Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I thank the Chairman and the joint committee for the invitation to discuss again the implementation of the recommendations of the cost of insurance working group on motor insurance. I will also touch on the work being done in phase 2 to tackle the rising cost of employers' and public liability insurance. I also propose to say a few words about the Setanta judgment issued last week.

I am very conscious of the need to implement the recommendations made in the report of the cost of insurance working group on motor insurance in line with the deadlines set in the action plan. I recognise the importance of this issue for society as a whole as there is virtually nobody who has been left unaffected by the surge in insurance premiums in the past two years. I also accept that while CSO statistics indicate a greater degree of stability on an overall basis, the figures only represent a broad average and there are many who are still seeing increases in the cost of their policies. I take the view that while the greater stability in pricing is good, premiums are still at a very high level and insurance cover continues to be prohibitively expensive for many. That said, both the report on the cost of motor insurance and the committee's report recognise that, unfortunately, there is no single policy or legislative silver bullet to immediately stem or reverse rises in premium costs. However, I firmly believe implementation of the report on the cost of motor insurance will make a difference in the pricing of insurance policies in the next 18 months. I also believe the Setanta judgment, in finding that the Motors Insurers Bureau of Ireland, MIBI, is not liable to meet the cost of third party claims, removes a major cause of uncertainty for the industry which I expect to be reflected in pricing in the short to medium term.

Since I was last before the committee in February, a lot of work has taken place to implement the report of the working group on the cost of motor insurance. It includes the production of its first quarterly report on the progress of implementation of the action plan. The report provides a comprehensive update on progress made to date and reasons for the delays in the few instances where they have occurred. Since publication of the report the advisory committee on small public service vehicles has met Insurance Ireland and I have been informed that a protocol for the insurance industry to promote compliance with road safety legislation should be finalised in the next few weeks. Establishing a reliable set of data and commencing a review of the impact of legal and other fees on personal injury awards is proving to be a more complex task. However, work is ongoing and progress is being made.

I would like to give the committee a more detailed overview of some of the key achievements in the first quarter. One of the key findings made in the report concerns the need to enhance transparency and facilitate the use of data sharing and collection to the level seen in other jurisdictions. The Department of Finance established a subgroup at the beginning of the year to implement the recommendations surrounding data issues. The group has met ten times to date and in the first quarter issued an initial data template to the insurance industry for completion. The returns are expected in the coming days. Once received, they will be analysed by the Department and published before the end of June. The Department will continue to build on and publish a similar update each quarter until the establishment of the national claims information database. The group is also working on the development of legislation to provide for the database, while the Central Bank has led a number of workshop sessions to develop the precise specifications for it. The Department has begun drafting the heads of a Bill to provide for the establishment of the database. Detailed and considered work is already well under way.

Another core recommendation concerns the establishment of a personal injuries commission to investigate and make recommendations based on processes in other jurisdictions which could enhance the claims process in Ireland. The personal injuries commission was established in January, with the former President of the High Court, Mr. Justice Nicholas Kearns, as chairman. The first meeting of the commission was held on 10 February. Monthly meetings have since taken place and will continue to take place for the duration of the commission which is on target to deliver by the end of the year its first report in which it will examine the assessment of soft tissue injury having regard to international experience, its diagnosis and treatment, standardised medical reporting and the use of objective tests.

A number of other actions have also been completed. For example, I recently attended Insurance Ireland’s newly established consumer and business forum which will be of benefit in providing for stronger engagement between stakeholders. Additionally, reviews have commenced of the impact of the changes to court jurisdictional limits and the setting of the discount rate for personal injury lump sum awards.

As the committee can see, some very important work is under way to address the core issues examined by the working group on the cost of insurance. I will be happy to take questions on any of these issues.

A large number of actions are due to be completed by the end of this quarter. The second quarterly update will be published by the Department in July and provide details of ongoing implementation. I hope to be in a position to update the committee on the progress on these actions at the appropriate time.

Members may be aware that the 2017 report of the National Competitiveness Council on the cost of doing business in Ireland which has just been published acknowledges the role of the working group on the cost of insurance in maintaining and enhancing cost competitiveness for Irish businesses. In addition to the work on implementation of the report on the cost of motor insurance, the working group has continued to meet to examine ways to tackle the rising cost of insurance for businesses, particularly public and employers' liability insurance. It has met a range of stakeholders in that regard.

The following broad themes have emerged from our work to date. The cost of public liability insurance seems to be of greater concern to most of the groups to which we talked. There is an increasing trend towards taking on a greater excess to keep premiums down. Related to this is an increase in the number of businesses self-insuring. There is a lack of competition in the market for particular businesses or parts of their business and frustration with inconsistency in awards. There are huge legal and business costs associated with challenging claims through the courts process. Companies not being given sufficient credit for improving health and safety standards and there is suspicion of claims harvesting among businesses. The Statute of Limitations is posing concerns in being able to make an adequate defence of a case. Insurers are settling without proper notification or consultation with policy holders. Some are looking for legislative limits in the book of quantum. Some businesses believe they are victims of fraudulent and exaggerated claims. There is also the feeling the role of the Personal Injuries Assessment Board should be developed further. The working group is considering these matters and will consider what recommendations it can make to address them. It must be recognised, however, that there are some very complex legal and constitutional issues which need to be addressed if we are to make progress on these points to the satisfaction of the business sector.

My current intention is to publish an addendum to the report on the cost motor insurance to cover the cost of employers' and public liability insurance. However, I am reviewing this, as there might be additional updates we might also want to introduce on the report on the cost of motor insurance where there are strong linkages with issues related to the cost of employers' liability public liability insurance. A final report may not be ready until September. However, I hope to be able to provide some clarity in July on potential new measures. When I am clearer on our planned direction of travel, I will be happy to appear before the committee to explain our thinking.

I would like to say a few words about the recent Setanta judgment. While not completely unexpected, there was still some surprise that the Supreme Court overturned the decision previously upheld by the High Court and the Court of Appeal. The impact of the Supreme Court's decision is that third party claimants will be compensated by the Insurance Compensation Fund for only 65% of the claim or €825,000, whichever is the lower. Claimants will also be entitled to a further sum arising from the Setanta liquidation but the current indications are that it is unlikely to be sufficient to cover all of the 35% gap.

As to when payments can be expected to commence, it should be noted that officials of the Department of Finance have had discussions with the Office of the Accountant of the Courts of Justice and the State Claims Agency and indicated that they have plans in place to deal with this issue. Our understanding is both agencies are working with the liquidator to plan the process of validation and the presentation of claims. Once the liquidator has the claims ready for examination, the State Claims Agency will step in to commence the validation process.

The State Claims Agency has assured the Department that it will act swiftly so that there will be no unnecessary delay caused by this validation process. I hope to have greater clarity on the timescale shortly.

While the most recent CSO figures suggest that motor premium levels have stabilised to some degree, the Government is not taking this position for granted and also recognises that motor insurance premiums are still too high. The implementation of all the report's recommendations between now and the end of 2018 is critical to introducing fairer premiums for consumers and businesses.

There is also a recognition of the need to find appropriate solutions to address the employer liability and public liability issues because of the difficulties they are causing for the business community, particularly SMEs. I am determined to ensure that this important work progresses at a pace and that the implementation deadlines relating to it are met. I am happy to take any questions or to provide clarifications on the work of the cost of insurance working group and on Setanta in order to assist the committee.