Mr. Declan O'Rourke:

We thank the committee for the invitation to give evidence today on behalf of AIG. We understand the valuable work of the committee and the importance of these hearings and welcome the opportunity to contribute to the discussion. My opening statement will provide some background on AIG in Ireland and then address the costs and availability of insurance in Ireland.

AIG is 100 years old this year and has operated in Ireland for 43 years. AIG companies have a team of 900 people in Ireland. The team is involved in insurance and shared services, both domestically and internationally. Domestically, AIG is the seventh largest general insurer and the second largest health insurance provider in Ireland. In addition, the AIG team in Ireland provides IT support to AIG operations in Europe, the Middle East and Africa. The AIG team also provides treasury and investment services to AIG globally from Ireland. Our general insurance business is roughly €300 million in premiums, 50% in insuring individuals and 50% in insuring companies. Our principal lines are financial, for example, directors and officers insurance, professional indemnity and cyber insurance, motor insurance, travel insurance, liability insurance and property insurance. For 40 years, AIG has been the insurance partner for large and small companies, not-for-profit organisations and consumers in Ireland. Operating in over 80 countries, our global footprint combined with our local presence and knowledge has enabled us to support the insurance needs of Irish based companies expanding in the EU and around the world, as well as the insurance needs of US and other multinational businesses in Ireland. We are proud of the part we play in safeguarding people and property.

The high cost of insurance has been an ongoing challenge in Ireland for many years. Representing the Government back in 1992, the former Minister, the late Des O’Malley, stated in the Dáil that insurance costs in other countries are only a fraction of what they are here. However, the claims and awards in other countries are also only a fraction of what they are here. Inevitably, the former is a reflection of the latter and that will continue. As has been discussed, Ireland has experienced significantly higher personal injuries awards from its courts than comparable European jurisdictions, with awards for minor injuries, on average, 4.4 times higher than in the UK, according to the Personal Injuries Commission. Claims awards and legal costs make up the majority of insurance premiums, and this is a key factor in the cost of insurance in Ireland. The higher awards arise from a combination of factors, including the relatively high award levels for personal injury claims set out in the book of quantum, the inconsistency of awards made by the courts, and a time-consuming and costly appeal process. There is real commitment from Government, the Oireachtas and key stakeholders, including the insurance industry, to implement change. We welcome the Judicial Council Act 2019 as it provides an opportunity to address some of the root causes of higher insurance costs by creating a fairer and more consistent framework for the allocation of personal injury awards. We look forward to the establishment of the personal injuries guidelines commission, under a judicial council, to oversee the delivery of new personal injuries guidelines. We also support the Civil Liability (Capping of General Damages) Bill 2019.

It is critical for the market that insurers are well capitalised with a strong governance and risk management framework. For insurers to continue to provide services to consumers and businesses, they also need to be profitable. Although the Irish motor insurance market made a profit for the first time in many years in 2017, liability remains loss-making. In the last six years of published data, the liability market has made a net underwriting loss of over €500 million and the motor market has made a net underwriting loss of over €800 million. This has led to some companies exiting the market or exiting poorly performing segments, which has impacted the cost and availability of cover in these areas. We want to work together with the Government and Oireachtas to create a sustainable, fair and consistent cost framework for insurance claims, allowing AIG to play its role supporting businesses and consumers in Ireland.