Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the committee for the invitation to appear before it today to give it an overall view of the Government's new insurance reform agenda. This marks the first time I will do so in my role both as Minister of State with special responsibility for financial services, credit unions and insurance and as a member of the new subgroup on insurance reform under the Cabinet committee on economic recovery and investment. It is important to listen to and consider the views of as many key stakeholders as possible. This committee plays an important role in holding the Government to account in this regard. Accordingly, I look forward to today's engagement on this issue.

Since taking up my appointment in July 2020, I have had a series of meetings with a number of key stakeholders. These include the chief executive officers, CEOs, of the largest insurance companies in the Irish market, the Alliance for Insurance Reform, the State Claims Agency, Insurance Ireland, the Law Society of Ireland, the Bar Council of Ireland, the Central Bank, Brokers Ireland, Irish Public Bodies Mutual Insurances Limited and the Motor Insurers Bureau of Ireland. I discussed with them the Government's insurance reform agenda and asked them to outline what opportunities and challenges they see at present. I hope I will hear the committee's views today on the various opportunities and challenges, as all Members of the House have a common interest in moving forward on the insurance agenda.

Members will be aware that much work has taken place in the area of insurance reform over the past four years. Indeed, in 2016, the committee produced its own report on the cost of motor insurance, which fed into the cost of insurance working group's report in the Department of Finance. Both the committee and the cost of insurance working group found that there is no single policy or legislative fix to remedy the cost and availability of insurance. This position remains true.

I will outline progress to date on the cost of insurance working group reforms. Members will be aware that this group published its last progress report on 30 October 2020. It showed that the majority of its recommendations were implemented.

These included improved transparency through the introduction of the national claims information database, the implementation of the Personal Injuries Commission recommendation to replace the book of quantum with the new personal injuries guidelines, the strengthening of requirements to co-operate with PIAB and civil liability law changes to make it more difficult to make fraudulent claims.

It has been shown that these reforms have largely stabilised the motor insurance market. The data from the CSO and EUROSTAT show reductions in the cost of private motor insurance of about one third since 2016. I would like to recognise the contribution of all sides of the House on this issue. Without cross-party support, I genuinely believe many of the issues might not have been able to be progressed to the extent that they have. This is an example of how, when we work closely together, we can make progress.

Nevertheless, more needs to be done. We are all aware of the stories from businesses, charities, voluntary groups, childcare operators and leisure operators of the increase in public liability insurance. This includes a series of inconsistent awards levels for injuries. In some cases, injuries appear to be relatively minor but this inevitably creates difficulties for the businesses, such as crèches and play centres, in securing insurance thereafter. In addition, data from the national claims information database demonstrates that Personal Injuries Assessment Board, PIAB, settlements in recent years continued to decrease. This is despite it being shown that PIAB represents a much more cost-efficient and time-efficient settlement channel than going through litigation.

Our economy and society need a stable and affordable insurance environment. The programme for Government recognises this and sets out a range of commitments to reform the insurance sector in Ireland, including reducing the size of personal injury awards, increasing competition through new entrants and enforcement, improving transparency and minimising the need for costly litigation through reforming the system.

It was also recognised that, to address these issues, a whole-of-government approach was needed. In order to achieve this and to elevate the reform agenda to a group closer to the Cabinet, the Government decided that a subgroup on insurance reform, under the Cabinet Committee on Economic Recovery and Investment, would be the most effective vehicle to drive the implementation of these commitments. The subgroup was formally established at the end of September and is chaired by the Tánaiste, and it also includes the Ministers, Deputies Donohoe, Michael McGrath, McEntee and O’Gorman, the Minister of State, Deputy Troy, and myself.

One of the first tasks of the subgroup was to commence progressing a number of key areas of reform and to produce an action plan. The plan was launched on 8 December by the Tánaiste, the Minister, Deputy McEntee, the Minister of State, Deputy Smyth, and myself. The action plan has generally been well received. It recognises a number of the key issues where progress is needed in the short term and we anticipate that 97% of these actions will be completed by the end of 2021. The subgroup will continue to meet on a regular basis to monitor the ongoing implementation of those actions due in 2021, and the small number that fall into 2022.

The action plan sets out 62 actions to bring down costs for consumers and businesses, introduce more competition into the market, prevent fraud and reduce the burden on businesses and community and voluntary organisations. The action plan will replace the book of quantum with new guidelines on the appropriate level of personal injury awards. It will enhance the role of PIAB. It will examine the duty of care to strengthen waivers and notices in order to increase protection for consumers, businesses, sporting clubs and community groups. It will further strengthen transparency through the expansion of the national claims information database and monitor whether personal injury awards need to be capped. It will reduce insurance fraud, including by placing perjury on a statutory footing, making the offence easier to prosecute. It will strengthen the enforcement powers of the Competition and Consumer Protection Commission, examine dual pricing and establish an office within the Government to encourage greater insurance market competition.

