay. The public pay higher premiums, general taxation and compensation claims when these institutions collapse. It seems to me that if the public pay every single time when anything goes wrong, maybe the public should run them. Then, at least, they would get the benefit of any profits they generate, as well as having some influence over the policies they set for premiums, business models and necessary provisioning.

I am absolutely convinced that would be better, more efficient and cheaper. I recently brought to the attention of the Minister of State, Deputy Dara Murphy, the example of a Manitoba insurance company which was established directly after a series of hearings, just like the ones we had on motor insurance. Unlike our ones, where we have 77 recommendations that basically do nothing except try to perfect a market which is not perfectible, the Manitoba authorities set up their own not-for-profit insurance company to provide affordable, basic third-party insurance for everybody.

It will eliminate discrimination against particular cohorts of drivers. It will base risk on individual assessments of those drivers and penalise them if they turn out to have a bad record but not penalise whole cohorts, as these insurance companies do on spurious reasons in order to make money. That is what I think we should do. Otherwise we will be here again. We will not resolve the dilemma and it will just keep going around. In a year or two we will be debating the collapse of some other unregulated entity, or for that matter, even a regulated one.

Deputy Maureen O'Sullivan

For me the whole area of insurance should be about assurance and reassurance and that, in the event of an accident, an injury or a fatality or, with property, in the event of theft, damage or vandalism, people feel assured and reassured that their insurance will cover them. What we are seeing in the insurance industry recently, however, is this whole spiralling. The word I would use to describe it is "excessive". There is a subtle form of blackmailing to have insurance for every possible eventuality. We are seeing claims being sought and claims being granted by insurance companies that are highly controversial and really defy all common sense, with the result that everybody's insurance premiums increase.

I want to look at three groups in particular. I know we are talking about Setanta and Enterprise in particular, but these particular groups have been in touch with me to a considerable extent. Taxi drivers are one such group. They use their cars to make a living. Numerous constituents who are taxi drivers cannot afford to work now because of the insurance increases. These are drivers who have completed their public service vehicle tests, they have kept their vehicles up to stringent standards by completing all the service vehicle checks and they have to deal with increased anti-social behaviour. The increases are making it increasingly difficult for them to work. A couple of them have said that they have been quoted excesses of €10,000 per year.

Pensioners are another group. Many insurers will not insure persons over the age of 75, full stop. They are not even looking for medical documentation. We know the reasons that pensioners can rely on their cars: for getting about, a sense of independence and leisure activities. For some of them their cars are a necessity, sometimes to pick up grandchildren. In the case of retired people on State pensions who cannot afford to insure their car we are talking about increasing isolation and loneliness. One particular constituent saw a 70% increase in her insurance premium this year. This was a lady who had a no claims bonus for more than 20 years and had not changed her car. She is now unable to use her car and she lives in an area that is not best served by public transport.

We see the working poor and the low and middle income families. These, again, are families who rely on their cars for everyday use, whether it is for dropping children to school, for appointments or for work. The increase in the cost per annum is just phenomenal. We know that part of the problem is companies like Setanta and Enterprise, foreign registered companies, going into liquidation. It is quite astonishing that the whole industry is taking collective responsibility. As somebody pointed out, it is somewhat like one supermarket going bust and the rest of them coming in to bail it out.

The choice of the insurer is for the individual but there has to be a real knowledge and awareness regarding the companies and where they are regulated. There is a need for common standards across all the jurisdictions in the EU. We have to acknowledge that very often cheapest is not the best value.

With these massive increases we are seeing an increase in people not taking out insurance. We see that in recent figures from the Garda. That is, of course, creating even more problems. We especially see that with young drivers when accidents occur. One of the recommendations in the report is to establish a fully functioning database which would allow gardaí to check insurance compliance through technology like automatic number plate recognition.

I believe the individual is doing his or her best in terms of insurance but I do not see the insurance companies meeting people half way. We know the discrepancy between what the legal profession is saying and what the insurance industry is saying regarding costs. I am sure the truth lies somewhere in between.

We are seeing staggering amounts paid out by insurance companies, some €1 billion yearly in 2011 and 2012, slightly less in 2013 and €1 billion in 2014. There is a need to tackle these overly generous awards. They are not proportionate to the claim. We have to get out of this compensation culture that so many are in because it is not fair to those who have genuine claims.

Deputy Catherine Connolly

I thank Deputy Michael McGrath for tabling this motion. I have no hesitation in supporting it. I want to say there is quite a lot of merit in what my colleague, Deputy Boyd Barrett, has said in respect of a State insurance company. It should be looked at.

Since the 1980s, the compensation fund has advanced moneys to the former PMPA, to the former Insurance Corporation of Ireland, to Quinn Insurance and lately we are looking at Enterprise. Outside of housing and health, the rise in the cost of insurance is the issue causing most concern to people. The figures are staggering. They are not sustainable.

Into that comes the narrative of the insurance companies. I have to disagree slightly with my colleague here, much to my reluctance, but I believe the narrative of the insurance companies is to put the blame on the claimants as opposed to looking at what are the problems. In this regard I have previously quoted the former chairperson of the Personal Injuries Assessment Board, PIAB, Dorothea Dowling. She points out, in respect of the narrative being spun by the insurance companies, it is only because of the existence of PIAB, with whom all injury cases must be registered, that we know the total average number of claims is 31,576. She said PIAB can only account for 9,046 between the courts and PIAB. There are 22,530 claims on which only the insurers have the information on who is getting what. That should be borne in mind when listening to the narrative from the insurance companies as to what is leading to increased costs.

Separately and entirely, there are 151,000 people on our roads without insurance. Separate from that again, four out of every ten accidents involve alcohol. They are some of the reasons leading to insurance claims, in addition to the failure of the insurance companies themselves to give information. In respect of the review of the framework for motor insurance compensation in Ireland, published last July, which I have read and downloaded, none of it has been implemented. We hear tonight that something is going to happen in the next few months. There were four very specific recommendations. I do not know what the delay is in implementing them.

If we go to the motion in respect of Setanta itself, in a previous life I had experience on the ground of the absolutely appalling suffering of victims of car accidents who find themselves in the position of having no cover. Setanta got into trouble in 2014, which is three years ago. We have this framework, published last year, but absolutely no action on it.

There are a number of things we can do. First, I welcome the motion and all of the recommendations in it. Second, I am looking at the framework and I specifically ask the Minister what accounts for the delay in implementing the recommendations of that review. Why has it not been done, in particular in relation to the database? I see absolutely no reason for a delay. That is one of the specific recommendations of the report. It has not been touched.

I will leave it at that. I happily support the motion without any reluctance.