Mr. Philip Bradley:

I am here today to represent AXA Insurance which is the key operating business in Ireland of one of the world's largest insurance companies, the French headquartered AXA Group. AXA has been present in Ireland since 1999 when we acquired the Guardian Royal Exchange company which had itself previously acquired the business of PMPA, so we represent a business which has been providing insurance in this market since 1721, almost 300 years ago. The wider AXA Group employs more than 2,000 people in Ireland in various businesses. Those businesses include AXA Partners, AXA MPS, AXA XL, Architas, AXA Global Health and AXA Life Europe. AXA has a long, growing and deep commitment to this market. In AXA Insurance, we employ 1,200 staff across both the Republic and Northern Ireland. We operate in all channels of the market here and we offer products directly to consumers and via intermediaries and partners. Through these products, AXA provides critical support to the social and economic life of the country. AXA has one of the widest underwriting acceptance criteria in the marketplace in motor insurance for both personal and commercial purposes and our products enable companies and individuals to go about their business with confidence.

I understand the committee is particularly interested in the difficulties being experienced with the cost and availability of motor, home, business and public liability insurance. There has been a very significant focus in recent months on the cost and availability of insurance and some strong criticism of recent trends in the market amid suggestions of excessive profitability by insurance companies such as us. The reality is that the Irish market is relatively small in international terms. It is equivalent to less than 10% of the UK market and it is very competitive, with more than 30 different companies competing here. It has also proven to be a difficult market in which to develop a sustainable and profitable business with high and volatile claims costs. We are all aware of the high-profile companies which launched in this market only to withdraw or fail as times got tougher.

The Irish market was not profitable for motor and liability insurance between 2013 and 2017. The Irish insurance industry paid out €1.1 billion more in this period than it collected in premiums from customers for motor and liability insurance. The overall insurance market results improved in 2017 when, for every €100 we collected from customers we paid out €96 in claims and expenses, leaving the industry with an underwriting profit of €4 for each €100 collected. For our part, we believe we have developed a strong business model that can sustain us through various economic cycles that we expect to encounter. In the motor and home insurance markets, we have grown to a relatively strong position compared with the market generally. We continue to seek to compete and grow in new market areas, and we are currently competing very strongly to grow our position in the agriculture and small business sectors where traditionally we have had a small presence.

We are currently profitable, but by its nature insurance is a long-term business and we measure our performance over cycles of years rather than months. Over these horizons, we have had good years and poor years, and on average we have made profits adequate to justify the significant investment which our parent company has made in this market. This is an important point as there have been examples recently of companies offering insurance products in this market which were not regulated here and which went out of business, resulting in difficulties to consumers and to other market participants.

On the steps that might be taken that could facilitate reductions in premiums, I will highlight three areas which are especially relevant to our core market of motor insurance. First, there could be reform of how the courts decide damages in cases of whiplash and soft tissue damage. Awards for minor whiplash and soft tissue injuries in this market are 4.4 times that of our nearest neighbour and most comparable legal system. AXA supports the efforts of the Government to set up a judicial council with the task of redrawing guidelines for awards in injury cases. It is hoped that whatever guidelines emerge would be regarded by the public as fair and reasonable for the various categories of injuries. The guidelines should be sufficiently well-defined that everybody should know with reasonable certainty the value of any particular claim. Should this happen, then the problem of judicial inconsistency should cease, leading to less recourse to the court and reduced legal fees, meaning lower claims costs.

Second, there could be reform of the workings and legal basis of the Personal Injuries Assessment Board. PIAB was a success when introduced and directly led to a fall in insurance premiums of approximately 40%, but in the years since the legal profession has found ways to work around PIAB and the system encourages lawyers to do just that. Its effectiveness has been significantly undermined as a result.

Third, we should do more to contain fraud. I am greatly encouraged by the increasing focus on this issue in the wider community and in the media. For our part, we have invested very substantial resources to tackle fraud and to discourage those who might consider it. Our special investigations unit was established in 2002 and was the first dedicated unit in the insurance industry set up to tackle this issue. We note with some concern that even in cases where a judge may dismiss a case due to evidence of fraud or exaggeration, there seem to be no consequences for the plaintiff or their legal counsel. None of these issues will transform the cost or availability of insurance but each has an important role to play. I look forward to any questions.