Mr. Declan O'Rourke:

I thank the committee for inviting me to discuss issues relating to business continuity insurance and the recent changes to judicial awards and their impact on policy premiums. These are issues of significant importance to all stakeholders in the Irish insurance industry and we welcome the opportunity to contribute to the debate. As the CEO of Aviva's general insurance business, Aviva Insurance Ireland, I cannot respond to questions on mortgage protection, which is a life policy underwritten by a separate Aviva business here in Ireland. However, I have made available to the committee a short statement from Aviva Life & Pensions Ireland on the impact of Covid-19 on underwriting criteria for life policies, which also clarifies queries on the impact of vaccinations on mortgage protection claims.

Aviva has been operating in the Irish market for more than 240 years. Our businesses in Ireland are fully owned subsidiaries of the international insurance group Aviva plc, which is listed on the London Stock Exchange and is a member of the FTSE 100 Index. In Ireland, Aviva currently employs 1,500 people across our offices in Dublin, Galway and Cork. Aviva Insurance Ireland, of which I am CEO, and Aviva Life & Pensions Ireland are significant general insurance and life players in the Irish market. We are sustainable and socially responsible insurers that seek to deliver value for all stakeholders, including our customers, over the long term. We contribute significantly to national sports and community organisations through our sponsorship of the Aviva Stadium and our support of charitable and community causes. We remain committed to operating in a competitive Irish insurance market that is stable and sustainable for our customers. We have led the market in supporting insurance reform and we continue to support the creation of a more sustainable and less volatile market, which will assist with both the cost and availability of insurance for all our customers.

We are aware that the issue of business interruption claims is a significant concern to businesses, advocacy groups and policymakers. As has become apparent through recent legal cases in the UK and Ireland, this is a complex issue and it is widely accepted that no insurance market in the world provides widespread business interruption coverage for a pandemic such as Covid-19. Aviva Insurance Ireland has approximately 15,000 customers who have cover for business interruption. The vast majority of those policies do not provide cover for business interruption arising from the Covid-19 pandemic. The wording used by Aviva in the policies is generally unambiguously clear. However, we have approximately 50 policies taken out by small businesses where the wording is not as clear. So far, we have received only a few claims on those policies and we have paid them. Despite not receiving claims from the remaining customers, we have been very proactive in writing to those policyholders to draw their attention to the cover they have in place and inform them that they may have a valid claim. We have a small cohort of large corporate policies where a claim may arise in the future. We are working closely with the brokers on those cases.

Where we have received business interruption claims due to Covid-19, we have provided each customer with a full explanation of our decision in cases where policies did not provide cover. Only a small number of customers were unhappy with our determination and subsequently made complaints. Most of those complaints were resolved by our complaints handling processes. However, a handful of customers took cases to the Financial Services and Pensions Ombudsman. All of those cases have been ruled in our favour. In summary, the vast majority of Aviva Insurance Ireland's policies do not provide cover arising from the Covid-19 pandemic. Where they do, or where the policy wording is not clear, covered claims are being paid and all notifications are being dealt with promptly.

Aviva is fully supportive of the Government's action plan for insurance reform and welcomes the implementation of the new personal injury guidelines. We acknowledge the work done by successive Ministers of State, Eoghan Murphy, Michael D'Arcy and Deputy Fleming, the relentless work of officials at the Department of Finance and the work of Mr. Justice Nicholas Kearns. We also acknowledge that despite opposition from many of its own members and the Law Society of Ireland, the Judicial Council voted to adopt the new guidelines. The changes will have a positive impact on the cost and availability of insurance for businesses, voluntary organisations and motorists.

While acknowledging the work done, there is still a long way to go before minor awards are on a par with those in many European countries. For example, one of the largest reductions is for fully recovered minor whiplash, awards for which will move from €16,000 to €6,000. However, this will still be four times higher than what applies in the UK, where minor whiplash payouts are moving from £4,000 to £1,500. Many countries do not provide any compensation for minor whiplash. We believe there is still more to do in both reducing awards and strengthening the scope and remit of the PIAB.

Regarding the impact on premiums of the new guidelines, Aviva has anticipated the changes and reduced premiums in advance of the implementation of the guidelines.

In an open insurance market like we have in Ireland, there is a clear correlation between premiums and claims costs. Insurance markets will not allow excessive profits and combined ratios generally gravitate to approximately 95% over the cycle. As claims costs reduce, insurance companies enter new segments of the market where there is an opportunity to make a reasonable return. In the Irish market, we are already seeing better availability of insurance in underserved areas. At Aviva, we see the changes to awards as a positive and an opportunity to grow our customer base, enter new market segments, launch new products and provide great value to our customers.