I will provide an overview of the plan's principal aims. First, members will be aware that the Judicial Council has been tasked with adopting new guidelines as to the appropriate level of court awards in personal injury actions. The new guidelines must be adopted by the Judicial Council no later than 31 July 2021, which is three months earlier than had originally been planned. While I do not have any influence on these guidelines, I believe that at the very least they will bring both certainty and clarity to the settlement of personal injury actions in the courts. I further believe that since PIAB assessment levels will also be based on these new guidelines, there will be less incentive for claimants to reject a PIAB settlement and proceed to litigation. The action plan seeks to examine the duty of care to strengthen waivers and notices to increase protection for consumers, businesses, sporting clubs and community groups. The Department of Justice is reviewing the legislation in this respect and will bring its findings, including any recommendations, to the subgroup in the very near future.

It is also important to progress the Perjury and Related Offences Bill 2018, which it is hoped can be passed by the Oireachtas in early 2021. For the first time, there will be a statutory offence of perjury which will make it a criminal offence. It is expected to have a significant deterrent effect in regard to fraudulent insurance claims, particularly if these claims are being made attractive. The Department of Justice is also increasing co-ordination and co-operation between the Garda and the industry, and examining the publication of insurance data fraud details.

The national claims information database reports have shown the clear benefits of PIAB to consumers. It plays a critical role in the success of what we are trying to do. We have seen its impact previously in regard to the cost of insurance and we hope it will have a similar impact again. The Minister of State, Deputy Troy, is considering the role and remit of PIAB and, in particular, how to increase the number of cases which are settled by PIAB without having to go through the recourse of litigation. It is also worth noting the national claims information database report and that PIAB has commenced an advertising initiative recently to increase awareness of the clear benefits of using PIAB.

Encouraging competition in the insurance sector is another innovation in this action plan, and it is one that I believe can benefit the industry as much as it will benefit consumers going forward. In this regard, I am pleased that an office has been established within the Department of Finance tasked with encouraging greater competition in the insurance sector. I believe this can provide a far more joined-up approach between State bodies in the area and will adopt a strategic approach to reduce existing barriers to competition. I chaired the first meeting of this office yesterday. We will be holding regular meetings and reporting on the ongoing work of this office to the Cabinet subgroup.

Linked to this, the action plan contains a number of important actions to strengthen competition enforcement. In this regard, the Department of Enterprise, Trade and Employment is currently preparing the draft general scheme of a competition (amendment) Bill. The Bill will include the transposition of the relevant EU directive, which will represent a step change in competition enforcement in Ireland. Included in the provisions are a new civil enforcement regime for the Competition and Consumer Protection Commission. This will include the power to levy significant administrative sanctions, arrange for statutory immunity and leniency and measures to enhance the enforcement of competition law in Ireland.

As members will be aware, on Monday the Central Bank published its interim report on differential pricing in the motor and home insurance sector. I know this is an issue that is important to members of the committee and I believe it needs to be considered further. That said, we need to recognise that the interim report notes the issue is complex, and there are winners and losers. I believe, therefore, it is sensible to await the outcome of the Central Bank's full review before deciding what action is required with regard to dual pricing. That report will be completed in the coming year.

In conclusion, I remind members of the commitment Insurance Ireland made to this committee that if award levels came down, so would the premiums charged by its members. I believe this continues to be a very important statement, and it is a commitment the Government intends to hold the insurance industry to. Yesterday, I met with Insurance Ireland and also with the Alliance for Insurance Reform. As we begin to emerge from Covid-19 next year, I believe the industry will play a key role in helping to reopen the economy and wider society. I believe that should costs fall for insurers, whether as a result of the reforms or through lower claims costs as a result of the pandemic, insurers need to reflect these savings to their customers. I believe this is consistent with the previous statement by the industry that it should treat its customers honestly and fairly at all times. In that regard, I am personally writing to the CEOs of the main insurers in the State within the next week to outline my views and to ask for a further commitment on how these reforms may reduce premiums.

I hope I have outlined a number of the key elements of our work. I believe last week's launch demonstrates this is an issue the Government will prioritise. Once implemented, the key reforms should begin to ease affordability and availability difficulties that consumers and businesses have been experiencing. I would welcome the views of members and I am open to questions.