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

This is an important new section in the legislation regarding deducting the value of State supports. That issue became apparent as the Covid-19 situation emerged. There is a general misunderstanding among the public because many of the insurance companies had said they would not deduct any payments the State had made from any payments they would be making under business interruption policies. Many people felt that all that funding was going to come back to the State. However, what the companies that made those statements did not say is that the vast majority of them had no business interruption policies to start with. When they knew they had no business interruption policies, it was very easy to make a statement that they would not deduct any State payments from any payments they might be making because they were making no payments anyway. That point has not been picked up fairly across the industry. I am putting it on the record now because a narrative about this issue has carried through in that respect. With regard to the figure the Deputy mentioned, most of that relates to one particular company. Most of the other companies that have spoken on this in various public venues said they would not be deducting from any of this because they were not providing business interruption policies to start with. I want to make that clear. They were correct in what they said, but people did not fully grasp the subtlety of what they were saying.

When this issue arose and it came to our attention during the course of the pandemic that the limited number of insurance companies that had business interruption policies were deducting some of the State payments so that the business or sometimes sole traders, if they were publicans or restaurateurs, would receive the net loss, there was concern in the Department and the Government that the insurance companies might make a profit from the State supports. We immediately examined this matter closely with a view to dealing with it, but it became clear from legal advice that it was not possible to legislate retrospectively. Bear in mind that these policies might have been written before the Covid-19 pandemic and these payments happened during it. When we saw this happening, it was not possible to come back and change a policy that was written 18 months or two years previously because it was a legal document. It was not possible to look back retrospectively to claim payments in respect of policies that were issued and in existence before that.

The issue that arises then, and I would put this down as one of the big lessons from Covid, is that we saw what happened. The reason we are introducing these sections is so we can gather information on these supports, and if any other situation arises in the future, we will have a base to work from and to understand how it works. It might not be related to Covid. Some other issue could arise in the country where there is an insurance policy and the State is also supplementing some of the cost. This is a forward-looking legislative measure and it is important that it be seen in that context.

I will make another point. The reason I looked at this at that stage was that I was conscious that, under the Department of Social Protection, other State payments may be relevant to insurance claims. There already are processes in place. We already had legislation in place dating back many years strictly to deal with what is known as the recovery of benefits and assistance scheme by the Department of Social Protection. I will explain it simply. Let us say somebody was in a car accident and he or she was out of work for a significant period and received disability payments for a period. Then the insurance company settles the claim in due course. It estimates the value of the person's claim at €100,000, for example, but the person has already received €20,000 from the State. If the company pays out the €100,000 there is a legal mechanism in place for the insurance company to refund that €20,000 back to the State. That happens currently. Ultimately, we want to get to that situation across the board, but the first thing we must do is gather information on this.

On the up-to-date figure I have in respect of business interruption policies, the Central Bank has stated that a number of insurers accepted and commenced settling claims as a result of the Central Bank's intervention. I welcome recent data to the end of February 2022 which show that more than €171 million has been paid to 5,312 policyholders through settled claims and interim payments. This is up from the earlier figure.

Another point is that this matter is still before the courts, so the matter may yet come to light as part of the quantum hearing in ongoing litigation that remains before the courts. The approach of the Bill is designed to ensure we do not pre-empt any legal ruling by passing legislation at this stage before the relevant court cases are dealt with. This issue may be raised during those quantum hearings which are not yet concluded. From that point of view, I am precluded from saying anything further on this because, as people will appreciate, the matter is currently before the courts.

However, this is really a lesson learned for the future. We want to have a cross-government approach. We already have it in the Department of Social Protection and, ultimately, I would like to see this in any Department where a similar situation could arise in the future. The first thing that must be done is gather the information so the Central Bank will be able to give us information. When we get that information we can then look at policy implications and draw up legislation in due course.