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

Reform of Insurance for Thatched Heritage Buildings: Discussion (Resumed)

An Cathaoirleach

We will now continue our consideration of petition No. 00036/21, which is on seeking reform of insurance for thatched heritage buildings and on related EU Commission correspondence.

On behalf of the committee, I extend a warm welcome to the representatives from the Alliance for Insurance Reform: Mr. Brian Hanley, CEO; and Mr. Peter Boland, board member. I also welcome the 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.

I call on Ms Murdock and Mr. Brian Hanley, respectively, to make their opening statements for around ten minutes. We will then have questions and comments from members. Members will have five or six minutes initially but may contribute more than once if they so wish.

Ms Moyagh Murdock

Good afternoon. I thank the Cathaoirleach and committee members. I am pleased to be here to contribute to the committee's review of petition No. 36 of 2021, entitled Reform of Insurance for Thatched Heritage Buildings, as submitted by Ms Katie McNelis.

I am the chief executive officer of Insurance Ireland and am joined by my colleagues Mr. Florian Wimber, director of advocacy, communications and public affairs, and Solvency II lead; and Mr. Michael Curtin, manager for regulation and policy development. Insurance Ireland is the representative body for the Irish insurance industry.

We represent over 130 members, which are providing cover to more than 25 million customers in more than 110 countries. The insurance industry plays a vital role within the Irish economy and makes a substantial contribution both socially and economically. The sector employs some 35,000 people in skilled and well-paid jobs and contributes in excess of €2.7 billion annually to the Irish Exchequer. Insurers based in Ireland paid more than €68 billion in claims in 2022, including almost €10 billion in domestic non-life claims.

We understand that this petition has been before the committee on a number of occasions and that members have heard from the petitioner, Ms McNelis; from the Thatch Property Insurance Action Group; and from officials from the Department of Finance and the Department of Housing, Local Government and Heritage. On behalf of Insurance Ireland, we are happy to be here to form part of this important discussion.

Insurance Ireland appreciates that thatched properties are a unique part of the fabric of Irish culture and a valuable asset to our country from tourism and heritage perspectives. Insurance Ireland is proud that a number of thatched property owners currently hold policies with insurers within our membership who have remained loyal to those members and continue to provide cover in a time when there has been a relatively high national incidence of fire in thatched properties.

Insurance Ireland representatives have met officials from the Department of Housing, Local Government and Heritage and the Department of Finance on this important topic, and we welcome the progress made on fire safety guidance and increased awareness of fire risks associated with properties.

Insurance Ireland further welcomes the positive results achieved in a recent survey conducted by the Department of Housing, Local Government and Heritage in conjunction with local authority fire officers, where the incidences of fires recorded in the past 12 months have reduced. However, time will be needed to ensure there is a consistent and positive trend.

That said, it cannot be overlooked that thatched properties, which are properties of non-standard construction, present a greater fire risk than a property of standard construction. There is also a greater risk of total loss for more rural thatched properties, given their remote location and distance from fire services in the event of a fire. The insurance of buildings such as thatched cottages is a specialist area and advice from a suitably qualified and experienced consultant, insurer or broker is often necessary. In his recent "Report on Insurance and Fire Safety in Thatched Properties", Frank Keohane noted that 90% of the properties surveyed are over 100 years old, 70% are thatched and almost half of those surveyed have been with their insurers for between five and 20 years.

Incidences of fire in thatched properties have traditionally been much higher in Ireland than in our closest neighbour, the United Kingdom, with Frank further noting in his report, in a five-year period, that 72 fires occurred within approximately 2,300 Irish thatched properties, while under 150 occurred in the UK, which has 50,000 thatched properties. Further, given the size of the Irish thatched property market, scale is an issue. As noted earlier, we understand that there are currently approximately 2,300 thatched properties in Ireland, which is a much smaller pool than other jurisdictions with thatched properties, including 50,000 in the UK, 55,000 in Denmark, and between 30,000 and 50,000 in Germany. Given the increased risk of fire, the higher incidence of total loss and the small number of thatched properties in Ireland, a single total loss fire claim could exceed the annual premiums collected in total, in essence completely depleting the pool of premiums. Insurance is provided on a basis of total reinstatement. In a situation where a total loss occurs, this should provide the owner with sufficient funds to completely rebuild the property to the same design and quality, using the same materials as before and in line with current building regulations.

In recent committee discussions, compulsory insurance was raised as an approach for consideration. Insurance Ireland shares the opinion of the European Commission in its letter dated 28 August, in that there is nothing in Directive 2009/138/EC, the Solvency II framework, stopping compulsory insurance being introduced for property insurance in Ireland. However, as noted in that same letter, "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." The letter continues, "insurance coverage for specific risks and for specific policyholders may require high insurance premiums, which in some circumstances could also be considered unaffordable by the prospective policyholders." It is important to note at this point, in his report, Frank Keohane noted that 69% of respondents had a premium of between €500 and €2,000. Those without insurance, almost 50% of respondents, noted their main reason for not taking out insurance was unaffordability.

Insurance Ireland would further caution that such an approach may have unintended consequences for other parts of the property insurance market, requiring that property insurance be compulsory for all properties in Ireland. Similar to motor insurance, which is compulsory in this country, a means of identifying non-compliance and certifying compliance and enforcement measures would need to be introduced. When it comes to a way forward, Insurance Ireland is committed to working with all stakeholders to work towards a viable solution for thatched property owners. We will continue to work with our members and the Departments of Housing, Local Government and Heritage and Finance to progress with this issue and hope that the positive results from the recent Department of Housing, Local Government and Heritage survey will continue in their positive trend.

Insurance Ireland has met with colleagues in Brokers Ireland and has been heartened to hear some new capacity is coming into the market through the brokers channel. We will continue to engage with Brokers Ireland so that the organisations can provide the most up-to-date information to thatched property owners. In his report, Frank Keohane noted that 90% of owners of thatched properties are interested in forming an owners property group. Insurance Ireland has seen some success in consumers coming together to seek a co-operative approach or a group scheme that would encourage thatched property owners to consider such an option.

