Joint Committee on Public Petitions and the Ombudsmen díospóireacht -
Thursday, 30 Nov 2023

Reform of Insurance for Thatched Heritage Buildings: Discussion

An Cathaoirleach

I will read some formal notices. I remind members of the constitutional requirement that they must be physically present within the confines of the place in which Parliament has chosen to sit, namely, Leinster House, in order to participate in public meetings. I will not permit a member to participate where he or she is not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting.

Our next business is our engagement regarding petition No. P00036/21, reform of insurance for thatched heritage buildings and related European Commission correspondence. The petition is from Ms Katie McNelis and the correspondence received from the EU Commission relates to EU Directive 2009/138/EC Solvency II. Ms McNelis appeared before the committee on 28 September 2022 to present her petition. Unfortunately, she is unable to be with us in person today but is viewing the proceedings online and we welcome her. The committee has agreed that I will read Ms McNelis's submission into the record at this meeting.

This engagement will be split into two sessions. First, from 1.30 p.m. to 2.30 p.m. we will hear from the Minister of State at the Department of Finance with special responsibility for financial services, credit unions and insurance, Deputy Carroll MacNeill, and the Minister of State at the Department of Housing, Local Government and Heritage with special responsibility for nature, heritage and electoral reform, Deputy Malcolm Noonan. From 2.30 p.m. to 2.45 p.m. we will have a brief meeting with the Ambassador of the Republic of Kenya, H.E. Mr. Michael Mubea Kamau. Second, from 2.45 p.m. to 3.30 p.m. we will meet representatives from the Alliance for Insurance Reform: Mr. Brian Hanley, CEO, and Mr. Peter Boland, board member; and with representatives from Insurance Ireland; Ms Moyagh Murdock, CEO; Mr. Florian Wimber, director of advocacy and public affairs, and Solvency II lead; and Mr. Michael Curtin, manager of regulation and policy development.

Before we begin, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if witnesses' statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Before we hear from our witnesses, I propose the committee will publish the opening statements and submissions on the Oireachtas website. Is that agreed? Agreed. I have a submission from petitioner Ms Katie McNelis, which the committee has agreed I read into the record, and then we will hear from the Ministers of State. The submission from Ms Katie McNelis begins with a brief background to the insurance issue:

The insurance market for thatch properties doesn’t function normally. There are currently no insurers open for business in terms of quoting for new business at affordable prices. So, even thatch owners

who have insurance are unable to shop around to find better quotes. By our estimate, up to 50% of thatch properties are not insured. This is due to insurance cover being either unavailable or unaffordable. On the flip side of this, there is a considerable cohort of thatch properties which are insured. Many of these are insured at affordable rates and have been for many years. As far as we know, these owners are all covered by the same Irish owned insurer - FBD. FBD clearly has managed to maintain their thatch insurance business as profitable. Why else would they continue to renew these thatch policies at stable and affordable rates? FBD (a publicly quoted Irish PLC) is very profitable overall. It’s accounts and financial statements are publicly available. However, whilst FBD continues to renew its existing thatch policies at affordable rates, it has decided not offer any new thatch policies and is effectively closed to new thatch business. This is disappointing. But their thatch policy rates are available as examples of Irish insurance industry thatch benchmarks. The remaining thatch owners who are not fortunate to be covered by FBD are stuck with (mainly non-Irish) providers at unaffordable rates. Many of these insurers have no long term commitment to the Irish insurance market. They simply see Irish thatch as a way to make a quick buck. Their insurance rates are not viable in the long term. One company - OBF - which has a considerable number of these policies has decided to exit the Irish market and is consequently increasing their premiums (at rates way beyond inflation – 27% - on average in 2023) presumably to force policyholders to abandon their cover. We understand that OBF has recently taken a decision not to renew thatch policies with a reinstatement value above €250k. This is a very worrying new development. A recent report by the DHLGH points to the fact that thatch insurance premiums are high because of an increased incidence of thatch fires. However, this doesn’t explain the affordable thatch premiums by the Irish insurer FBD. If thatch fires were such a problem why haven’t their thatch insurance premiums increased in line with this increased risk? Even thatch properties which are fitted with heat pumps and have no open fires, woodburners or boilers are regarded by the insurance industry as high risk simply because of one single feature – a thatch roof. Properties with mixed roof types – thatch and tiled - are similarly risk assessed as if the entire property is thatched. This is so even where they are separate buildings on the same property. The reality is the insurance industry doesn’t carry out any meaningful risk assessments on thatch properties. It pigeonholes all thatch properties as high risk regardless of the details.

The Ministers will probably refer to a number of insurers such as O’Callaghan Insurance or Dolmen Underwriting or Reidy Insurances (ERGO) as companies who are offering thatch insurance and offer

this as evidence that cover is available. These providers offer thatch insurance but it is completely unaffordable. It is charged at rates which are multiples of the premiums offered by FBD. Also, in most

cases the policy terms offered by these companies are totally inferior despite the ridiculous price. For instance, O’Callaghan do not cover contents. Dolmen do not cover fire. The policies offered by these insurers are sub-standard and their prices are completely out of reach. The Ministers will probably say these companies are evidence that thatch insurance is available and so they should not intervene. But this is a false argument. Precisely the opposite is true. The Ministers are pointing at the wrong things and not asking the right questions. They should be asking - Why is there a two tiered market with low / normal prices charged by FBD and high prices charged by everyone else?

Why is there no arbitrage? Why is there no price competition? Maybe if you found the answers to those questions then you might draw the right conclusions.

To us the answer is obvious. The thatch insurance market in Ireland is broken and needs Government intervention to fix it.

Impact of Protected Structure legislation

Most thatch properties have protected structure status simply because they are thatched. They are part of Irish heritage. It is generally unusual for them to be designated because they have significant architectural merit. It is all about the thatch.

Protected structure status places obligations on thatch owners to keep and maintain the property including the thatch. Whilst thatch owners recognise there is a state grant system in place to support owners doing that – these grants are wholly inadequate. They haven’t maintained pace with inflation and are inconsistently available throughout the country. They are also skewed towards capital items such as replacing the thatch or a ridge (which might occur every 10 years) as opposed to annual maintenance which is also costly but not covered by grants.

