Dáil Éireann Debate, Thursday - 28 April 2022
7. Deputy Cormac Devlin asked the Minister for Finance the work that he is carrying out to ensure that the benefits of the insurance reform agenda are passed on to customers; and if he will make a statement on the matter. [20526/22]
Amharc ar fhreagraI also express my condolences to the Minister, Deputy Donohoe, on the passing of his mother.
I would be grateful if the Minister of State could update the House on the Government's insurance reform agenda and the work being carried out to ensure the benefits are being passed on to consumers.
I thank the Deputy. There is a limit on the time available to facilitate me updating him and doing justice to the work I do specifically. On the issue of the timescale, the Deputy is fully aware that we have a wide-ranging plan for insurance reform underpinned by the action plan for insurance reform. This cross-departmental action plan was published in December 2020 with the most recent implementation report, from March 2022, indicating that work is progressing well. The vast majority of actions in the plan have been delivered, while the remainder are still ongoing. Over a two-year period from the time the plan was launched, every aspect of it will be fully implemented and everything Government agencies and Departments can do will be completed in that period.
Given the increasing priority and pace of reform, it is necessary for the industry to pass on the benefits to its consumers. The Minister and I have been clear on these points and have been holding the insurance sector to account on commitments made, in addition to having regular engagement with it.
I have met individually with the CEOs of the eight main insurers in the Irish market, twice since the adoption of the personal injuries guidelines. I am keen to continue my engagement with them and to hear their views on all matters regarding the Irish insurance market, while also ensuring that commitments to pass on cost savings arising from the insurance reform agenda in the form of reduced premiums to their customers are honoured. In this context, I note that motor insurance premiums are approximately 40% lower than they were about six years ago, which must be welcomed. They have decreased by between 12% and 14% since the Government came to office. In these meetings, and in my ongoing engagement with industry, I have consistently stressed the importance of insurers reflecting lower claims costs through reduced premiums and the need for insurers to respect the guidelines by not settling for amounts that are inconsistent with them. They have all assured me personally that they will strictly adhere to them.
We have seen those reductions particularly in motor insurance. People have experienced them. There has been good feedback from younger drivers in particular. That was a perennial issue for many years. Reducing the cost of insurance for consumers and businesses is critical, particularly when we see costs increase in energy, retail and other areas. I welcome the priority given to this issue by the Government. I acknowledge the work done in this area by the Ministers of State, Deputies Fleming, Troy and James Browne, and also by the Ministers for Finance; Enterprise, Trade and Employment; and Justice. I commend them on their efforts because from the get-go they have engaged with the insurance companies and we are seeing the benefits. The personal injury guidelines are clearly having impacts on the size of awards. Some 20% of awards are now under €5,000 and 29% are between €5,000 and €10,000, which means nearly half the awards are under €10,000. That compares with just 12% in 2020. Will the Minister of State give an indication of progress on the remaining actions in the Government's action plan on insurance reform?
I thank the Deputy for highlighting those points. The national claims information database, which is compiled by the Central Bank, is unique and provides a level of information that is not available in any other EU country.
An issue that has cropped up at all our meetings is that of pinch points. We are dealing with those very specifically on an area-by-area basis. This week we completed the Second Stage reading of the Insurance (Miscellaneous Provisions) Bill 2022. I hope it will go to Committee Stage shortly. It includes the issue of dealing with price walking which some people say is part of dual pricing. I want to acknowledge the ongoing work of Deputy Doherty on this matter over some time. We are bringing in specific aspects of that through our legislation. We are also dealing with State payments that insurance companies may have taken into consideration. That matter is before the courts.
In the immediate future, the legislation on duty of care will be going to the Cabinet. It is very important. The Personal Injuries Assessment Board, PIAB, legislation is also in the system. Test cases are holding up some of the delivery of those items.
Given the very significant reduction in the cost of awards, as I outlined, and the introduction of other measures, consumers and businesses will expect proportionate reductions in premiums to bring them into line with EU averages. I think we are seeing that. Consumers are certainly feeling that when they renew or examine other policies. If that trend continues, we will be in a very good position and more aligned with our EU counterparts than before. The work being undertaken is being felt by consumers at a critical time given the rise in costs in other areas.
It is actually a year this week since the Judicial Council guidelines came into effect. Awards have dropped dramatically but premiums have not. Even in motor insurance, they have not dropped to the level that we expected or, indeed, that the industry told us to expect. We are not seeing the reductions to business and community groups. It is a year on. We have been told to wait and see how it works. It is now time to get behind my legislation. The Government has stalled it for nine months. It will be before the committee next week for pre-legislative scrutiny. I am asking the Minister of State to get behind the legislation and collect the data that allows us to seek, empirically, whether the insurance industry is benefitting from the judicial guidelines that were put through by this House or whether all of that money is being passed on to consumers.
It is very important to point out that while the judicial guidelines are giving reductions of 40% in the cost of claims for soft tissue injuries and the most common injuries, no one who understood the system ever believed that would lead to a 40% reduction in premiums because the cost of those claims was the biggest cost to the insurance industry but it was not its only cost. That 40% will apply to the proportion of their costs that related to the cost of claims.
It should be 20% but it is not happening.
Whatever. The issue is that they are working so well that people have seen they are getting less, and that is why there are test cases. We have had a big increase in the number of people not accepting the new reduced awards and taking their claims to court. When we have those test cases through the courts, I hope the colleagues of the Judicial Council who wrote the guidelines will implement them in full. That has slowed up the settlement of many cases in the last several months since these guidelines were brought in. It is because they are very effective and people are having difficulty accepting the lower award. I hope that will wash through the courts as quickly as possible and all the reductions promised will pass through.
On business insurance, 93% of all businesses in Ireland have a total annual insurance premium of less than €5,000.