In conclusion, Insurance Ireland recognises the cultural significance of thatched properties and empathises with thatched property owners who are struggling, but it must be said that there are significant risks that need to be mitigated before insurers will look to increase capacity in this area. We welcome the great work carried out by the Departments of Housing, Local Government and Heritage and Finance with regard to insurance for properties. Insurance Ireland will continue our work with these Departments into the future. I thank the Cathaoirleach for the opportunity to present our position and I look forward to answering any questions you may have.

An Cathaoirleach

I apologise. I should have said sorry to the witnesses at the start. The delay in the first session with the delegation from Kenya put us an hour behind. I thank Ms Murdock.

Mr. Brian Hanley

I thank the Chair and members of the committee for the invitation to make a statement here today in the context of your ongoing scrutiny of petition No. 36 regarding thatch insurance and the effect of the Solvency II directive on obtaining insurance for thatched properties in Ireland. I am the CEO of the Alliance for Insurance Reform and I am here today with my colleague, alliance board member, Mr. Peter Boland. The Alliance for Insurance Reform now consists of 46 civic and business organisations from across Ireland, representing more than 55,000 members, 700,000 employees, 622,000 volunteers and 374,000 students. Our straightforward aim is to ensure adequate insurance cover at affordable levels for all in a market that is fair and transparent.

Thatch properties are an important part of our heritage and play a role in Ireland’s vital tourism sector. However, the thatch insurance market today does not function properly and breaks down into three distinct groupings. The first is those that get cover from one known insurer at a reasonable rate. However, we understand it is not providing cover for new business. The second is those that are offered cover at an exorbitant rate, approximately 1% of the property's value. The third is those that cannot get or cannot afford cover, which is approximately 50% of thatched property owners.

Most thatched properties have protected structure status usually simply because they are thatched, thereby placing obligations on property owners to maintain the property, including the thatch, by dint of legislation. How can citizens be required to maintain thatch by the State in a market that will not provide it with insurance? The response of the European Commission appears to provide new avenues for addressing this vexed issue that hitherto have not been adequately explored.

The situation thatch owners find themselves in did not occur in a vacuum and many of the issues they are experiencing resonate with other people and organisations sharing common hardships such as unaffordable premiums and an absence of adequate underwriting cover. I joined the Alliance for Insurance Reform earlier this year and, at my first members' meeting, found it extraordinary to see the range of organisations there, from small and medium enterprises to arts, sports, voluntary and community sector bodies, all adversely impacted by insurance. I encourage members to take a minute to review the names of the representative organisations appended to our submission and to think of the lives and livelihoods in your constituencies adversely impacted by persistent insurance difficulties.

Both the Government and the Opposition have supported considerable reforms in the insurance landscape in Ireland. You, like us, were told by insurers that these reforms were essential before premiums could and would come down. Representatives for insurance companies reminded us constantly that we were a country with a high volume of claims, excessive awards, a significant problem with insurance fraud and beset by an imbalanced and unfair duty of care. The people of this country, through their representatives, have addressed each and every one of these issues. The first of the reforms was the judicial guidelines. In April 2021, the judicial guidelines were introduced, replacing the Book of Quantum for the assessment of awards in personal injury cases. The guidelines provided more detailed guidance in the assessment of awards and have contributed significantly to reducing awards to levels seen in other European countries.

In 2021, the Garda National Economic Crime Bureau established a dedicated office to take reports of alleged insurance fraud for initial consideration. According to the CSO, there were 98 insurance fraud cases recorded by An Garda Síochána in 2022 compared with 18,453 personal injury claims in the same year. That is 0.5% yet insurers have regularly insisted that up to 20% of claims could be fraudulent or exaggerated.

Amendments to the duty of care were commenced in July this year. They involved a proportionate rebalancing of the duty, requiring individuals to take greater responsibility for their own safety and their own actions when on another’s premises. The new legislation makes it much more difficult for trespassers to succeed in bringing claims and it also expands the instances in which the voluntary assumption of risk arises. Taken together, the risk profile of most organisations has changed significantly and this should be reflected in all premiums going forward, notwithstanding protestations to the contrary.

The reforms have had a significant impact already. The volume of claims reduced by 46% between 2016 and 2022 across public, employer and motor liability. If nothing else were to have happened, such a precipitous and sustained drop in the volume of claims should have led to meaningful premium reductions in public liability insurance. The recent Courts Service annual report for 2022 found that new personal injury cases fell by more than 40% in the last four years. In the High Court, it is even larger, down 70% from 666 new cases lodged each month in 2019 to less than 200 in 2022. The average PIAB public liability assessment is down 39% to June 2022 compared with the average 2020 assessment under the old book of quantum. Published in July, the NCID mid-year data report on public liability by the Central Bank found a 12% reduction in the total cost of settled injury claims to mid- 2022 from the 2015-2019 pre-Covid average.

Where, then, have the tens of millions of euro that have been saved gone if they have not been passed on to the public in the form of reduced premiums, particularly for public liability policyholders? Recent newspaper headlines might provide some clues: “Irish arm of insurance giant Allianz sees profits jump to €50m”; “FBD approves €35.8m dividend as profits jump on receding costs”; and “Arachas profits soar 35% amid wave of insurance broker deals - insurance broker group paid out €77.7 million in dividends last year”. I will leave it to the committee to draw its own conclusions.

Having been the primary, if not sole, beneficiary of insurance reforms to date, it is disturbing to now see insurers bring “big data” into play. Insurance cover was historically built on the premise that the fortunes of the many covered the misfortune of the few. The new model of “micro-sectoring”, that is, only covering niches that are projected to be profitable in themselves without any pooling of risks, seems determined to squeeze the few out of existence, thatch included. The thatch insurance market seems to be the very definition of market failure. How can the State compel thatch owners through protected structures legislation to maintain and keep their thatch without providing some means by which they can obtain insurance cover? It is utterly invidious and singularly unfair.

