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Insurance Costs

Dáil Éireann Debate, Wednesday - 11 July 2018

Wednesday, 11 July 2018

Ceisteanna (69)

Michael McGrath


69. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the steps being taken to address problems in the insurance market being experienced by consumers; and if he will make a statement on the matter. [30927/18]

Amharc ar fhreagra

Freagraí ó Béal (10 píosaí cainte) (Ceist ar Finance)

This is a question relating to the problems in the insurance industry from a consumer perspective. Is the Minister of State satisfied with the progress that is being made by the cost of insurance working group, the recommendations and the phase 2 report on employer and public liability? I will come back on a few specific issues. I want to get the view of the Minister of State who is in charge as to whether he is satisfied with progress so far.

The cost of insurance working group was established in July 2016 as a result primarily of the rising cost of premiums in the motor insurance market. It was clear from the working group's extensive consultations that there was immense frustration and anger with the scale of price increases in recent years and the lack of understanding as to why that was happening. A similar view was expressed in the Oireachtas joint committee report. Consequently, transparency has been one of the key themes of both the motor and employer and public liability reports.

In this context an important step forward is the approval last week by the Government to publish the Central Bank (National Claims Information Database) Bill 2018. This Bill, when enacted, will enable the Central Bank to publish an annual report using data gathered from the insurance industry to increase transparency on the relationship between insurance premiums and related costs, identifying the factors that drive movements in the price of insurance in the State, the number of claims, as well as providing statistical analyses of the costs associated with settling claims, and importantly understanding the settlement channels used.

It is important to consider the Government's progress in addressing the problems in the insurance market in the context of the views expressed by both the Oireachtas joint committee and cost of insurance working group reports that there is no single policy or a legislative silver bullet to immediately stem or reverse premium levels. Therefore, when seen in this context, the step-by-step implementation of the bulk of the motor insurance report recommendations on schedule has been an important factor in creating the environment within which the average price of motor insurance premiums have been consistently falling since mid-2016, with the most recent CSO data for May 2018 indicating that private motor insurance premiums have decreased by 19% since peaking in July 2016.

However, I am conscious that there is still much work to be done and the cost of insurance working group project must continue to be a priority for Government and the relevant Departments must continue prioritising the implementation of the recommendations of the reports on the cost of motor insurance and employer and public liability insurance, and of the Personal Injuries Commission under Mr. Justice Nicholas Kearns.

I encourage the Minister of State to drive through the reforms that are necessary in the interests of the industry and of consumers. When he introduced the Insurance (Amendment) Bill 2018 last night, there was strong support across the House for the Bill. Equally, I have no doubt there will be strong support if he is to tackle in a meaningful way the key issues affecting consumers in the insurance sector.

One of the most depressing replies I got was about the CSO collecting data on the cost of business insurance, employer liability and public liability. It seems to be as far away as ever. At least we can measure the impact on premiums for motor insurance policies but we are operating blind when it comes to the cost of insurance for businesses, local community groups, voluntary bodies and sporting clubs. We are relying on their feedback, which is not positive. In a moment I will refer to other more specific issues. Could the Minister of State deal with that issue and try to get data on the cost of insurance in the non-motor area because there is a vacuum currently and it makes policymaking all the harder when we do not have access to basic information?

What surprised me most of all last night was the fact that although we got into a pretty general conversation, nobody discussed awards. The reason insurance is high in this jurisdiction is because of the level of awards. The Department of Finance has conducted a report in which we cross-referenced Irish awards with similar awards in the UK. The indications are that an Irish award is between three and five and a half times more than a similar award in the UK. We are out of kilter with most other jurisdictions. We must get a handle on that and get the settlement channels to remain within the book of quantum, leaving to one side the outlier awards that are coming through the courts, which are outside the book of quantum. This is the big issue we have to deal with. I am not in a position to cap the awards nor do I believe is this Chamber. We have asked the Law Reform Commission, LRC, to conduct a report on the potential capping of awards. We do not know yet whether the LRC is prepared to do that body of work but we hope we will know soon. We must get a handle on the awards in this jurisdiction because if the awards are high then the premiums will be high.

What the Minister of State seems to be saying is that we are heading towards a referendum if we want to deal with the issue of the level of awards which are impacting on the insurance industry and consumers. Has he received advice to the effect that there is no law this House can pass to address the issue of awards? The Personal Injuries Commission is benchmarking Ireland versus other jurisdictions, but is it its view that irrespective of what its recommendation will be that we do not have the capacity as a Legislature to address that issue? Could the Minister of State comment on that?

We need more engagement with the Personal Injuries Assessment Board, PIAB. We would welcome any moves in that regard. We need the information. The national claims information database has been consistently delayed. Other smaller issues that arise include the retention of CCTV data being aligned to the period within which people can report incidents so that at least claims can be defended. Bona fide claims should be dealt with and people who are the victims of accidents and involved in incidents should be properly compensated. Nobody is arguing otherwise, but there are issues in the industry that are having a really detrimental impact on consumers.

The Insurance Action Group reported and set out a number of clear actions that could be taken to improve the situation for many consumers around the country. People are feeling the pressure due to the cost of insurance. Many of those actions have either been delayed or have barely come into effect. One action which started in quarter 1 of this year was completed but all of the others were delayed. The national claims information database which was due to commence later this year has also been delayed. These are actions the Minister of State can promote, energise and get going. What steps is he taking to ensure that he catches up on those actions that have not been completed to bring them to fruition?

As I outlined last night, there have been huge delays in the implementation of the report. One of the biggest criticisms I had at the time of the report is that everything seemed to be long fingered, but even that long fingering has now resulted in a further long fingering in respect of the national claims information database and issues relating to premiums.

What the Minister of State said about awards gives an insight into his thinking. Anybody injured in a motor accident who has a legitimate claim should be paid an award. The issue in some cases is that people are over claiming. Last night I welcomed Charlie Weston's work, and it is important that it is reported that the courts are now questioning those issues. I mentioned the Minister of State's colleague as an example of where a large award was sought and a reduced amount was given by the courts. It is appropriate that the courts are challenging claims that are made. The insurance industry is under investigation for cartel-like activity. We need robust legislation and action from the Government which deals with this not only for motor insurance but for businesses as well and the community sector.

Anybody who says there have been huge delays is wrong.

There are delays involving a number of issues. In terms of the motor insurance report, 39 out of 43 recommendations will have been concluded by the end of this year. We will have concluded 26 out of 29 recommendations of the report on the cost of employer and public liability insurance. We are down into the legislative changes. The national claims information database will be implemented and will be published next week. I am open to anybody on the other side of the House providing time to this side of the House to get this through. I am absolutely committed to it. I thank my colleagues who will facilitate the movement of the Insurance (Amendment) Bill very quickly this week so I am open to doing this if I can get support or time.

In respect of section 8 and data retention, we hope to have that done in quarter three in order that the data period will reconcile with the period in which somebody will be obliged to inform an insured person that there is potentially a claim, Consequently, that person can keep that information, data and imagery in order that he or she has the opportunity to defend themselves properly. Section 14 of that Act is very important, as it will give the courts the opportunity to make an inference from people who do not comply with section 8. Consequently, if one shows up four months later and if the data and imagery are gone and one is not able to defend oneself properly, the courts can make an inference. The other aspect of this that is very important is that the legislation, namely, the Civil Liability and Courts Act 2004, is fine. The sanction is fine. The sanction for people who represent an exaggerated or fraudulent claim is a fine of €100,000 or prison or both. We do not need any more than that.

It is never acted upon.

It is never acted upon but what we want to do is put in place the pathway by which it will be acted upon