Protected Structure status limits the property rights of thatch owners.

Because the insurance issue has persisted over such a long time, many thatch owners have sought to resolve the insurance issue by removing their thatch. The protected structure legislation prevents many from doing that. Consequently, thatch owners expect their Government to provide a solution to the insurance problem and if none is forthcoming would regard the protected structure legislation as onerous and unjust. It is simply not sustainable or acceptable to expect thatch owners to live and maintain these properties (as Protected Structures) without affordable insurance cover.

Thatch Insurance Action Group

Since the Thatch Insurance Action Group was formed in 2022 our objective has been to find a solution to this problem. One solution we have considered was to get enough thatch owners together to form a thatch insurance group scheme. Group schemes can be a solution by pooling similar risks together and having one single insurer bear the portfolio risk. These have been attempted in other sectors where insurance cover was either unavailable or unaffordable with mixed success. We understand that some of the early group schemes are now having difficulties due to increased premiums despite an absence of claims with no explanations from insurers.

Despite this we have tried to pursue it. Advice on this was that we needed circa 1,000 thatch owners to make the group scheme commercially viable. Less than that number would result in a lack of interest from both potential insurers and brokers. This is because there is a considerable amount of work to be carried out to create these schemes. To date we have 320 members. This is clearly not enough. There would not be enough premium to cover the overheads of the scheme never mind if there were any claims.

We don’t know how many thatch properties actually exist in Ireland. But at the rate we are adding new members it is unlikely we would ever get enough owners together to make a group scheme commercially viable. We reluctantly have come to accept that a thatch insurance group will never be possible in Ireland.

Government Inaction

Thatch owners have written many letters to Dáil Deputies and Government Ministers outlining all these issues. The responses have been many and varied but in one respect they were all consistent. They all stated that the Irish Government’s hands were tied by the EU Single Market Framework for Insurance (the Solvency II directive). This legislation categorically and absolutely prevented any intervention by the State.

Based on the recent EU letter obtained by the Chairman of the Committee on Public Petitions and the Ombudsmen, these statements by Government Ministers were at best an over generalisation.

Thatch owners are eternally grateful to the committee, its Chairman and secretariat, through their persistent hard work for pursuing this issue with the EU Ombudsman and EU Commission and exposing the truth about Irish Government excuses for inaction.

The Government needs to intervene. In all fairness to thatch owners, it can’t continue to allow a position where, through protected structures legislation it forces thatch owners to maintain and keep their thatch and not produce legislation or a Government sponsored scheme to provide affordable insurance cover. It needs one if it wants to keep the other. Otherwise the fair thing to do is to remove protected structure status from thatch properties and let thatch owners have free rein over their properties.

There are better minds than ours to produce a solution to this problem. But it seems to us there are 2 ways to go

1. The Government legislates to make the market provide a solution; OR

2. The Government decides to put in place and run its own thatch insurance scheme

There are models available in other EU countries for both of these solutions.

In recent weeks the Government has made policy decisions to support the victims of flood damage caused by the recent storms. Many of these property owners (even if they have insurance) will not have flood cover because the insurers may have removed it from their policies. Whilst we support such actions it seems strange and unfair that flood victims from Midleton, Co Cork get State support, but uninsured thatch fire victims like Laura Lindholm and her family in Co Offaly did not.

One thing is clear, under EU law the Government is not powerless to intervene because the thatch insurance market is a non-functioning part of Ireland's insurance market. If the Government continues with its current approach then it is making an active policy decision not to support thatch owners. If that is the Government's decision and it is not going to fix it, then give us back our confiscated property rights and let us make our own choices and arrangements. But please don't ignore us and continue to do nothing.

I reiterate that is a statement on behalf of Ms McNelis, not on behalf of the committee.

On behalf of the committee I extend a warm welcome to the Minister of State at the Department of Finance, Deputy Carroll MacNeill, who has responsibility for financial services, credit unions and insurance, and the Minister of State at the Department of Housing, Local Government and Heritage, Deputy Noonan, who has responsibility for nature, heritage and electoral reform. I also welcome the staff from the various Departments.

I understand that the Minister of State, Deputy Carroll MacNeill, will make her opening statement first, followed by the Minister of State, Deputy Noonan. I suggest that they take approximately ten minutes each for their opening statements and we will then have questions and comments from members. Each member will get five minutes for questions and answers. We will let people in for a second round of questions if they want. I invite the Minister of State, Deputy Carroll MacNeill, to make her opening statement.

Minister of State at the Department of Finance (Deputy Jennifer Carroll MacNeill)

I will make my opening statement and then also address perhaps a number of issues in response to the letter where we may have different or other information that it may be helpful for the committee for us to clarify.

I thank the committee for the invitation to join it here today. I acknowledge Ms McNelis's letter to the committee. We share a common interest, which is ensuring that thatched property owners are treated fairly and can access insurance at an affordable price. However, rather than a silver bullet that can quickly assist us in this regard, the response is much more complicated and multifaceted. It will require both time and buy-in from everyone involved – insurers, the Government and thatched property owners themselves.

I understand that Ms McNelis highlighted the Solvency II directive. It is important to note that the Government is not speaking in generalities in relation to this but on the basis of our best legal advice and as members of the European Union contributing to the development of such directives and the implementation of them. The Solvency II directive plays a significant role in the insurance industry and it also impacts what the Government can do in plugging insurance gaps, as such. As members are aware, Solvency II is an EU level framework that has been in place since 2016. It contains provisions including on minimum capital, and supervisory and reporting requirements that apply to almost all insurers and reinsurers across the EU. Essentially, the directive helps ensure that insurance firms are run in a prudent, solvent manner and can meet policyholder liabilities as they fall due. That is in the interests of all policyholders across the spectrum for motor, home and every possible area of insurance.

Specifically, Article 21 of Solvency II states that member states, including us, "shall not require the prior approval or systematic notification of general and special policy conditions, of scales of premiums, of the technical bases, used in particular for calculating scales of premiums and technical provisions, or of forms or other printed documents which an undertaking intends to use in its dealings". This, essentially, means that the Government cannot set the prices or the terms at which insurers can offer cover.