In this regard, the Government needs to hold insurers’ feet to the fire in terms of creating a market that is fair and accessible to all. We are looking at the thin end of the wedge here today if it does not. Insurers need to be compelled to bring market solutions to the Government’s table. It is not acceptable to merely cherry-pick the sections of Irish society that are most profitable and leave others to wither on the vine. We already know there is ample profit to be made for insurers in this country and it is past time they played their part in finding the solutions that are needed.

Deputy Emer Higgins

I thank the witnesses for attending. As the Chairman said, we apologise for the late start. My questions are mainly for Insurance Ireland and they have been shaped a little by the last presentation from the Alliance for Insurance Reform. Some of the statistics that Mr. Hanley rattled off, given he no doubt does this a lot, are stark, and I would welcome a response to them. They include a 46% reduction in claims, a 40% reduction in claims brought to court, a 70% reduction in claims brought to the High Court and a 39% reduction in claims in PIAB. What has been the reduction in premiums?

Ms Moyagh Murdock

I am here to talk about thatched cottages and a solution in that regard but I am happy to answer the question. I would argue that premiums have come down significantly over the last two and a half years. Motor insurance is down 28% against a backdrop of very high inflation. Employer’s liability and public liability have been stable and that is against an inflationary rate where we have seen materials and labour costs in the economy increase dramatically. We would argue that the premiums there have remained relatively stable. I reject the argument that there has not been movement or change in the market.

I would also say that in the market for motor insurance, we are seeing a number of new entrants come into the sector. However, we have not seen new entrants in the employer liability-public liability market because it is still a very challenging market and for the previous ten years, as per Central Bank-NCID data, it has been significantly loss-making, both in employer’s liability and public liability. The insurance companies have always said they will pass on savings as the agenda for insurance reform is implemented but, unfortunately, when you are making a loss, there is nothing at this point to pass on. We are optimistic that the agenda will have a positive impact on the market and we still stand over that commitment to pass on savings as and when they arise.

Deputy Emer Higgins

When we are talking about loss-making and contrasting that with headlines around profits and dividends, it is hard to marry the two. I suppose we are talking about the stabilisation of public liability in particular. The legal landscape changed in July, when we had new changes in regard to the duty of care, things were rebalanced and the risk profile changed. To quote Ms Murdock, premiums should be commensurate with risk, or that is what she said in her opening statement with particular reference to the petition around thatched roofs. I assume that statement is also about the industry as a whole. As the duty of care has been completely rebalanced since July, how are the members of Insurance Ireland reacting to implementing that change? Is stabilisation of premiums good enough when there has been this massive change from a legal perspective?

Ms Moyagh Murdock

We would say that the members are definitely very welcoming of the change in the duty of care legislation. We have always called for a rebalancing there and said that too much onus was placed on business owners and the owners of properties, so when an incident or accident does happen, there is no real responsibility on the individual. As the Deputy said, the new legislation was introduced in July and it is a very short time since it was introduced. It is still very early days in terms of seeing actual figures as to how that is going.

The Deputy quoted figures from PIAB. We would encourage people to use the PIAB channel but, unfortunately, it is still the case that only 11% of personal injury claims go through PIAB. People get fair and faster treatment there but, unfortunately, too many cases still go the full route of litigation. That is unfortunate.

In terms of the future impact on premiums, I cannot discuss future pricing at all. I can only talk about what has happened in the past.

Deputy Emer Higgins

It is five months since this change happened. If we cannot look into the future, let us look at the situation since July. What has the change in premiums been?

Ms Moyagh Murdock

I cannot comment on that because I would need to see data from the Central Bank. It will be best placed to say what impact it has had.

Deputy Emer Higgins

Surely the Insurance Ireland organisations know.

Ms Moyagh Murdock

All I can do is comment on what our members are saying. We welcome that change in legislation and we have called for it for a long time. This will take time to bed in. The insurers stand over their commitment to pass on savings when they see them. I repeat that premiums have remained stable against an inflationary and booming economy. Businesses have increased their turnover, employment and salaries, and the CPI is telling us on a daily basis that we are in a booming economy with full employment.

That translates into insurance cover. We insure against an asset. The asset or business has gone up in value but premiums have remained the same.

An Cathaoirleach

Mr. Boland wishes to contribute on that matter.

Deputy Emer Higgins

I would first like to ask a follow-up question about passing on savings to customers. What transparency is there, in particular in public liability, which we hear is a loss-making area? What data is available publicly?

Ms Moyagh Murdock

Ireland is unique in that we have a national claims information database. It is a report by the Central Bank. The full report is produced annually on motor, employer liability and public liability. It has started producing an interim report on-----

Deputy Emer Higgins

It does not show whether companies are making losses or not, surely?

Ms Moyagh Murdock

It does indeed.

Deputy Emer Higgins

Does it show that level?

Ms Moyagh Murdock

Absolutely. That is where we take our information from. I do not have personal information from companies. I am not sure whether it is the actual market. Mr. Curtin can answer that.

Mr. Michael Curtin

All of the insurers operating in the market are obliged to report to the Central Bank about their income, loss and expenditure. It produces a report on the totality of the market. On the point on personal injury guidelines, CBI tracks the impact of the guidelines. One point in its mid-term report on employer liability and public liability was that only 3% of claims have settled through the guidelines in the litigated channel. That is where all the cost is. The CBI report states that 66% of claims are settled in the litigated channel. That is 86% of the cost. There are also a number of challenges to the veracity of the guidelines. The operating environment is still fluid.

Ms Moyagh Murdock

A wait-and-see approach has been adopted by some solicitors in progressing cases until the judicial review is completed. We are optimistic that we will see a positive result. It is unfortunate that there are some cases still holding back on that. It is the Central Bank. In the last report, I think there was a loss of 3% in employer liability and 11% overall between employer liability, public liability and property. It is loss-making. We are optimistic with the new guidelines in place and the legislation on duty of care, insurers will start to see an impact on claims and, we hope, on profitability. Each individual insurer reports on its own profitability. We do not report on that.

