I am aware of the study referred to by the Deputy which was carried out between mid-June and the start of September 2019. It focused on employer and public liability insurance and was responded to by 770 Public Participation Networks members (which equates to just over 5% of total PPN membership). The survey indicated that 83% of respondents have seen their insurance increase over the last 3 years, 45% indicated that they may have to reduce events or services, and more worryingly, 47% indicated that they may have to close within the next year due to rising insurance costs.
This study confirms much of what we already know about there being a significant problem in relation to the cost and availability of public and employer liability cover. Unfortunately, as the Deputy is aware neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance, which expressly prohibits Member States from adopting rules, which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to direct insurance companies as to the price or the level of cover to be provided to either consumers or businesses. A further constraint is the fact that for constitutional reasons, I cannot direct the courts as to the award levels that should be applied. In summary, therefore there is unfortunately no quick fix solution to this matter.
Notwithstanding the above, I wish to reemphasise however that this issue remains a priority for the Government. The Cost of Insurance Working Group (CIWG), which was established in July 2016, and which produced two reports, is continuing to work to implement the recommendations of the Cost of Motor Insurance Report and the Cost of Employer and Public Liability Insurance Report. Its most recent Progress Update, the Ninth, was published in July 2019 and shows that the vast majority of recommendations and actions due by Q2 2019 have been completed. To that end, the key achievements to date from the two reports, including the following:
- The establishment of the Personal Injuries Commission and the publication of its two reports, which included a benchmarking of award levels between Ireland and other jurisdictions for the first time. This showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales;
- The enactment of the Judicial Council Act 2019 in July, which provides for the establishment of a Personal Injuries Guidelines Committee. It is now matter for the Judiciary to put in place the Judicial Council and to operationalise the Personal Injuries Guidelines Committee, which will introduce new guidelines to replace the Book of Quantum. While the Government cannot interfere in their deliberations, I would hope that the Judiciary will recognise the importance of this issue and prioritise it accordingly;
- The Law Reform Commission (LRC) has undertaken a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries, as part of its Fifth Programme of Law Reform;
- The establishment of the National Claims Information Database in the Central Bank of Ireland (CBI) to increase transparency around the future cost of private motor insurance. The CBI is due to make its first report by the end of 2019, and will also make recommendations regarding potentially expanding its scope to include employer and public liability insurance;
- Reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019 to strengthen the powers of PIAB around compliance with its procedures;
- Amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to align the timeframes by which claims should be notified to businesses and organisations with GDPR time limits on the keeping of CCTV footage to make it easier for businesses, community groups and insurers to challenge cases where fraud or exaggeration is suspected, and;
- Various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, a divisional focus on insurance fraud guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality.
I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from August 2019 show that the price of motor insurance is now 24% lower than the July 2016 peak). However, I recognise there is still much work to be done in the public/employer liability insurance areas. In this regard, a big issue which the Government is trying to address is the level of awards as well as the inconsistent application of such awards. This problem is a significant part of the reason a number of UK insurers have left the Irish market, a point, which was confirmed to the Minister of State for Financial Services and Insurance, Michael D’Arcy TD when he met a number of such companies in London recently
Consequently, I believe that the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs particularly for small businesses and community groups is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions, and the establishment of the Judicial Council in the near future is very important in this regard.
What will also be key is that insurers pass on the benefits of any reduction in award levels to policyholders. In this regard, Minister of State D’Arcy has been engaging with them in order to seek a commitment that they will reduce premiums and, even more importantly, widen their risk appetite to reflect savings made, in particular if there is a recalibration of award levels downwards. I am also encouraged by the comments made by a number of insurers at the Finance, Public Expenditure and Reform and Taoiseach Oireachtas Committee in July about the passing on of savings arising from a recalibration of award levels downwards.
In conclusion, I am believe that the cumulative effects of the completion of the recommendations of the CIWG, including a reduction in award levels, will lead to reductions in pricing in particular for small businesses and community groups and also to a more competitive and stable insurance market.