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

I thank the Chairman and members for the opportunity to address the committee. This is my first time doing so. I am pleased to be here.

I thank the committee for the opportunity to address it today. The specific question of insurance for thatched roof properties is linked to the condition of the wider insurance market in Ireland. For years the Irish market has suffered a series of economically damaging cycles characterised in part by prohibitive premium costs, and coupled with a high volume of claims. Brexit has added another layer of complexity. Ireland has only one domestic underwriter and is significantly reliant on foreign multinationals to provide insurance cover. London is one of the largest insurance markets in the world and is unique for having a similar common law legal jurisdiction, in comparison with other EU countries. For smaller, more niche sectors, much of their cover was sourced from UK specialist underwriters who passported into the EU to allow them sell their services. This practice has now ended and has made it more expensive and bureaucratic for specialist underwriters to provide their products in Ireland. The Government has limited policy options to influence international insurance developments. However, the Government is determined to deliver a stable domestic insurance market by taking decisive action on the home-grown inputs that shape some elements of insurance premiums.

The action plan for insurance reform is a whole-of-government initiative, which was published in December 2020. Its importance is demonstrated by the fact that its delivery is overseen by a Cabinet sub-group comprised of relevant ministers and chaired by the Tánaiste. The action plan contains 66 actions across five Departments. The recently published third implementation report shows that 90% of these are currently being delivered. The result of this top-down, Government-led initiative is to help encourage competition in the insurance market, to restrain soaring personal injury awards, and to ensure that fraud is reduced as much as possible. We see evidence of the change in the Central Statistics Office's, CSO, consumer price index, which shows that the cost of motor insurance is now more than 43% below its July 2016 peak and 18% below where it was when the action plan was introduced two years ago. One of the most important achievements to date is the introduction of the personal injury guidelines, which were implemented in 2021, six months ahead of schedule. Preliminary data shows they have reduced awards for a range of injuries and Personal Injuries Assessment Board, PIAB, awards are now almost 40% lower than the average payout in 2020 under the old book of quantum used at the time. The Government has also addressed the issue of fraud through the Criminal Justice (Perjury and Related Offences) Act 2021, which became law in June 2022. This criminalised the offence of perjury for the first time and should help redress the issue of fraudulent claims. I also chair the office to promote competition in the insurance market, which was established under the 2020 programme for Government, with a mandate to encourage greater competition in the Irish market.

In the two years since it began the office has held more than 100 meetings with insurance stakeholders. These include engagements with potential new entrants as well as with market incumbents to encourage them to expand their range of product offerings. This is an important part of the process to address perception issues and to build confidence in the insurance environment in Ireland. The office is also working closely with the Industrial Development Authority, IDA, Ireland to encourage new and extra capacity into the Irish market. Due to the success of the reform agenda I am confident that IDA Ireland now has an attractive package to offer prospective market entrants, some of whom I met with recently, and I expect further positive announcements in this regard over the coming months. Work remains ongoing across government to deliver outstanding elements of the action plan. The reforming of the duty of care Occupiers’ Liability Act 1995 is now a key priority for Government. Rebalancing the duty of care should improve the situation for slips, trips and falls, particularly in high footfall sectors including commercial thatched roof properties. Addressing the imbalance in the duty of care can potentially encourage extra capacity in the insurance market for high footfall sectors. Government is also prioritising the Personal Injuries Resolution Board Bill 2022 in the Oireachtas, which will expand PIAB’s remit, address the issue of legal costs, and add mediation to the PIAB settlement process.

One of the major focuses over the past two years has been the issue of pinch point sectors, in which insurance accessibility or affordability has been an issue. I am pleased to report that pinch points have declined to a small number, some of which are sub-areas of already small sectors. In my engagements with these, the importance of setting up group insurance schemes, also called a bottom-up approach, has become the dominant theme in dealing with those particular problems. Group schemes allow businesses to wield significant bargaining and purchasing power, while also offering assurance to underwriters that risks are being centrally managed. Demonstrating to insurers that specific sectors are implementing strict safety standards across the board is key to reducing premiums. I met last week with the Thatch Property Insurance Action Group and we discussed this potential approach. For example, Early Childhood Ireland has recently set up a group scheme. The scheme involves its members accepting obligatory safety standards and engaging closely with both their broker and underwriter to analyse risk trends in order to implement mitigation measures. Significantly there were under bidders for this group scheme in the childcare sector, showing that competition is increasing in the insurance market. Specifically in terms of the issue we are here to discuss developments in the UK show that increased safety standards, as well as group assistance via the thatched owners group for example, gives owners a much greater chance to obtain affordable insurance premiums. The key issue for many groups is no longer availability of insurance but the cost of premiums. I acknowledge pressure points remain and this is a key concern for me. I, therefore, raised the specific issue of thatched roof insurance during my series of engagements with the major insurance companies and brokers in Ireland within the past month. I also impressed on them the need to expand their cover into under serviced areas.

There are clear signs of the market responding to the Government’s reform agenda. One of the large general insurance providers active in the sector has informed me it is fully committed to offering renewals to existing customers in respect of their thatched roof properties, subject to their normal underwriting criteria. I am also pleased to report that other providers have recently entered the market and additional brokers are now interested in providing and obtaining cover. The capacity from existing incumbents augmented by potential new entrants should improve competition in the sector and gradually reduce premiums for thatched roof properties. I am also aware of work being undertaken by Minister of State, Deputy Noonan, and his team to understand the risks associated with thatched properties, with a view to communicating these to providers and owners thus allowing greater scope for mitigating those risks. Like all reform this may take time to fully bed in but I am optimistic that the change under way will improve competition in the market. I communicated this to the Thatch Property Insurance Action Group when I met them last week and I look forward to further engagements with this group as we continue to examine the issue of thatch insurance. The Minister of State will now speak about the work undertaken by his Department to date, including providing support, which may reduce the risks associated with thatched roof properties. I thank the committee for its time and I look forward to hearing its suggestions on how to alleviate insurance issues for this important sector.