At the outset, it is important to note that while 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. The day to day supervision of insurance undertakings is a matter for the Central Bank of Ireland, and so my officials have consulted with the Bank in respect of the information sought.
In this regard, I am advised by the Central Bank of Ireland that, during 2017 (the latest available figures), 20 insurance undertakings, which are prudentially supervised by the Central Bank, wrote general liability business in Ireland. It has also indicated that in 2017, there were 13 insurance undertakings, which are authorised in the UK, that were writing general liability business via Freedom of Service (FOS) or Freedom of Establishment (FOE). A further figure which the Central Bank has provided my Department with is the fact that there are currently 139 insurance undertakings, which are authorised in the UK, that are notified to write general liability insurance on a Freedom of Service (FOS) basis in Ireland.
With regard to the point about competition raised by the Deputy, it is accepted that there is a lack of availability of employer/public liability insurance providers for certain types of small businesses. For instance, I am aware of the particular difficulties currently being faced by the play centre sector. It would appear that the main reason for these difficulties is due to a lack of capacity in the market which I understand has been driven to some degree by the overall claims level in the sector. In determining their willingness to enter into or remain in a particular sector of the market, insurers will generally make an assessment of what they consider the overall risk to be. Therefore unfortunately even in situations where there have been no claims, part of their assessment of what premium level to charge, or whether to offer cover in the first place will be based on what they consider the general likely trend for claims in the sector will be, based on their overall past experience. This difficulty is reinforced by the fact that award levels in this country are significantly higher in this country than for instance the UK.
Consequently, these difficulties in the employer/public liability insurance sector explain why Minister of State D’Arcy is placing such an emphasis on implementing the recommendations of the second PIC Report as both of us are of the view that bringing our award levels more in line with other jurisdictions is essential if there is to be a sustainable reduction in insurance costs in the near future. If this were to occur, I have no doubt that that there would be more entrants into the Irish market and more competitive pricing.
With regard to Brexit and its impacts, the decision of the UK to exit the European Union undoubtedly poses challenges for the Irish insurance market, given the level of cross-border insurance business. This will be the case no matter what the outcome is of negotiations on the UK’s withdrawal from the EU. However, in terms of general liability insurance (including employer and public liability insurance in particular), I understand that the majority of the main non-life insurers operating in Ireland also write this type of business. In addition, the Central Bank has advised that in 2017, 40% of the domestic Irish liability market was provided by UK authorised insurers, with one large UK insurer accounting for 22% of that total liability exposure. The Central Bank notes that:
- this insurer has implemented its Brexit plan for both new and existing business;
- the majority of undertakings providing liability insurance have developed and are currently progressing and implementing their Brexit plans on time for 29 March.
As liability insurance is a commercial insurance product, the Central Bank expects that insurance brokers are reviewing the capacity of the insurance market and ensuring that their commercial clients are provided with suitable products from insurers to match their commercial client needs.
In conclusion, my view is that the impact of Brexit on the provision of insurance should not be that significant. I think of much more importance to the general health of the sector is the need to address the high award levels for soft tissue injuries in line with the recommendations of the PIC.
