Dáil Éireann Debate, Tuesday - 23 June 2020
49. Deputy Louise O'Reilly asked the Minister for Finance if the State or county councils can provide insurance to a not-for-profit social enterprise (details supplied) which can no longer obtain insurance from the insurance market. [11888/20]
Amharc ar fhreagraLet me say at the outset that I am very aware of the affordability and availability of insurance cover issues facing not-for-profit organisations, such as the one outlined in the Deputy’s question. However, there are significant constraints on what the Government can do to immediately resolve this issue.
Neither I, nor the Central Bank of Ireland, have any influence over the pricing of insurance products, and neither can we compel any insurer operating in the Irish market to provide cover to community groups or organisations, as this is a commercial matter for insurers. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive) 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.
In relation to the provision of insurance by the State or County Councils, I would be cautious about the introduction of such schemes generally for a number of reasons. Firstly, 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. Secondly, there is no reason to believe that the State would be any better at managing risks than private insurance companies, and therefore would be in a position to price more affordably. Thirdly 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 lines of business which are considered to be unprofitable. This would 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. In view of these factors, I am not convinced that a State-backed insurance scheme would be a solution to the cost or availability of insurance, either for not-for-profit organisations or other consumers more generally.
Regarding the organisation in question, I understand from recent media reports that they had insurance with a UK-based insurer that operated in Ireland on a Freedom of Services basis. This insurer indicated last year that it would withdraw from the Irish market in August 2019, although it would continue to honour existing policies after this date. In addition, I also understand that there is an open claim against the organisation in question, which could be impacting its ability to obtain insurance cover from an alternative provider. While I am not in a position to intervene on this matter as Minister for Finance, I would advise the organisation in question to make contact with Insurance Ireland, through their Insurance Information Service. This Service is for those who have queries, complaints or difficulties in relation to obtaining insurance, and can be accessed via email at feedback@insuranceireland.eu.
In conclusion, I believe that this case illustrates the continued need for the work which the Government has been doing already through the Cost of Insurance Working Group to continue, so as to increase both insurance affordability and availability. Of particular importance is the work of the Personal Injuries Guidelines Committee, which was formally established in April and is due to present its draft guidelines to the Judicial Council by the end of October. I expect that more consistent award levels for personal injuries will help to reduce the cost of claims, in particular in relation to legal costs, over time as there will be less incentive to litigate, and instead use the Personal Injuries Assessment Board to settle claims. In addition, I believe that insurers recognise the need to reflect any savings that result from a reduction in the cost of claims in lower prices and a broader risk appetite, which should increase the availability of insurance to community and not-for-profit organisations.