I note the correspondence received by the committee from the European Commission through the European Ombudsman. It notes that insurers are expected to require a level of premiums that is commensurate to the risk they accept and the level of uncertainty for the insurer. Accordingly, what that means is that insurers may need to charge, according to the Commission, high insurance premiums, which in some circumstances could also be considered unaffordable, having regard to the risk. While this does appear unfair to affected policyholders, if we step back, it is in all of our interests as consumers that the insurers we purchase products from are on a sufficient financial backing in order to be able to pay out on claims that arise. Therefore, we do have to ask the question of whether it would be irresponsible for firms to deliberately price premiums lower than the risk they represent, whether that would be unsustainable as a business model and whether it would have an impact on insured people across the various streams more broadly.

Thatched properties are a continuing pinch point for me in the office to promote competition in the insurance market, which has been working for some time now. We have had good success in other areas but thatched properties remain a work in progress. Such properties experience a number of issues that make them more difficult to insure than non-thatched, or conventional ones. I think the Minister of State, Deputy Noonan, will speak more on this, but the biggest risk is fire. Department of Finance officials have been informed by the industry that for insurance providers, thatch is too risky for many to take on.

We work on this all the time with those who are currently providing insurance and with those who may step into the market. Indeed, this morning my officials met a provider who may look to step into the market. This week, I met an insurer who is providing cover to many thatched property owners to discuss the conditions under which they continue to do that. I say that to make the point that this is a constant conversation involving me, as Minister of State with responsibility for insurance, and my officials.

As reported to this committee last year, the Department of Housing, Local Government and Heritage estimates there are around 2,000 thatched properties in the State. Its report, published last November, indicated that there were 72 fires in thatched properties in the previous five years. The rate of fire is much higher than in conventional properties. As a consequence, many insurers have experienced large losses and indeed total losses, and are reluctant to re-enter the market, which has led to a lack of competition. Those who remain in the market generally either impose strict exclusions, as part of their policies, or charge very high premiums to reflect the risk involved in covering a thatched building. I think the letter made reference to other European jurisdictions where, as Ms McNelis said, the state had intervened. We are not aware of state interventions as such. There are a number of north European countries where thatched buildings are common, for example, in Denmark, and where is thatched insurance available, but in general, the cost is four to five times higher than normal house insurance. We can see that the scale of risk there is as much as it is here because thatch has an increased risk of fire. We are trying to do different things that will help the market be able to absorb the risk, particularly in the small market here.

As I said, the correspondence refers to certain interventions in the market that are worth considering. There are three broad options that are often suggested when dealing with insurance pinch points, and it should be noted that these are not limited to thatched properties. Let us go through them and discuss what impact they can have. The first option mentioned is mandatory insurance. As the letter notes, that is allowed under Article 179 of the Solvency II directive. The requirement to have insurance varies across member states. In Ireland, there are four mandatory insurance products, all for forms of transport. You must have motor insurance if you are driving a car. You also must have insurance for aircraft, light rail vehicles and ships. There is no other circumstance in which we say that you are required by law to have insurance. In other countries across the EU the scope can be wider. For example, in Germany, you are required to have health insurance. Different countries take different approaches. Nevertheless, as the letter notes, where an insurance is made mandatory, it is done so as part of a broader set of actions that, taken together, were intended to improve the effectiveness of their national insurance market. I do not believe that making insurance mandatory for thatched property owners in itself would not improve the situation as we would not be addressing the root cause of the issue, namely, the fire hazard, which is what makes thatch insurance difficult to access and much more expensive. Making it mandatory would not reduce the price where insurance is already available because the thatched property market in Ireland is very small and cannot benefit from economies of scale in the same way motor insurance can, and where a set of losses can be written off against another product. In addition, if we make thatch insurance mandatory then we also need to legally enforce that requirement. I do not believe that that is a fair thing for the State to do to people with thatched properties.

The second option is that of a public private partnership, PPP, such as in the form of a State insurance company. It sounds like an easy, attractive option, and I would have thought it was, but any such solution would be required to abide by the Solvency II rules. That would require the State to take a substantial amount of capital – most likely from the Exchequer – as well as appropriate expertise in the form of staffing to ensure compliance with the market condition rules set out in Solvency II. Most importantly, such a venture would not, under European law, be able to provide cover at below-market rates without flagrantly breaching prudential requirements. Another unforeseen impact could be to reduce competition in the market, as existing insurers that are currently providing insurance to about 60% of thatched properties now may decide to simply stop providing it if they realise that the State is going to step in as the insurer of last resort. There is a broader read across to other elements of the market about the State taking such a position on insurance generally that I am sure the committee would have a strong interest in. The danger is there is no incentive to write difficult business. This is a dialogue that we are having all the time in respect of flood and other areas of difficult business. It is going to become more important, not less important. It is precisely the opposite of what we are trying to achieve through the Government's insurance reform programme, namely, to make the conditions for insurance better and more stable, and therefore to have more competition in the market and lower prices. We are seeing the effect of that in motor insurance prices, new entrants to the market and in our ability to resolve other pinch point areas that have proven difficult. I believe that we will get there with thatched property insurance as well.

The third and final option discussed in the letter is to introduce into law provisions to require insurers to cover certain risks. I know Sinn Féin tabled a Private Members' Bill in respect of this in respect of flood insurance. I set out the reasons why that would work against us. I believe it would reduce competition in the market and it would send a very different signal in terms of the State's intervention in private enterprise, never mind just insurance. If we tell somebody how to run their insurance business, the read across is that we may tell them how to run their pub, coffee shop or whatever else. It is a very different enterprise policy to be taken by a government. Again, all of the same rules would apply in relation to Solvency II and other EU laws.

Given the niche nature of thatched properties, of which there are around 2,000 nationwide, we just do not believe that any of those three solutions is likely to work. We have been able to achieve results in other pinch point areas, such as in childcare, play centres, equestrian activities and for ice-skating. I had a meeting with one insurer this week who told me that they had, for the first time, quoted for a new ice-skating business this Christmas, but they had in fact been undercut by a new market entrant. Indeed, I had a conversation with the owner of that business some time ago. They have experienced a different insurance landscape this year than last year. They are still paying, but it is a good deal less.

