At the outset, it is important to note that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. My Department does not collect the type of information being sought by the Deputy. In addition, it should be noted that the Central Bank of Ireland does not systematically record any information on retentions or partial settlement payments in the standard returns submitted by companies, however it does get information on the aggregate amounts paid and aggregate amounts outstanding for different classes of business, but cannot tell whether the outstanding amounts relate to claims that have been partially paid or are fully outstanding.
For the Deputy’s information, I have been advised that the making of interim payments, particularly in a property repair context is a standard practice by most insurers. Different insurers may adopt different approaches to the use of interim payments and may retain different levels of the overall amount (retention), however you should be aware that this is generally a commercial contractual matter between the insured and his or her insurer and is set out in the policy document.
The use of interim payments generally arises in a situation where the full extent of the liability may not be known until works have been completed. The intention behind this approach is to ensure that the customer can afford to meet the payments as they arise during the repair work for cash-flow reasons, notwithstanding that he or she expects to recover the full cost of the overall work from the insurer. Retention, in this context, refers to an amount held back by the insurer until it can confirm that the works required have been completed and final invoices or receipts are available that validate the costs incurred for the repair/ reinstatement work.
The Deputy will be aware that the Consumer Protection Code includes provisions related to insurance claims handling processes. The practice of retention is not prohibited by law or any other regulatory requirement such as the Code. However the Central Bank expects that firms will act honestly, fairly and professionally in the best interests of their customers in accordance with the general principles of the Code. To this end, it has conducted reviews in relation to retention in the past. I am aware, for example, that in 2013, it requested insurers to make clearer to policyholders their general approach to retention at the time of the product being purchased and again when a claim is instigated.
It is also worth noting that where any consumer is dissatisfied with the service received from his or her insurance provider, including on interim payments and retention, he or she should consult the website of the Financial Services and Pensions Ombudsman – https://www.fspo.ie/make-a-complaint/ – which advises on the correct complaints procedure that consumers may follow should they wish to formally complain.
Finally, as the Deputy is aware this issue of retention and interim payments has arisen on foot of negative feedback that Minister of State D’Arcy has received personally from policyholders of delays in claims processing in relation to recent storms. As indicated in a previous PQ the Minister of State has asked that his concerns be further examined by members of the Cost of Insurance Working Group over the coming weeks.