Mr. Peter Boland

Deputy Higgins highlighted some of the key figures we raised today. To simplify matters further, if you ignored all the reforms the Government has put in place over the past six years and just go to the heart of it, right from the time the insurance reform process began around 2016 or 2017, insurers maintained that claims drive costs. That was the number one focus of everybody. To repeat what was summarised, the total number of claims has gone down 46% across all areas of insurance since 2016. If you ignored everything else, there is the momentum to get premiums down. We have not seen any evidence that employer liability and public liability premiums have stabilised. In fact, if you look at specific sectors identified by the national claims information database, for office-based enterprises and, somewhat ironically, insurance businesses, premiums have come down quite dramatically over the past number of years. Premiums for the vast majority of other sectors that interact with the public, in particular, continue to increase substantially.

To go back to thatched cottages, we have been here all afternoon and applaud the work of the committee over the past number of months on behalf of thatched building owners. We applaud the work done previously and today. It is terrific to see progress but all of that progress is jam tomorrow for thatched cottage owners. Some 50% of thatched cottage owners are uninsured. They are an ageing population - the vast majority of thatched building owners are over 55. No young people are buying thatched buildings or are able to because they cannot get a mortgage as they cannot get insurance. Frankly, we have no faith in insurers to respond to this challenge in the short term. Mr. Hanley outlined various reforms yet policyholders are not being rewarded. The word we get from the umpteen sectors which have implemented significant health and safety initiatives in recent years is that when they are in place, they are ultimately not acknowledged by individual insurers. There is no return for all the extra effort and expense that go into additional health and safety measures. We have no faith in insurers responding to all of the recommendations the Department of heritage is putting in place.

From a market perspective, we are not convinced the sector will ever be big enough. I know the Minister of State at the Department of Finance referred to the Danish market, which has 55,000 thatched buildings. We do not see a route right now to get from 2,000 to 55,000 buildings because of the insurance regime. We do not see that as feasible. We ask how that sector is ever going to be sustainable.

What do we do in the meantime while these measures work their way through the system? That is where the Government comes in. The response from the European Commission on Solvency II is quite clear that intervention is possible. The Department of community affairs has already done it over the past number of years by subsidising very high insurance costs for community organisations that could not afford them. We are not prescriptive in the response from Government but we need a response from it because the insurance industry will not respond to this unless it is dragged kicking and screaming into a real response.

Deputy Emer Higgins

To Insurance Ireland, concerning thatched roofs, we heard earlier that some people who do not have open fires are still considered the same risk as others. I think the Chairman brought this matter up with the Minister. Is that a standard between different insurers? Is there an opportunity for people to engage with their insurers one to one when they have made a genuine effort to reduce risk?

Mr. Michael Curtin

There is no standard approach among insurers. They all assess a property's risk in a different manner. We see from the guidance that a bigger risk is associated with burning stoves than open fires. There are also other factors such as chimney height, chimney liner and flue, etc.

An Cathaoirleach

What is the bigger risk in a flue going up from a stove than an open fire with a hearth going up? Can someone explain that? I am from an age that I remember going to my grandparents' home with open fires, seeing sparks coming up from a chimney and no fire. Now that there is a stove with a flue up and only sparks coming out at the very top, suddenly there is a greater risk.

Mr. Michael Curtin

I am not an expert. From the report by the Department of housing, the incidence of fire was greater when there were stoves. I would have thought an open fire would be a greater risk. I think it is to do with the height of the chimney. If it is not 2 m clear of the thatch, that makes it difficult. To the Deputy's point, they all assess it individually. Usually, with regard to this matter, someone conducts a risk survey before the quote for a renewal or something like that.

Ms Moyagh Murdock

I am an engineer. I will not say I am a fire expert but I understand the confusion. In an open fire there could be sparks but they are at ground level. The heat generated up a flue is intense and the sparks coming out the top are much closer to the combustible material. That is probably why it is a higher risk. It is not so much the sight of sparks on the ground; it is what comes out at the top-----

An Cathaoirleach

That is what I am talking about. I remember open fires in my house and in this type of weather or this time of year, you would see sparks rising up and coming out the top of the chimney. It was not just at ground level. I cannot understand how anybody can stand over that and say that there is a bigger fire risk.

Ms Murdock was saying she is an engineer and I will take her word for it but from what I have seen from living in the country, in every country house you might see sparks coming out of a chimney. Suddenly, over the past couple of years, there seems to be a massive issue that those sparks are going to burn down the house.

Do Deputies Higgins or Buckley wish to come in?

Deputy Emer Higgins

I have no further questions.

Deputy Pat Buckley

I thank the witnesses for coming in. It is about insurance for thatched houses and I will return to that. One thing I hate is maths, but I was doing some just there based on the Alliance for Insurance Reform figures. The three companies mentioned, between dividends and profits alone, have €163.5 million, while families or pubs whose buildings have thatched roofs are unable to get insurance because of technicalities or a non-common sense approach that is without empathy. I appreciate companies must make profit and so on and so forth, but in Ireland we normally come up with empathy. I think it was at the public accounts committee that the insurance companies were in discussing instances of fraud and speaking about how they were compelled to put premiums up because of the thousands of fraudulent cases. However, Deputy Doherty asked the five main insurers how many such claims were reported to the Garda and they said there were no more than 116 or 120 between them, so it is misinformation.

We are here because we are trying to protect our heritage. The people who live and work in these houses and businesses are proud of them. The minute we go to the European Commission and get a statement to say the companies actually can do something about that we are then into a defensive mode. We will be told it is a bad idea. As far as I know, when this committee wrote to the European Ombudsman it was specifically about thatched houses and not any other kind of home, yet we move across to Insurance Ireland on it and it is kind of suggestive on it. I welcome that the statement says, "When it comes to a way forward, Insurance Ireland is committed to working with all stakeholders to work towards a viable solution for thatched properties owners". We already had two Ministers of State in here and in fairness to them they have committed to a pilot project on making stuff a lot safer and so on. To be realistic, the insurance companies are trading here and making very good profits. I do not know why there is not a bit of fair play or understanding in businesses that we now have a Government willing to put forward a pilot project to assist these homeowners and business owners with thatched properties, even financially.

