Mr. Anthony Brennan:

I thank the committee for the opportunity to discuss the cost and availability of insurance in Ireland. Zurich welcomes the opportunity to be part of this discussion, contribute to the work of the committee and discuss the next steps in the reforms required to address the challenges on the agenda today. As this is our first time to appear before the committee, I will briefly introduce Zurich Ireland. It was originally founded in Cork in 1952 and has been part of the global Zurich Group since 1998. Our AA- financial strength rating means Zurich customers can rely on us to consistently deliver on our promises when it matters. We are a proudly Irish business with a 100% local management team focused solely on the Irish market, with 380 employees across our Dublin and Wexford offices. We write over €300 million in premiums in Ireland, giving us a market share of approximately 9%. Our business profile is similar to that in the market overall, with 45% of premiums in motor insurance, 30% in property and the remaining 25% spread across a number of more specialised business lines including farm, financial lines and liability business.

Like most companies in the market, Zurich experienced the ups and downs of the Irish insurance cycle in recent years, with underwriting losses after several years of falling premiums and rising claims costs across the industry. In 2015 we enacted a turnaround programme to restore our business profitability. By 2018 we had completed the programme and delivered a 6% underwriting profit on our written premiums. Even during the turnaround period, we continued to experience consistently rising claims costs. The continued rise in claims costs and volatility has been the key driver of increased insurance premiums and reduced availability of cover in certain lines across the Irish market. We have worked to help drive change and reform and have been consistent and active supporters of the actions outlined in the reports of the cost of insurance working group which lay out a clear framework that can deliver real change for Irish customers in terms of internationally benchmarked claim awards, faster resolution of those claims and improved predictability of total claims costs which will deliver reduced cost and increased availability of insurance for Irish customers.

We accept that providing more consistent and transparent industry data to independent bodies such as the Central Bank will help all stakeholders to understand relevant trends and drivers of performance. We have seen the useful impact of making such data available through the work of the Personal Injuries Commission which used independently verified industry data to drive an informed debate on the level of personal injury awards in Ireland and provide that Irish soft tissue injury awards are more than four times the level of such awards in the UK. It determined the cost of inaction on the issue, with awards for such injuries increasing by more than €900 each year benchmarked from 2011 to 2016. We welcome, therefore, the recent passage of the Judicial Council Act through the Oireachtas. It promises to be a significant step in reforming and modernising the way our courts work. However, real measures need to be implemented as a matter of urgency to align the level of compensation awarded in Ireland with that in other jurisdictions. We also welcome recent Court of Appeal rulings which recognise that minor injuries should attract appropriately modest general damages. We acknowledge and welcome other key steps taken in 2019 such as the progress of the Civil Liability (Capping of General Damages) Bill and the commencement of the Personal Injuries Assessment Board (Amendment) Act which should enable more timely and accurate settlements to injured parties.

The introduction of the Personal Injuries Assessment Board in the early 2000s was a landmark event and initially led to material reductions in the duration and cost of claims as well as delivering reduced insurance premiums across the market. These benefits have been eroded over time as more and more claimants have chosen to reject the recommended awards and instead pursue a longer, more adversarial and more costly settlement path. The steps I have outlined are key enablers of reform and it is important to acknowledge progress that will benefit customers, insurers and society. However we must also acknowledge and act on public frustration with the pace of change and the need for a continued sense of urgency. All stakeholders need to remain engaged and vigilant to ensure the benefits are delivered and maintained from these actions and not allowed to erode over time as happened with the Personal Injuries Assessment Board.

We recognise the committee’s major concern regarding the cost and availability of insurance in the Irish market. There are a number of factors, so how do we fix the problem? The way forward is to continue to deliver the recommendations laid out in the reports of the cost of insurance working group, which lay out a comprehensive suite of reforms agreed through co-operation and commitment across multiple stakeholders. We cannot get away from the fact that the single biggest input into our calculation of insurance premiums is the cost of claims. Insurers transfer the risk and cost of claims and we share it across our portfolio. This means the cost of claims directly impacts on every insurance premium we calculate and collect from our customers. Our premiums must reflect the prevailing level of awards to ensure our business is sustainable. If the level of injury awards and incurred legal costs reduce, this will drive meaningful reform in the claims environment which will deliver a stable and sustainable cost of insurance for businesses and consumers. We want to be part of the solution and we welcome any help from the committee to maintain the necessary sense of urgency on reducing uncertainty and delivering these core reforms. I wish to take this opportunity to confirm that we will pass on the benefits of reduced claim costs to our customers. I thank the Chair and look forward to answering questions from members.