Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Okay. I would like to come back to the purpose of this and what people want, which are solutions. They also want to figure out what is going on here and why it has gone on. Ms Dowling mentioned an area at which I have been looking. If the cause of this is Solvency II, the insurance industry should just say it, apologise, get on with it and stop all this pretence that it is about something else that is not related to the issues that have appeared over the last two years. The European stress test that took place in 2014, which 60% of the insurance voluntarily took part in, found that we were very vulnerable to a period of low interest rates. We know that is exactly what happened as a result of quantitative easing.

My own assessment of looking at the core data here is that the medium of High Court awards has not gone up, legal fees have not gone up - indeed it is argued that they have gone down - the amounts paid for whiplash have been paid historically at that level so it cannot be the factor, and the frequency in claims has not gone up. All of these issues do not stack up. Fraud has not increased in the last number of years. It has always been suggested that is has been €50. Whether one believes it is €50 or not, we will leave that for another day. Ms Dowling made those arguments in her presentation. Therefore, what is the factor that has driven a 70% increase? I ask Ms Dowling, as well as the IBA, to comment on that.

From my view, it is the issue of the investment arm of these insurance companies which lost over €100 million in their investment or had their investments reduced by €100 million over a two-year period. Solvency II kicked in and meant that they had to increase their capital base. This is not based on risk at all. It is based on the fact that the companies have to ramp up their profitability. They have had to do it over a very short period of time because they acted in my view recklessly up until then. The people that are now feeling the pinch are those who are getting a 40% premium, if they are lucky enough to be on the average, and the outliers who are seeing 200% or 300% increases. That is my own assessment from what I have heard so far and from what I have investigated so far. I ask Ms Dowling to comment on that.