All we have from the insurance companies is excuses. They say they do not want to take the risk. When you ring up for an insurance quote, everyone is an individual, so can it not be done as individual cases? The insurers are lucky they are not in Denmark, because they would have thousands and thousands of cases to deal with, whereas here they might have the capacity to deal with people on a one-to-one basis on this matter. There was another question on motor insurance. We see it when people are caught drunk-driving or drug-driving and are put off the road for a certain period of time. Those individuals had motor insurance prior to the offence, but when they go back in for a quote, having served their time, the insurance company says they are high risk and bumps up the quote by about 90%. The individual then has to go back and get three different refusal quotes, which is degrading, before they can apply to, I think, Insurance Ireland to instruct the original insurer to give them a realistic quote for insurance. Why can this not be done with thatched houses? If somebody has insurance and we will say the premium is €250, some of the insurance companies are moving out of the market and the ones that are staying are saying this person is high-risk and we want €2,000. Is there a mechanism for those people to go to Insurance Ireland and state this is the same house, that they have not had a fire and they are improving it all the time? Despite this, it is at the behest of the insurance company whether these people can get insured or not. I appreciate the companies say they must make a profit, but we seem to be nit-picking. The word that was said a while ago was that it was microsectoral. That is magic word. It is cherry-picking. There was mention of public liability coming down. It is a massive problem when it comes to fundraisers, events and so on. We lost our St. Patrick's Day parade last year and it is the insurance companies that are going to get the bad reviews for that. We have the hot rods in Ireland and the motorbike racing. These are all being cherry-picked at the moment and the premiums are going so high groups cannot afford to run these events anymore.

Going back to what the European Ombudsman said about the suggestion something could be worked with it, I do not know how it will be resolved but surely there must be some avenue whereby these people with thatched houses and businesses can get insured. As was said in one of the opening statements, there are the insurance companies that have stayed loyal and those people have stayed loyal to the companies as well, but they are not taking on any extra risks. People cannot understand how one company can decide it is safe enough to insure a premises but others can decide otherwise. I hope the witnesses can understand my points.

Mr. Michael Curtin

I will come in on that point. It goes back to the discussion about whether insurance should be made compulsory. As we said in our statement, there is nothing to say it cannot be made compulsory, but the unintended consequence takes us back to the Deputy's scenario about motor insurance. It is compulsory, so someone deemed high-risk or a bad risk from an insurance perspective must get insurance to drive on the road and that is where the declined cases mechanism, as it is called, works. Where there are three refusals the person is sent back to the first insurer. We administer it on behalf of the market, but if we were to do the same for thatched cottages, all properties in the country would have to do the same thing. Given the scale of it, with perhaps 2 million properties in the country, they would all need to get insurance if it was made mandatory. Then it would have to be administered. There would also have to be a scheme in place in case an insurer went insolvent and there is the question of whether it would breach state aid rules and all of that. While we recognise and are willing to do anything to resolve the issue with thatched properties, I do not think compulsory insurance is the mechanism to do it.

Deputy Pat Buckley

I am sorry to cut across Mr. Curtin, but he spoke of being "willing" to work and we have listened to the two Ministers of State-----

Mr. Michael Curtin

I am sorry to cut across the Deputy, but we have been engaged with both Departments on this issue over the past six or seven months. We facilitated a meeting of our members with some of the thatched property owners and with both Departments about the guidance they are implementing. We will provide feedback on that as well. It does not solve some of the issues that currently exist, but we see it as a positive development into the future.

Deputy Pat Buckley

It is something at least. We have had many meetings where there are five different Departments or agencies all trying to solve the one problem and all coming up with a different plan instead of coming into one room and all agreeing on one plan. I cannot get my head around it. I understand the point of profit in any business, but if the insurance companies are working with the Departments and there is a plan - in fairness, they have made a commitment on the pilot project and done free booklets on extra fire prevention and so on and these are all positive - in tandem, can the companies recognise that and provide these people with a realistic quote, even as an interim measure, until we have a plan?

We are coming to the end of this year, so this would be for next year. Can it do that so those people in those homes have some security while this other issue is ongoing between Insurance Ireland and the Departments? The sad side of it is that people are running family businesses under these thatched roofs. Their business is gone without any consideration because of a technicality that this bar or that bar has changed. Is there an option for the insurers to sit down with the Department and put their hands up and say they can do X, Y and Z, but that everyone has to move to a place where they are all going to be happy? My problem is that those families have spent an awful lot of money restoring these homes of which they are proud. They are preserving our history. We saw what happened in respect of "Ryan's Daughter" and how that fell to rack and ruin when we should have held on to it. What can we do whereby we can tell these families that the insurance companies are now working with the Departments and have come up with an interim plan? The families would then have a bit of security that the insurers were going to give them a realistic quote, although I do not know what a realistic quote is. The insurers could give them a realistic quote in order that while this is ongoing, the families are safe. Then, in another year, if the insurers are still talking to the Department or if anybody is still talking to anybody, these people will have not lost their homes or the ability to keep their businesses going and we will not be back here scratching our heads and asking how that happened when we saw it coming.

Is there an interim solution? As Ms Murdock said, Insurance Ireland has 130 members providing cover for more than 25 million customers in 110 countries. That is a lot of people. There has to be profit in that. It is not making sense. It is very difficult for me to try to get my head around it. Again, I understand that it is profit. At the moment, however, we see what the Government is doing. I am on the Opposition side, but I am very straight and fair that way. I am on the Opposition side but I give credit when Ministers are doing their jobs and actually engaging with everybody on this.