The scale of the market is very important. We make motor insurance mandatory. There are over 2.9 million vehicles on the roads, which means there are greater economies of scale to offer efficiencies and lower prices. I realise I am running out of time and I will outline my point in further responses but we believe that we have had a big impact in the insurance reform programme on motor insurance prices. They have come down by over 40%. We are doing the same with public liability insurance for SMEs, small businesses and places with high footfall. That is just since July. We are having an effect in terms of price and in terms of new entrants to the market. I am meeting new insurers who are coming in and actively applying for licences with the Central Bank. I am meeting existing insurance providers who are extending their risk appetite into different areas. I met a very established Irish insurer this week, which informed me that it is stepping into the sports insurance market for the first time. Every insurer that I talk to is expanding its risk appetite into a particular area. I met a different insurer this week which is now, for the first time, going to start insuring urban pubs in a way it had never done before. It had done rural pubs. Urban pubs obviously have a much higher footfall and there is a much greater risk but because of the Government's reform programme, that insurer is now able to step into that market. I say this for the benefit of the committee to set the context of the insurance reform programme more broadly and to say that we have had other very significant pinch points, such as in childcare, equestrian activities and others, where the Department officials, working with different brokers, insurers and underwriters, have managed to find solutions.

The work that the Minister of State, Deputy Noonan, and I will set out is really very important, because it helps me have a conversation with insurers about very different conditions. Indeed, this week I spoke with one of the main insurers on thatched properties and outlined the work that the Minister of State, Deputy Noonan, had done, and asked it if that would help it continue to remain in the market and to perhaps continue to extend its risk appetite. The insurer is comfortable with the work that the Minister of State has engaged in and has done. That is very important.

In Ms McNelis's letter, there is a reference to OBF leaving the market. I appreciate what is in her letter but we, in the Department of Finance, have no information in relation to that. That would be news to us, having regard to the many conversations that we have. I respect what she has said in her letter and her information may be different to mine.

An Cathaoirleach

I invite the Minister of State, Deputy Noonan, to make his opening statement.

Minister of State at the Department of Housing, Local Government and Heritage (Deputy Malcolm Noonan)

I thank the committee for the invitation to attend today. Since I was before this committee a year ago, my Department has undertaken a range of initiatives designed to assist the owners and occupiers of thatched buildings. It will take time for these initiatives to take full effect but I am confident that the steps we have taken will reduce the incidence of fire in thatched buildings and thereby improve safety, reduce losses and make thatched buildings easier to insure. I am very much encouraged to see there has already been a significant reduction in the number of thatch fires in the 12 months since we spoke. I will discuss this in more detail later, but first I would like to summarise the relevant work carried out by my Department.

Last year we contracted an historic buildings expert to produce a report on the topic of thatch insurance and fire safety. This study considered information received from the insurance industry, owners, fire officers and local authority heritage personnel on the incidence and causes of fire in thatched buildings. It also reviewed research undertaken in other jurisdictions on the causes of thatch fires and on fire-prevention measures. In parallel, it liaised with officials in other jurisdictions to understand the prevalence of thatch fires there.

The first key finding of this work was that the incidence of fire in thatched buildings in Ireland is much higher than in England, the only other jurisdiction for which figures are available. Survey responses from local authority fire officers indicated that Ireland had 72 thatch fires in the five-year period to November 2022. Figures provided to my Department by Historic England indicated that the equivalent figure for England, which has more than 20 times as many thatched buildings as Ireland, was only 189. This means that in the period 2018 to 2022 there were fires in 3.1% of thatched buildings in Ireland, compared with only 0.4% of thatched buildings in England. The incidence of fire in Ireland was approximately eight times higher than in England.

The second key finding was that fires in thatched buildings tend to originate from a small number of causes, relating mainly to chimney use, chimney maintenance and, in particular, the ejection of hot embers out of the chimney and onto the thatch. A review by Burgoynes, an engineering firm which specialises in forensic investigation of building fires, found that 64 of 103 thatch fires investigated were caused by the ejection of hot embers, with a further 13 originating in the chimney. This risk can be addressed through simple measures such as not using solid-fuel stoves and improving chimney design and maintenance. Taken together, these findings hold out the possibility that through a sustained effort we can very substantially reduce fire risk and reap the obvious benefits that would stem from that, including improved insurability.

Following on from this research, my officials have used our regular contacts with owners and local authority staff to raise awareness of the measures needed to improve fire safety in thatched buildings. We have also developed and published a document entitled Fire Safety in Thatched Properties, in conjunction with the National Directorate for Fire and Emergency Management. This booklet is aimed at thatch owners and occupiers and offers clear advice on the simple measures required to reduce risk. It has been sent directly to the owners of thatched properties, who, following on from the thatch insurance survey that my officials circulated last year, indicated that they would like to stay in touch with the Department. Together with architectural conservation officers, heritage officers, housing inspectors and thatchers, my officials are working to ensure that the booklet is circulated as widely as possible.

As part of the implementation of this fire safety guidance, I am pleased to announce that in 2024 we will run a pilot scheme where thatch owners can request a visit to their property by an engineer from my Department. The engineer will provide advice on how to apply the published guidance, in the particular to property in question. This service will be available to the owners of thatched properties free of charge. It will be available for an initial six-month pilot period. If it proves successful, the Department will look to make it available on an ongoing basis.

In addition to engaging with local authority staff and the public, officials from my Department and the Department of Finance have met with Insurance Ireland and Brokers Ireland, as well as a range of individual underwriters and brokers to raise awareness of the research findings. To establish a baseline and to assist the insurance sector in understanding the scale of the market, my officials completed a national survey to ascertain the number of thatched buildings, both historic and modern, across all counties. This survey identified 2,278 thatched buildings, including homes, commercial premises, etc. When fully compiled, we will circulate the survey results to Insurance Ireland and Brokers Ireland, so that they may clarify the scale of the market for their members. In addition to helping insurers, this data will also assist local authorities by giving them a comprehensive picture of the location and general condition of the thatched buildings in their area. This will enable them to take the necessary steps to protect these buildings and in identifying owners and occupiers who may wish to access advice and grant funding for repairs and maintenance.

