Niall Collins
Ceist:59. Deputy Niall Collins asked the Minister for Finance if advice will be provided on a matter raised in correspondence (details supplied); and if he will make a statement on the matter. [43920/19]
Amharc ar fhreagraThursday, 24 October 2019
Ceisteanna (59)
Freagraí scríofa
I am aware of the issues facing some businesses when it comes to the affordability and availability of insurance, and I have a lot of sympathy with regard to the business in the details supplied, which I agree provides an important service in its particular field.
I understand that the issue related to in the details supplied has been exacerbated by the announcement of a UK-based insurer, over the summer, that they were withdrawing from the Irish market. The company is a UK-authorised company and conducted its business in the Irish market on a Freedom of Services basis, and cited Brexit as its primary reason for its departure. It is understood however that certain parts of the company’s leisure book were not profitable due to the cost of claims over the last number of years so it is likely that this has played a key part in its decision to exit the Irish market.
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 either to consumers or businesses.
Nonetheless, insurance reform remains a priority for the Government. The Cost of Insurance Working Group (CIWG), which was established in July 2016, has produced two reports, and 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. The most recent Update Report, the ninth, was published in July and shows that the vast majority of the CIWG recommendations have been implemented. A key conclusion of the CIWG was that there was no single policy or legislative “silver bullet” to immediately address the problem of rapidly rising insurance premiums. Instead, a broad series of initiatives are required to address this problem.
Consequently, the Government has brought forward a number of pieces of legislation, arising from recommendations of the Cost of Insurance Working Group. These include the following:
- The Judicial Council Act 2019, which was enacted in July. This is a key piece of legislation in the context of insurance reform. It provides for the establishment of a Personal Injuries Guidelines Committee, which will introduce new guidelines to replace the Book of Quantum, following the formal establishment of the Judicial Council. It is now matter for the Judiciary to put in place the Judicial Council and to operationalise the Personal Injuries Guidelines Committee;
- The Central Bank (National Claims Information Database) Act 2018, which has established the National Claims Information Database in the Central Bank. This will 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 to me regarding potentially expanding its scope to include employer and public liability insurance;
- The Personal Injuries Assessment Board (Amendment) Act 2019, which makes important reforms to the Personal Injuries Assessment Board, by strengthening its powers around compliance with its procedures; and,
- 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 with GDPR time limits on the keeping of CCTV footage to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected. These were introduced through the Central Bank (National Claims Information Database) Act 2018.
In relation to the enquiry into having an Irish public body provide insurance for the business in question, even on a temporary basis, I do not believe that this would provide a solution to those businesses impacted. Indeed, such an approach could actually decrease competition in the Irish insurance market, with insurers potentially deciding to cease insuring certain types of risks if there is a view that the State will insure these risks instead, particularly for lines of business which are considered to be unprofitable. This could in turn lead to a lack of choice for those seeking cover which could ultimately mean that the cost of insurance becomes even more expensive than it is now. Also, there is no reason to believe that the State would be any better at managing risks than private insurance companies, and as a result there potentially would be a large financial exposure to the State if significant losses were incurred. Finally, any State insurance scheme would be required to comply with the same prudential rules as private companies, thereby meaning that the cost of any insurance would still have to reflect the risk involved. In view of these factors, I am not convinced that a State-backed insurance scheme would be a panacea with regard to the cost or availability of insurance, either for small businesses or other categories of consumers.
I believe that this makes it more important that the levels of personal injury damages awarded in this country are brought more in line with those awarded in other jurisdictions. The establishment of the Judicial Council in the coming months is very important in this regard. This is why I allocated €1 million in Budget 2020 to allow for this. While the Government cannot interfere in the judiciary’s deliberations, I would expect that they will recognise the importance of this issue and prioritise its establishment accordingly and take account of the Personal Injuries Commission’s findings.