I ask the witnesses to go back to the insurance companies Insurance Ireland represents and tell them we have a bad situation here. That probably will not bother them because they can cut their cloth and walk away from it. On the other side of it, however, we will all have to work together in this country regardless of what kind of insurance it is. Let us not get into the mess of what happened the last time about what I would call false advertising around fraudulent claims and the companies saying that was why the premiums were going up. It was absolute - I will not say the word but the witnesses know what I am saying. This is my frank question. Does Insurance Ireland have the authority or is it in the position to go back to the insurance companies to tell them its representatives have appeared in front of the committee and have spoken to the Ministers and that something needs to be done about this and that both sides need to be realistic and fair? Insurance Ireland obviously has a plan about what it wants. This committee's plan is that we want fairness and to see people sorted fairly. Then, whatever happens after that, I do not know what that plan is.

Is it possible that Insurance Ireland can give people outside this House assurance? We have gone around in circles on this and nobody can give us a definitive answer. This is not to be disrespectful to anybody but all we seem to get are excuses, and excuses are no good to the people who need this specific insurance. All we are getting are companies saying they could give it to people but they cannot do this or that. The new regulations are in place. Ms Murdock mentioned the duty of care. Yes, it is only a couple of months old but to me, duty of care is the common-sense approach. People should know they are responsible for their part as well and not to be taking the you-know-what. That happens as well. I will shorten it as much as I can to this line. Is it possible to do something right now, before Christmas, in the interim, to save all these families from going through the crap they are going through? Can we come in and not argue, but sit in a room together and come up with one plan that solves it?

Ms Moyagh Murdock

I thank the Deputy. I cannot commit to having something that will solve everything before Christmas. All I can continue to say is that we will work with the local authorities, the Department of Housing, Local Government and Heritage and the Government to ensure that we can do as much as possible. That does include reducing the risk of fire. We really welcome the work that is being done on that. As well as that, we would certainly be positive towards group schemes. We know that 90% of thatched owners are interested in forming a group. That sets minimum standards and everybody tries to attain those. The risk is reduced. Part of the challenge, however, as odd as it may seem, is that there are a very small number of thatched cottages in Ireland, which means that the actual premium derived from the insurance is equally tiny.

The Deputy mentioned the duty of care legislation. That really does not come into it when it is home insurance and thatched cottage insurance. Insurers cannot cross-subsidise loss-making lines and may not even sell certain lines. They may be in the motor sector only or they may be in the life insurance sector. While results may demonstrate that there are profits, the motor policy holders would not be happy that they are cross-subsidising other loss-making areas of insurance. That is why we have to work with Government and work-----

Deputy Pat Buckley

I am sorry; could the shareholders with €163.5 million not subsidise a bit of it? Does Ms Murdock get me? It is that piece in the middle. We are talking about empathy, businesses and profit. They do not mix in a pot. I know where Ms Murdock is coming from but people who are listening outside this House will have heard about the pool scheme. The Cathaoirleach read out a statement a while ago. Pooling the resources in Ireland for thatched homes will not work because the pot is too small. That idea has gone.

An Cathaoirleach

There are only 320 and they need 1,000.

Deputy Pat Buckley

That is struck out.

An Cathaoirleach

That is where the Deputy is coming from.

Deputy Pat Buckley

Yes, that idea has been struck out.

An Cathaoirleach

Is there something that can be done for people in private houses and businesses?

Deputy Pat Buckley

Would they have to go back to-----

An Cathaoirleach

The witnesses know and we know that they will not get 1,000. It has been thrown out the whole time they need to get 1,000, but it is not going to happen. There are 320 people who have tried to bring that scheme together. For it to be viable, they need 1,000. Is there something that can be done for people in private residences and businesses? We have heard it here that they cannot sell or buy houses. Some of them have half mortgages drawn down. They are caught now. They cannot even draw down the rest of their mortgage because of insurance. Surely, somebody with profits like those the insurers are making has some sort of responsibility to people like this to help them in whatever way possible. That is where Deputy Buckley is coming from.

Deputy Pat Buckley

That is where I am coming from. I will be very quick and give an example. When I was taking out my mortgage, I had to get house insurance. I had to have an alarm and so on. Those were the regulations and stipulations. The first fire, and only fire I had in my house, was the bloody alarm system they wanted to put in so I could get my mortgage put down. There was a €600 excess to replace a €33 battery. That is insurance for you. We could stay here for hours talking about it. What we need are results for people outside of this House. What can Insurance Ireland do? As of next year, because Ms Murdock said it would not be before Christmas, what can it do to assist these people now? They are losing their livelihoods. They are losing everything. These people are not deciding to go out next week when a house has gone up in flames. These people want these buildings as homes and they want their businesses. People mind anything they respect and love. I am at a loss. If somebody comes back to me and asks how I got on with the insurance issue, I will say I am still in the same position I was a year and a half ago. I am still full of more excuses and paperwork. That is mind-boggling.

Mr. Michael Curtin

Looking into the future on that, one thing we welcome is the Department of housing's acknowledgement around the pilot and getting engineers out to implement the guidance. From an insurer's point of view, our perspective is that managing risk is key. We have seen the higher incidences of fire in Ireland versus the UK. However, the implementation of the guidance might see insurers take a more sympathetic view to what is going on in the market at that stage. That may help. It will take time to get the pilot scheme on that up and running but the more that is done and the more communication there is between the Department, ourselves and our members, that might help alleviate the situation into the future.

An Cathaoirleach

It is right that Insurance Ireland has a duty of care to its members, but it is also taking premiums off people.

Mr. Michael Curtin

We live in these communities as well.

An Cathaoirleach

Some properties have no fire or open fire or they have heat pumps. There is no reduction in people's premiums where there is no risk of sparks going up the flue.

Surely, the insurance companies have a responsibility to those kinds of people and premiums should be coming down.

Coming back to something Ms Murdock said earlier in the opening statement, there is a greater risk to "rural thatched properties, given their remote location and distance from fire services". I would imagine those houses have not moved since they were built and are the same distance from the fire services as they were down through the years. Where is the greater risk coming from the last couple of years that they seem to have moved and are a greater distance from the fire brigade if a fire did start? Where did that come out of?

Mr. Michael Curtin

The feedback from our members is that the call-out times have lengthened due to resourcing on the fire brigade side. It is taking longer to get out to some of these rural locations. That is the feedback we have been getting, rather than the property not being in the same position.