As well as guidance on fire prevention, my Department is working with the National Directorate for Fire and Emergency Management to develop standard operating guidance for fire in thatched buildings. This type of guidance is intended for the fire services in local authorities. Recent research into fighting fires in thatched buildings indicates that improvements can be made that reduce both roof and building loss, while of course ensuring that human safety is paramount. This guidance is expected to reduce damage in cases where fire does break out, which should reduce insurers’ losses and, ultimately, premiums.

My officials have followed up the survey of fire officers that was previously mentioned with a repeat survey covering the 12 months to November 2023. I am pleased to say that the results of this survey are positive. In the five years to November 2022, we had an average of just over 14 thatch fires per year. With two local authorities left to report, the figure for the 12 months to November 2023 is six, of which only one resulted in full loss of the building. While it is only one year of data, and we may experience reverses in future years, this is still a very positive indication that the incidence of fire in thatched buildings can be significantly reduced. I hope that insurers will take note of this improvement and begin to see the commercial opportunity that exists in this sector.

I remind the committee of the grant support which exists for thatched buildings. Last year, I introduced a new ring-fenced fund of €500,000 under the built heritage investment scheme. This can be used for thatching or for other repairs to the historic fabric of thatched buildings. It is in addition to the €500,000 made available each year under the thatch repair grant and any funds that thatch owners may compete for under the historic structures fund or the wider built heritage investment scheme. While this funding does not directly address the issue of insurance in thatched buildings, it is a sincere effort by the State to take on some of the wider financial burden of maintaining our historic thatched buildings. In our view, it is a significant contribution.

The Department will continue to support local authorities and building owners to reduce fire damage to thatched buildings. Our Fire Safety in Thatched Properties booklet provides essential and evidence-based guidance upon which owners, occupiers and insurers can rely, and the offer of home visits will ensure that thatch owners and occupiers are supported to apply and adapt the guidance to their particular property. We will also continue to monitor the incidence of fire in thatched buildings in order that improvements can be brought to the attention of insurers in a timely manner. In short, we will do our utmost to reduce fire risk in order to protect historic fabric and ensure the safety of owners and users of thatched buildings. I hope that insurers will follow suit by offering insurance at a premium that reflects this reduction in risk. I thank my colleague, the Minister of State, Deputy Carroll MacNeill, and her officials for the ongoing and very constructive engagement we have had over the past year on this issue. In the context of the statement the Chair read out, he mentioned what I view is a very drastic action of removing properties from the record of protected structures. I think that is a very drastic solution. We are of the view that these are an incredible asset to our built heritage, our vernacular heritage in Ireland, and it is something that collectively the Government wants to address with the owners of properties. I have spoken to many of them over the last number of years. We want to work with them to ensure that we have viable opportunities for them to insure their properties and keep them in a good state and condition for liveability.

An Cathaoirleach

I do not think the Minister of State will get anyone who will disagree with him there. They are part of our heritage and it is why we want to continue this and come to a solution where we do not lose any more. As was said before, you can travel all around the country and it is something that really sticks out in a town or village. The last thing we want to see is them falling away because there is no insurance and that the only place we would see them is on postcards. The Minister of State has to realise the pressure people are under if they cannot insure them. One of the only options they see is to get out of the protected structure and take the thatch off because it is not viable that they continue living in these houses without any insurance.

I have two quick questions before I let in other members. Does the Minister of State see any opportunity in the directive to adopt legal provisions protecting the general good in their own territory? There was reference to increasing supply of affordable insurance for the given risk. Has that been examined to its full extent?

Deputy Jennifer Carroll MacNeill

Sorry, could the Chair give more detail on which ones?

An Cathaoirleach

Does the Minister of State see any opportunities within the directive to adopt legal provisions protecting the general good in their territory? It references increasing the supply of affordable insurance coverage for a given risk. Has that been examined fully in the context of the directive?

Deputy Jennifer Carroll MacNeill

I think so. The purpose of the directive is to make sure there is as competitive a market as possible within the Single Market and within each member state in the Single Market in order to make sure the State is not doing things which will reduce competition or have a market intervention effect and make sure that at the same time as having a competitive market you have insurers who have the capacity to pay out where a policyholder need it. Within the scope of the directive, interventions by the state that have any of those effects, diminish impacts or competition, are really not permitted.

An Cathaoirleach

Can the Minister of State give the committee an account of any discussions she has had with the insurance industry specifically on thatched buildings compared with other insurance?

Deputy Jennifer Carroll MacNeill

I will check my notes, but I am confident that we have raised thatched buildings along with every other pinch point that we had at the time with every insurance company operating in the market that I have ever met. Some of those matters have since been resolved. This morning, my officials met a new potential entrant in the market. That is commercially sensitive because the company has not made that decision. Just this week, I met people from an insurer which is in the market and which covers thatched buildings. I probed them on the conditions under which they are offering it and continue to offer it. I went through the report by the Minister of State, Deputy Noonan. I asked about the impact of maintaining existing cover, the potential impact on price and the opportunity to transfer cover to a new owner. I went through their risk appetite and the opportunity extend to other buildings that were thatched.

In every engagement, I have raised the pinch point areas as they are at that time. Even in the time that I have been Minister of State since last Christmas, that has reduced somewhat. I raise it in every single interaction I can to try to assess risk appetite. I might add that if I do not have the intelligence to do it on the day, my officials are sure to step in and make sure it is raised in every meeting.

An Cathaoirleach

Has the Minister of State received any indication that they may move to something like that?

Deputy Jennifer Carroll MacNeill

What is probably the most significant insurer at the moment has indicated its continued participation in the market. There is support for the report by the Minister of State, Deputy Noonan. The fire risk is significant; there is no question about it. To the extent that this risk can be mitigated, a thatched-roof property with radiators is very different from a thatched building with a stove or open fires. The fire risk there is fundamentally different. That will be the same whether it is in Ireland, Denmark, the UK or anywhere else. To the extent that the fire risk is mitigated, the insurer has advised me that it will have a better and more detailed conversation. The question is what mitigations owners of thatched cottages make. They are then open to further insurance. I do not want to step across the detail of the work done by the Minister of State, Deputy Noonan.

