Dáil Éireann Debate, Wednesday - 17 April 2019
100. Deputy Bernard J. Durkan asked the Minister for Finance if reference can be made to comparisons with other jurisdictions throughout Europe in respect of insurance costs here with a view to ensuring the competitiveness of the economy; and if he will make a statement on the matter. [18037/19]
Amharc ar fhreagraAt the outset, I recognise that insurance costs are important in the context of ensuring the competitiveness of the economy and I am very conscious of the difficulties being faced by certain small businesses in obtaining insurance and that a number of such businesses have had to close or are facing closure if they are unable to get cover. The Deputy will be aware that neither I, as Minister for Finance, nor the Central Bank can interfere in the provision or pricing of insurance products. However it was recognised that the State could play a role in improving the environment within which insurers operate, thus explaining why the Cost of Insurance Working Group (CIWG) was established in July 2016.
I understand from my officials that it is difficult to obtain reliable data to accurately compare the cost of insurance here to that in other jurisdictions throughout Europe. I am informed that international organisations, such as the OECD and Eurostat, do not publish comparative data on the cost of insurance between countries. Eurostat publishes Harmonised Index of Consumer Prices (HICP) data with regard to insurance, but this only provides a comparison of the level of inflation for different types of insurance such as motor and travel insurance. However, it is not possible to compare the underlying cost of each of the types of insurance. In addition, this does not include a comparative index for the price of insurance to businesses. Indeed, the CSO noted in its recent report to the CIWG on the feasibility of producing an index to measure the cost of insurance to businesses that there is little international precedent for such an index.
In any event, any international comparisons on the basis of price alone would not take into account factors such as the various regulatory environments and liability systems in place in different jurisdictions. However, increasing the availability of data in Ireland in relation to insurance and understanding the factors that influence or drive the cost of it are important. This was recognised by the CIWG and both of its Reports on the Cost of Motor Insurance (2017) and the Cost of Employer and Public Liability Insurance (2018) recommended a number of actions to improve transparency. In this regard, I believe the Central Bank (National Claims Information Database) Act, 2018 will be a major help from a transparency perspective. As the Deputy will be aware, the relevant legislation to establish the database was commenced in late January, and the Central Bank expects to produce its first report in the second half of this year. While its initial focus will be on the cost of motor insurance, I look forward to the Central Bank’s analysis by the end of this year on the feasibility and merit of extending the Database to employer and public liability insurance. If such a move is feasible, this is something I think will have a positive impact on understanding in more detail the recent trends in the cost of insurance to businesses.
Increasing transparency is not a solution by itself, I believe that the issue of the rising cost of insurance and in some cases its unavailability is linked to high award levels particularly for soft tissue injuries, as well as what appears to be an increase in fraudulent and exaggerated claims. In that regard, a key recommendation of the CIWG was the establishment of the Personal Injuries Commission (PIC) which was asked to examine amongst other things award levels in this country compared with elsewhere. The PIC reported in September 2018 and concluded that soft tissue injuries are significantly higher here than in England and Wales (4.4 times) and recommended that action be taken to address this disparity through the establishment of the Judicial Council. The PIC recommended that this body would become responsible for preparing the guidelines on personal injury award levels, and would replace the Book of Quantum.
The current position with the Judicial Council Bill is that the Minister for Justice and Equality has indicated that he hopes to have the legislation enacted by the summer. In this regard, it recently completed Committee Stage in the Seanad. Alongside this, the Law Reform Commission has included the subject of capping damages in personal injuries litigation in its draft 5th Programme of Law Reform and this work will begin shortly.
Finally, I expect that insurers’ pricing of premiums in general will take account of the measures which have been, and are being, implemented as a result of the CIWG recommendations more broadly and I believe that insurers themselves recognise this. In this regard, I would recall that Justice Nicholas Kearns, the Chairperson of the Personal Injuries Commission (PIC), noted in the foreword of its second report that insurance industry representatives on the PIC repeatedly stated that, as award levels and associated costs account for the bulk of the cost of insurance, if claims costs come down and are maintained at a consistent and predictable level, then premiums will also reduce accordingly. A further public statement by insurers to this effect would assist in efforts to continue the necessary reform.