An Cathaoirleach

Where is that feedback from?

Mr. Michael Curtin

It is from our membership. This may be another risk factor they would take into account.

An Cathaoirleach

I have done a lot of work with the Cashel fire brigade. I would imagine that over the last 30 years, machinery and the whole lot has improved drastically. As I said, the houses are the same distance from Cashel town as they were 30 years ago. I cannot make out why it is suddenly a greater risk or greater distance to get out with the new machinery they have.

Mr. Michael Curtin

I do not think it is that. Obviously there are new technologies and that so they are doing great work. It is more about the deployment time. It is more from the resource point of view, to get them activated and out. That is what our members-----

An Cathaoirleach

The retained firefighters have to respond within five minutes but they can only work within 2 km from the middle of the town. Same as it always was. I think that is a complete red herring as an excuse.

Deputy Pat Buckley

We are going to be facing something similar to this in my own town with the recent flooding and stuff. I understand companies have to make a profit but not extortionate profits from the suffering of someone else. Well before the recent flooding in Midleton, we had a flood back in 2015 or 2016 that did a lot of damage. People were coming into my office saying they could not get house insurance because their address was in Midleton. One fella was living in a place called Forest Hill. I spoke to the broker and said to listen to the address - Forest Hill. The house is up on top of the hill by the forest. They do not build in Castlelake or Water-rock. Incidentally, they actually are building homes in a place called Water-rock, which really aggrieves me because it is on a floodplain but that is for a different day. For house insurance and water damage insurance, there does not seem to be any alternative plan. If there is a disaster, you plan what to do in five or ten years if it happens again to be ready for it.

Mr. Curtin mentioned his members. Are they shareholders or what?

Mr. Michael Curtin

Yes.

Deputy Pat Buckley

If I was a member and I was in the pot of €163.5 million, I would say "I have a good idea - the fire brigades are getting slower to the house fires so we will put up the premiums". It is not a concern that people are going to get burnt inside the house. It is a case of "if we put up the premium, that increases our profit". Do the witnesses know what I mean? It seems to be excuses and risks but at some stage we are going to have to park it and be realistic and say we can only do so much. If the insurers came back and said they were out, they cannot touch thatched houses and are not going to touch them any more, never again, then we could look at the European stuff for a solution but because there is the threat of a possibility that things could be done very differently. I would personally love to see a State-run insurance policy, paid to the people, by the people, for the people. Even if after running costs there was a profit, the profit would go back into the Exchequer. It may not be doable but at least you would be able to cover what you are supposed to cover. The fear we have here is that we have no answer for those people in thatched homes and businesses today and we are not going to have one maybe until next year. We are not going to get an answer. I am only getting frustrated. It is not a personal attack on any of the witnesses. It is just me getting frustrated because I cannot get an answer for the people who want it.

Mr. Peter Boland

To summarise from our point of view, we are coming up to Christmas now and there are a lot of lists being written around the country. If the insurers of Ireland had written a wish list, and in fact they did back in 2016, the Government and the Opposition - that has to be said because this was very much a co-ordinated approach - have delivered the entire list Insurance Ireland put together back in 2016 and 2017. It is time for a payback for the policyholders of Ireland. If there is anything more the Government and the Opposition can do at this stage, as my colleague already said, it is time to hold the insurers' feet to the fire and pass on some of the additional profits. It must be remembered that insurance companies in Ireland never fell back into loss during the bad years but there is additional corporate profit being made now. It is time for some of that to be given back to policyholders.

An Cathaoirleach

There are just a couple of things I would like to raise. Ms Murdock spoke about new capacity coming into Ireland. What the petitioners have witnessed is that that is not the case, apart from one particular insurer that has traditionally provided insurance to thatched properties but is no longer taking on new clients and for any new additions it is asking for astronomical prices. Can Ms Murdock give her opinion on that?

Ms Moyagh Murdock

We are aware through Brokers Ireland that there is increasing capacity. Obviously it is tentative and it will take time. Some of the measure and approaches being taken by the Government and local authorities, as well as fire safety improvements, have increased the appetite for more to enter into the thatched cottages market. I do not have the answer as to how many that will cover but I think it will address some of the problems, although not necessarily everybody. It is a step in the right direction. The more improvements we can make on the risk profile, the more viable it is. At the end of the day, the insurers are obliged to retain a certain level of solvency and make a profit and if they cannot make a profit, they go out of business and leave the policyholders in the lurch. That has happened too often. There have been many years of significant loss-making and we have seen insurers go out of business and leave the market. That is not what we want to see happen here. We want more to come into the market and to provide better choice and more competitive rates because at the moment it is an unattractive risk and will be until we address some of the reasons it is different from the UK market and other jurisdictions.

An Cathaoirleach

None of us want to see anybody going out of business. There are very few of them we can name that went out of business but the profits, when companies are making profits, are astronomical. There must be some bit of give back at some stage.

Ms Moyagh Murdock

We saw Quinn Insurance go out of business and leave the policyholders with €1 billion of the loss.

An Cathaoirleach

We are still paying it.

Ms Moyagh Murdock

We will be for a long time.

Mr. Brian Hanley

There is a point to be made on the whole area of competition. The Minister of State, Deputy Carroll MacNeill, chairs an insurance competition group. More could be done from that office. We are seeing some possible new entrants in motor insurance but nothing as yet in the area of liability. One of the things that might be beneficial is rather than sending out a report at the beginning of every year saying what we hope to or would like to see, we could get some KPIs arising from that particular office and its work every year so it is more accountable to Members of the Houses and members of the public. If competition is as important an issue as we all know and believe it to be, it would be well worthwhile seeing something more tangible and measurable arising from that. I will take the opportunity to say that I am very thankful to the committee for its interest in this. Now that it is seised of this issue, I hope it will keep it up and that we will not leave it too long before we meet again and see what progress has been made.

An Cathaoirleach

I would ask for each of the witnesses' views on the interpretation of the Solvency II directive.