Deputy Pat Buckley

I thank both Ministers of State for coming today. I recognise that the Minister of State, Deputy Carroll MacNeill, is very busy, and there is a lot of work. The insurance market as a whole is extremely difficult and competitive. The Minister of State mentioned that the premiums for public liability, etc., are decreasing. The people with thatched cottages are caught between a rock and a hard place. I acknowledge what the Minister of State said, namely, that there has to be a realistic and common-sense approach given that there is obviously a greater fire risk.

The Minister of State, Deputy Noonan, spoke about a pilot project. I am always sceptical about pilot project because 99% of the time these projects work but they do not continue. I welcome the common-sense approach. We do not have a magic wand; I am a realist in that way. The floods in my town were mentioned. People will be reactive but we do not have a magic wand to fix everything. However, at least working in tandem to prevent such issues is a step forward. The pilot programme makes common sense. By making it more attractive to insurance companies and having a lower chance of having a fire in that property, at least we are going in the right way.

A thatched house that is a home is one thing. However, if it is a thatched building that a business cannot get insurance for, it is a livelihood that is going as well. When this matter first came to the committee's attention, I thought it was a bit strange. However, when we delve into it and see what the Ministers of State are doing in the background, working with the insurance companies and other stakeholders, the only question is what we say to people outside. Where can they go now? Will it need to be a waiting game trying to get more insurance companies in?

The Government will work with people to make their thatched properties more compliant with fire safety and so forth. That should bring down premiums. We need to be realistic in saying that it will take time and there is no magic wand. The Ministers of State seem to be saying there is no magic fix at the moment. Their two Departments will work in a collaborative way with the insurance companies and the people who own these properties to move in the right direction but it will take time. Is that it? Is that the answer for the people at the moment?

Deputy Malcolm Noonan

I might come in first and ask the Minister of State, Deputy Carroll MacNeill, to speak from her side. Since I was in here last, we have made significant progress, as the Deputy has heard from both of us. There has been really good collaboration. We are talking about very practical supports and advice to the owners of thatched properties. While it is a pilot scheme, it is intended to roll it out and keep it on an ongoing basis. We have architectural conservation officers in most local authorities. We hope that all local authorities will have those in the next year or two. That advice is critical in reducing and, in some cases, minimising the potential fire risk in properties. The thatched building working group that we set up in the Department is looking at many other issues relating to the availability of skilled thatchers and growing materials in Ireland. The grant supports are not insignificant. We have ramped them up significantly in recent years. As I travel around the country, I find many owners of houses and businesses with thatched roofs are availing of those grants to carry out routine maintenance on those properties and to fully rethatch them. We have made considerable progress. I am sure the Minister of State, Deputy Carroll MacNeill, will testify to this. I hope the industry will respond in kind to the measures we have taken so far.

Deputy Jennifer Carroll MacNeill

We are always very happy to come in here and outline the work we are doing. The purpose of the work is to provide a more stable insurance market for policyholders and to reduce prices. We are very happy to outline that at any stage. In the dialogue that I have with insurers, we are having a pretty straightforward conversation at the moment on motor insurance. It is a direct conversation on implementing the public liability changes that the Oireachtas put through in July and my expectation about the outcomes in that regard. It has initially been difficult to have a conversation about thatched buildings until we saw the work that the Minister of State, Deputy Noonan, was doing because of the scale of the fire risk. It is difficult, from a commercial point of view, to tell insurers that they could do a bit more, but now it is a different proposition because the State is intervening to provide support and putting guidance in place. As long as that guidance is met, the insurers are happier to step into a market where it is a lower risk.

I can give other examples from across Europe of where insurance for thatched buildings is more expensive. It is because of the fire risk. In Ireland, it is also because of the scale. Denmark has 55,000 thatched properties. Ireland and Denmark are not entirely dissimilar in population, but we have 2,000 thatched properties. When any insurer steps into the market, it is trying to spread the risk of a single incident. If a thatched house burns down, often the whole roof will be gone because it goes on fire very quickly and can often result in the loss of the entire building. As a result, it is not just partial damage but complete damage. The scale of loss is considerable. As I have said, the prices in Denmark are four or five times higher than regular home insurance and that risk is spread across 55,000 homes. In our case it is 2,000 homes and the same risk applies.

In order to get market entrants, we need to reduce the risk of fire events and the risk of total loss. However, it is a conversation we constantly have with the goal of getting insurance. The Deputy is right that these are incredibly difficult conversations. Aside from all the policy work, this is about people and their homes, and that is what matters. We are trying to deliver policy responses that will get a result here.

Deputy Pat Buckley

Again, I acknowledge the work the Minister of State has put into it. Following her engagement with the insurance companies, they are now talking about it. That is positive. People outside this committee expect answers today. Every day we come to the committee they want answers on that day. As I said, I am a realist. I welcome that we have opened the conversation. I thank the Ministers of State for engaging with the committee and for going out to all stakeholders and engaging with them. Hopefully, please God, it will not be too long before we might be here again having a conversation on the progress report and whether there have been new entrants.

This is not a committee to bash people. This is about opening a conversation to improve people's lives. I agree with the comments on our history, our architecture and so on. Everything has to be preserved, but it has to a two-way street. I welcome the comments today. This may be moving slowly but it is moving in the right direction, and I welcome that.

An Cathaoirleach

I will ask just one quick question before I let Senator Murphy in. The Minister of State, Deputy Carroll MacNeill, said there are 2,000 of these properties. Have we any indication since we spoke last as to how many of them have open fires still? The petitioners will tell us that even those who have no open fires and have heat pumps installed are still seeing no reduction in their premiums. Have we any indication as to how many of the 2,000 still have open fires?

Deputy Malcolm Noonan

I will ask Daniel to come in on that if that is okay.

Mr. Daniel Sinnott

The total we have from the census is 2,278. We do not know how many of those have open fires but we are aware that the insurance companies have not always responded to fire safety measures by offering lower premiums. A part of that may have been a lack of understanding as to what the risk factors are and what the things that owners should and should not do to reduce risks are. We are hopeful that, with these guidelines in place, with the advice supports in place for owners and with our engagement with colleagues in the Department of Finance and insurers, we can get the word out not only to owners but also to ensurers in order that they understand and respond to fire safety measures which owners are taking.

