Mr. Seán McGrath:

I thank the committee for the opportunity to discuss important matters relating to the insurance market in Ireland. On behalf of Allianz, I very much welcome the time and effort that the committee is putting into this, as it is an important topic for businesses, consumers and the economy as a whole. I confirm for the committee and for businesses and consumers that if the cost of claims in Ireland falls, insurance premiums will fall. Today’s meeting is a further and important step in the continuing work to bring about a mechanism to appropriately and fairly reduce the cost of claims and, therefore, the cost of insurance.

Before looking at the claims issue, it would be appropriate to give a little background to Allianz and our long-term and deep commitment to Ireland and our customers on a 32-county basis. I am the chief executive of Allianz in Ireland, which has had a continuous presence in general insurance in Ireland for 117 years. We have served businesses and consumers since 1902. Currently, we employ 660 people in the provision of general insurance. We provide a wide variety of products serving small businesses, large companies, social, voluntary and community organisations, as well as personal consumers. We are proud to have made a contribution to Irish business and community life over those 117 years. Our contribution goes beyond serving the insurance needs of our customers and we do this through our long-standing programme of sponsorship and support for arts and community-related projects throughout the country. Allianz Ireland is a wholly-owned subsidiary of the Allianz group, which is one of the largest global multiline insurers. It has a proven market leading position and a very solid capital base. It operates high standards of governance and risk management practices and it requires all its subsidiaries to adhere to these principles. In Ireland, the Allianz group employs a total of close to 1,700 people through its many different businesses.

Regarding today's agenda, we share the committee's concern and the concerns of many members of the public about the cost and availability of insurance in the Irish market and, in particular, the high cost of claims here compared to other jurisdictions. Claims costs are a core driver of the availability of insurance cover and premiums charged. Many business owners and individuals have understandably been very vocal on the topic, so how do we fix the problem? There are a number of factors to consider, including the high level of injury awards made for claims in Ireland, the legal costs incurred through those claims and the level of fraudulent and exaggerated claims, which are a consequence of the high level of awards.

The biggest issue to be addressed is getting the high level of injury awards under control. In case there is any doubt, we now have a clear and independently assessed picture of the scale of the problem based on the Personal Injuries Commission, PIC, report published last year. The findings of that report were clear and demonstrated that the awards for general damages, excluding special damages and legal costs, in the Republic of Ireland are 4.4 times those in the UK. Addressing this issue is a complex challenge and it involves addressing the claims environment in Ireland. Meaningful reform of the claims environment will ensure a stable and sustainable cost of insurance for businesses and consumers. We welcome the progress made to date and, in particular, the recommendations of the cost of insurance working group. These recommendations have the ability to recalibrate the level of awards and associated cost of claims in the market. This will have a material impact on premiums paid by businesses and consumers.

To address the level of awards, we need to examine the role of the book of quantum currently used by the Personal Injuries Assessment Board, PIAB, which is directly influenced by the awards set in the courts. We welcome the provision in the Judicial Council Bill which will give the judicial council responsibility for setting new guidelines for personal injury compensation by the courts and reviewing them regularly. In this scenario, both the courts and PIAB could use one single and consistent set of guidelines for the level of awards. We believe such a change will bring the Republic of Ireland more in line with other jurisdictions, including Northern Ireland where the judiciary establishes the guidelines for awards in the courts, known as the green book, leading to awards there which are lower than they are here for comparable injuries. The Civil Liability (Capping of General Damages) Bill 2019 from Senator Lawlor on the capping of general damages is a significant proposal which we would like to see implemented.

While these changes will help to bring consistency in the awards levels, lower premiums will only be possible if the level of awards, especially soft tissue awards, are significantly reduced. A reduction in the level of awards, coupled with the establishment of an efficient process for the settlement of claims, is vital if we are to reduce premiums.

I thank the committee for its work in this area. I reassure the committee that Allianz is committed to doing whatever it can to assist in the reforms that we believe are necessary in the Irish insurance market. It is only with real and substantial reforms, especially addressing the single biggest issue, the disproportionately high level of awards, that we will be able to move away from the abnormally high cost of claims in Ireland and towards a lower cost of insurance for businesses and consumers. I will be happy to take questions.