Mr. Michael Curtin

We have talked about it. It would be similar to the alliance's view. We do not see anything within the Solvency II directive that would permit or prevent the establishment of a compulsory insurance scheme.

For the reasons outlined and the unintended consequences, we do not think it is a preferable option at the moment.

Mr. Peter Boland

Obviously it is interesting to note that, essentially, the Government could compel incumbent insurers to insure thatched cottages but we do not believe that is commercially feasible. We want to see it coming from the insurers themselves. It is a slippery slope if we start compelling on something like thatched cottages because the temptation would be to expand it to many other areas and other entities which cannot currently get affordable insurance. Clearly, having it come from the insurers themselves is what we are about. We think there is significant risk associated with compelling insurers to do it. They are making enough out of the reforms that have been put in place at this stage to be able to do it voluntarily.

The second point we would make, and it is something we want to return to at a later date, is that the Commission noted that where member states seek to improve the effectiveness of their local insurance market, they can, in principle, establish public-private partnerships. We feel this is an area that needs to be explored. Insurance Ireland mentioned in its opening statement that it is open to looking at any mechanisms that would resolve this issue, and we expect that it and Government would certainly have a look at that as one of the options for fixing this. This needs to be fixed.

Ms Moyagh Murdock

I want to respond to the point Mr. Boland makes, that insurers should provide this out of their own funds. We have to draw back to the regulations from the Central Bank around prudential regulation. They cannot provide insurance at a loss and at a consistent level of underfunding. It would result in insolvency and in insurers exiting the market, which would be to the detriment of all homeowners, if there were an element of providing insurance at a loss to the actual entities. That just would not work. We want to ensure the risk is insurable and that it is at an affordable rate. There are things that have to be done to make sure the risk is reduced and that we can provide insurance at an affordable rate, either through a joint approach with Government or through elimination of the reasons thatched cottages are such a high risk for fire. That is the solution here.

Mr. Peter Boland

It depends on how one defines the risk. If the risk is for thatched cottages or, as we are starting to see now, the risk is for thatched cottages with stoves, then you are never going to make a profit as it stands because the population of them is too small. That has been outlined already by Insurance Ireland. If the risk is housing in Ireland, then that clearly presents the opportunity to make a substantial profit, as it currently does. You can pick a market to suit your argument but, effectively, if the appetite were there, it could be done.

The second thing I would say is that Quinn Insurance was brought up, as it often is, as a stick to beat us with. Again, it must be remembered that Quinn Insurance did not go out of business because of any inherent failing of the insurance market in Ireland. There were other external issues involved in that, so it cannot be used as an example of how delicate the Irish insurance market is.

Deputy Pat Buckley

Very briefly, I thank all of the witnesses. These conversations have to happen sometime. People over on this side of the table think we are taking it personally. We do not take it personally. It is about us doing what we are supposed to do, which is to represent the people who have concerns and get them aired.

We are not finished with this one. I do not think it is going to go off the board. We could nearly get a stand-alone committee on insurance in Ireland at the moment because there is a tsunami of issues coming after the recent flooding in my town and constituency. It is hard enough for them to get answers as to how they will get a grant, never mind what they are going to do when the house is back up and running, and what they are going to do about insurance. I have just bought my new house. I have not even drawn down the mortgage yet and now it is flooded. What is going to happen there with insurance companies?

I thank the witnesses. It was beneficial. I am nowhere closer to where I wanted to be, unfortunately, but I suspect we will revisit this.

An Cathaoirleach

I have no doubt we will be returning to it. We need to keep doing what we can as a committee to get this resolved because from the word go, from when the petition came in, this is all part of our heritage. If we start losing it, it is going to be a massive loss to the country. I would say that is a bigger risk to our economy than insurance companies having a small bit of a loss. The witnesses can see there is cross-party support for getting this resolved.

The one thing I would ask witnesses before we let them go is, if the petitioner were here today, what would they say to them about the future of thatched properties in Ireland going forward, if this is not resolved?

Ms Moyagh Murdock

I would endeavour to be positive. There are steps in place with the joint approach and the risk mitigation where we would try to avoid the eradication of thatched cottages. That is not what we want to see but we want to be able to have a sustainable insurance sector as well. That is what we are working towards and we are very willing to work with Government and the homeowners to try to come up with an equitable and sustainable solution.

An Cathaoirleach

For any stakeholders with thatched properties looking in on this, what could Ms Murdock say to them to allay their fears that their business might go down because they cannot get insurance, or that they would have to take the thatch off their family home because they cannot get insurance? We have heard it from petitioners. What could Ms Murdock say to them?

Ms Moyagh Murdock

I cannot give everybody the reassurance they may be looking for because sometimes there is a risk that is just uninsurable and insurers have to operate within a sustainable, solvent market. I do not know individual cases but I cannot give a blanket reassurance that they are all going to get cover.

An Cathaoirleach

The same question is for the Alliance for Insurance Reform.

Mr. Brian Hanley

I want to be positive but I think I would struggle to tell any of them to be patient after how long they have had to wait at this stage. It was commented on by various members of the committee to the Ministers on the work that has been done but there is nothing for this Christmas. What do we say in the spring? There are some really difficult decisions for businesses and families. Do I rear my family in a home that does not have insurance? These are really difficult decisions for people to have to make, and they are such an important part of our heritage.

We cannot just let this go and be another issue because it will be the thin end of the wedge in terms of the issues that come up. The petitioner would have said that even if reforms or mitigations are made, they are not even checked, so the level of granularity or microsectoring that happens is that it is thatch. However, not all thatched buildings are the same either. That needs to be taken very seriously and is something that could be done quite promptly, but it will only happen if people are serious about delivering on those kinds of things.

An Cathaoirleach

On behalf of the committee, I thank both organisations for coming in. It has been informative and I have no doubt we will be back again, and either the witnesses or someone else in the sector will be back in front of this committee. We will now suspend the meeting to allow witnesses to leave the room.

Sitting suspended at 4.39 p.m. and resumed at 4.42 p.m.