Senator Eugene Murphy

I welcome the Ministers of State, Deputies Carroll MacNeill and Noonan, and their officials. The presentations by both Ministers of State were extraordinarily interesting. They showed that they have a very keen interest in this area. All of us really want to maintain our heritage thatch buildings throughout the country. However, as I said here at one of the previous meetings at which we discussed this, is it not the case that the problem here is trying to maintain a beautiful old tradition while modernising houses? The Minister of State, Deputy Carroll MacNeill, mentioned radiators. There are phone chargers, car chargers and all these other electrical items. We all realise that there is a bit of a problem in that regard and that getting around it is the issue. Interestingly, she mentioned that 55,000 thatched or houses in Denmark have thatched roofs. There must be a way around this. Could we look at more research, for example, whereby a product could be used under the thatch and there could be a thinner amount of thatch to prevent fire or whatever happening or completely destroying the property? There must be a way of getting around this. I do accept, however, and I think we all have to accept, that it is very hard to maintain this old tradition under a structure that is modernised.

I was recently in a most beautiful place, Williamstown, County Galway. I do not know if the Minister of State is aware of it. It got a heritage award only recently. The celebrations were there last weekend. It is just an old structure in a rural area near the village of Williamstown, an area of thatched buildings. I encourage the Ministers of State to visit it sometime or to look it up on social media. It is just fantastic. There are areas like that which have not been over-modernised, and I do not think they have difficulty getting insurance cover. Is research ongoing in that regard, and do the Ministers of State agree that the difficulty here, even for the insurance industry, may be trying to keep the thatch and still having to acknowledge that houses must be modernised to a present-day standard? Between global warming and electricity, how will we deal with these structures?

Those are my questions. I thank the Ministers of State most sincerely for being here. I found their presentation really interesting.

Deputy Jennifer Carroll MacNeill

As regards insurance cover and a solution, the reality is that there are two problems: the accessibility and then the cost, having regard to not only the increased risk of fire but also the scale of damage if there is a fire. I will give the Senator a sense of the issues. My officials met on 16 November representatives from the Treasury in the UK. They confirmed that availability is an issue still in the UK, notwithstanding the size of the market. In Denmark - the Deputy is right that I referred to 55,000 properties there - the cost of the insurance, while there may be availability, is four to five times higher than that of regular home insurance. There is also additional cost as regards electrical damage and so on, so there are other read-across issues. This is persistent. It is about accessibility and cost. We have the same issue here, so there is not a magical solution, I am afraid. The solution is about getting more players into the market and making sure the conditions are such that they can predict the risk in a more likely way and predict that there is less likely to be a fire in a thatched cottage if there are radiators than if there is an open fire or a stove, where the heat literally goes out through the thatch and embers potentially come out on top of that thatch. The Senator can see the risk himself. We want to maintain the buildings. We want availability. These are not all historic buildings; some are modern buildings with thatch roofs so they are slightly different in terms of wiring or, potentially, the heating source. In every case where we have had effect, it has been about people coming together to create a risk mitigation strategy. For example, in childcare or equestrian, where my officials have been able to get good effect and solve pinch-point problems, it has been because those sectors came together, agreed a risk mitigation strategy to reduce the risk and then collectively went either to a single broker or to access a bigger market so the risk could be spread. You reduce your risk so you are better in terms of price and you spread the risk, potentially with an insurer operating in a different market, so you have an impact on price as well. Those are the things that have worked to date. We think this can work as well but we have a little bit to go yet.

Deputy Malcolm Noonan

The Senator referred to a number of issues as regards the styles of thatch and some properties being modernised inside or modern-ish buildings. I gave the example of the Thatch, in Cloneen, Tipperary. There are some fabulous older businesses still managing to operate from these buildings. There are a lot of traditional thatches where the owners have kept absolutely pure to the original building fabric and structure. It requires a great deal of care and commitment on the part the owners to do that. Many of the ones I have been in have all mod cons inside. From a climate perspective, they are probably the most comfortable buildings you could be in. They are the most natural, carbon-neutral buildings we have. They are hugely important in an Irish context. It would be hard to overestimate how important they are. There are so few of them left in the country. That is why there is a commitment in the Government to try to not only save the ones we have but actually to see if we can support owners of, in particular, buildings where there is thatch under a tin roof where they might opt to restore them fully. We want to try to get to a place where we celebrate them and support them and we can perhaps see their number increasing over time. That is what we would love.

Deputy Emer Higgins

I thank both Ministers of State for being here with us and for all the collaboration it sounds like they both have done and their Departments have both done together on this really important issue.

The petitioners tell us that almost half of the 2,278 home and business owners do not have insurance, so we know that we as a Government need to support them to reduce their risk and, therefore, to reduce their premiums. My question for the Minister of State, Deputy Noonan, is as follows. Is the grant he has made available, the €500,000, being fully utilised? Is it being fully drawn down? Are people engaging with it?

If I may direct my comments first the Minister of State, Deputy Carroll MacNeill, this is part of the wider agenda she is driving when it comes to insurance reform. She has led on this and is implementing it, and it is really important work that will have a huge impact when it comes to people's pockets because most of us are insurance holders, whether it is car, a home or a business. I would be keen to understand whether everyone is playing ball with the reforms she is introducing. Are solicitors, for example? We know that quite often solicitors might prefer to end up in a court room than in the PIAB. That could be the case from a financial perspective for everybody involved, but it also means there is the added cost of going to court.

That added cost has to be borne by somebody and I imagine that would be the policyholder. Perhaps the Minister of State could give us a little bit of clarity on that. Is the industry, as a whole, responding? Are solicitors engaging?

Deputy Malcolm Noonan

On the grants, we will not have a fuller picture as to the drawdown for a few weeks yet, but there has certainly been very good uptake of the grant schemes to date. The increases in recent years have proven very popular. There is always a challenge with sourcing skilled craftspeople and thatchers in particular. That is always an issue, as are materials. We need a certain degree of flexibility within the grant schemes to account for the availability of materials and the availability of craftspeople to work on the houses.

Deputy Jennifer Carroll MacNeill

As the Deputy has said, this work is part of the broader insurance reform programme through which we have made many changes to make the conditions for insurance better, to drive down premiums and to make the market more stable and predictable. A large part of that is strengthening the Personal Injuries Assessment Board, PIAB, and making that system really work. The Deputy will recall that, when the board was originally established in 2004, there was a drift towards the court process, which the Deputy has mentioned. Frankly, that undermined the reform under way at the time. We saw a drift and very high awards being made in respect of what seemed like soft tissue injuries and minor injuries. Cases were being taken very frequently and there were very high legal costs associated with that. The Government has made 99 changes across the board. A big part of this is strengthening PIAB. We have reset the dial and PIAB is now the natural place to resolve a claim. If somebody has an accident, they are entitled to compensation for the damage that has happened to them. However, people are not entitled to make claims that are not justified. We have seen that fall away. We have seen good evidence of smaller claims falling away.

My concern is the drift into court, which the Deputy is right to highlight. We have created a statutory system that is quicker than going to court and where you get essentially the same outcome but that is one twentieth of the cost. It is 20 times more expensive for a case to be resolved in court than through PIAB. The Deputy is right to ask who pays for that because it is the policyholders. When a case goes to court, it is 20 times more expensive to resolve it and it is the Deputy, the Chair and everybody else sitting here who pays for it. Everybody's premiums cover the additional cost of going to court. I am trying to make sure the overwhelming majority of cases are resolved within the PIAB system. I see too many cases drifting into the courts system and I have to question some of the incentives in that regard.

I have been in this position for nearly a year now and I have been speaking to businesses, the insurance companies, the Alliance for Insurance Reform, business owners and the Garda fraud squad, I have been watching every different metric, and I keep hearing there are some solicitors and firms that are routinely not accepting outcomes from PIAB. That causes me great concern. I keep hearing about some firms that have never accepted an outcome from PIAB. I cannot understand that. I keep hearing about this difficulty. I assure the Deputy this is something I am going to discuss with the Law Society and the legal profession and that, along with the Courts Service and the Minister of State, Deputy Calleary, I will be examining all instances of cases passing from PIAB into the courts.

For example, PIAB might give an award of €5,000. I even hear of situations in which solicitors have not shared that information with the claimant. I will be interrogating that information but it would be a cause of great concern. Where such a case migrates into court, it may move into the jurisdiction of the Circuit Court. You would have to question both how that is happening and why. It takes a great deal longer to resolve a case of that kind and it comes with attendant legal costs. That is a subject of great concern for me because this Government wants the PIAB reform programme and the insurance programme to work. It wants people to be able to get compensation where needed but quickly, effectively and not at great additional cost to everybody else. That is not to say there will not be cases that need to go to court from time to time. I am talking about the broader system and making sure there is no drift. That is a conversation I will be having very directly with the Law Society. I thank the Deputy for raising the issue.

Deputy Emer Higgins

It goes to show how lucky we are to have somebody with a legal background in the Minister of State's position. I thank her for all she is doing. It is great to have undertaken 99 reforms. People are genuinely going to see the effects of the work the Minister of State is leading on in their pockets and bank balances. That is good for everybody.

Deputy Jennifer Carroll MacNeill

It is the whole of the Government. The Cabinet subcommittee is led by the Tánaiste and was previously led by the now Taoiseach. This really is a whole-of-government commitment. The Minister of State, Deputy Calleary, and I met with Insurance Ireland just this morning. We are very much working together on this programme. We are determined to see it work and to investigate every avenue that may threaten it.

An Cathaoirleach

I have two quick questions. I am conscious of the time but this is a topic I imagine we will be coming back to at a later date. We did not have enough time within the hour. The group that tried to set up a thatched insurance scheme has 320 members but needs 1,000. Is there any way the Government could help the group in setting up a scheme of that kind? If the petitioner were here in front of the Ministers, what would they say to her about the future of thatched properties in Ireland if we are not able to resolve the insurance end of things?

Deputy Jennifer Carroll MacNeill

On the first piece regarding the group scheme, officials from the Department are always happy to engage. Indeed, they have engaged with representatives of the thatched building group. They will always be available to continue that conversation and to provide guidance and answer questions. Officials are already advocating with different brokers, insurance companies and underwriters in this regard. There is no difficulty in respect of that. I mentioned the question of scale. I do not know whether such a scheme will ultimately work for insurers. I suspect the path we have taken in other areas of difficulty may be a more efficient solution but everything is on the table, insofar as is possible under the Solvency II directive, with regard to resolving this issue. My officials and I are always available to continue to engage on the matter. The second question is probably more appropriate to the Minister of State, Deputy Noonan.

Deputy Malcolm Noonan

Our Department circulated information on that core group of 320-odd thatched property owners to other thatched property owners to encourage wider membership and participation in the scheme. On the Cathaoirleach's second question, which was what we would say to the petitioner if she were here today, what we have outlined today represents significant progress since we were here last year. We hope the industry will respond positively. The supports we are putting in place show a deep commitment on the part of Government to resolving this issue and making the ownership of our thatched heritage viable for people. That is critically important. We want families to continue to live in them. They should not just be features of our landscape but important homes for people. People and businesses make a deep commitment when they choose to buy, restore or live in a thatched property. From that perspective, we have made significant progress through the collaboration between our Departments and we will continue to do so. Our Department launched a vernacular strategy in 2021 and the actions in that strategy back up what we are trying to achieve for our thatched properties across the country.

An Cathaoirleach

On behalf of the committee and myself, I thank the Ministers of State, Deputies Carroll MacNeill and Noonan. This meeting has been very beneficial. I recognise the amount of work they and their staff have done and I compliment them on what has been achieved since this time last year. As I have said, I imagine we will be coming back to the topic again at a later date. I hope as much work will have been done again and that we can get the issue resolved. However, the amount of work that has been done since we last met must be recognised. On behalf of the committee and myself, I again thank the Ministers of State. We will now suspend the meeting for five minutes to allow for a changeover of witnesses.

Sitting suspended at 2.39 p.m. and resumed at 3.03 p.m.