Ms Moyagh Murdock:

Good afternoon. I thank the Cathaoirleach and committee members. I am pleased to be here to contribute to the committee's review of petition No. 36 of 2021, entitled Reform of Insurance for Thatched Heritage Buildings, as submitted by Ms Katie McNelis.

I am the chief executive officer of Insurance Ireland and am joined by my colleagues Mr. Florian Wimber, director of advocacy, communications and public affairs, and Solvency II lead; and Mr. Michael Curtin, manager for regulation and policy development. Insurance Ireland is the representative body for the Irish insurance industry.

We represent over 130 members, which are providing cover to more than 25 million customers in more than 110 countries. The insurance industry plays a vital role within the Irish economy and makes a substantial contribution both socially and economically. The sector employs some 35,000 people in skilled and well-paid jobs and contributes in excess of €2.7 billion annually to the Irish Exchequer. Insurers based in Ireland paid more than €68 billion in claims in 2022, including almost €10 billion in domestic non-life claims.

We understand that this petition has been before the committee on a number of occasions and that members have heard from the petitioner, Ms McNelis; from the Thatch Property Insurance Action Group; and from officials from the Department of Finance and the Department of Housing, Local Government and Heritage. On behalf of Insurance Ireland, we are happy to be here to form part of this important discussion.

Insurance Ireland appreciates that thatched properties are a unique part of the fabric of Irish culture and a valuable asset to our country from tourism and heritage perspectives. Insurance Ireland is proud that a number of thatched property owners currently hold policies with insurers within our membership who have remained loyal to those members and continue to provide cover in a time when there has been a relatively high national incidence of fire in thatched properties.

Insurance Ireland representatives have met officials from the Department of Housing, Local Government and Heritage and the Department of Finance on this important topic, and we welcome the progress made on fire safety guidance and increased awareness of fire risks associated with properties.

Insurance Ireland further welcomes the positive results achieved in a recent survey conducted by the Department of Housing, Local Government and Heritage in conjunction with local authority fire officers, where the incidences of fires recorded in the past 12 months have reduced. However, time will be needed to ensure there is a consistent and positive trend.

That said, it cannot be overlooked that thatched properties, which are properties of non-standard construction, present a greater fire risk than a property of standard construction. There is also a greater risk of total loss for more rural thatched properties, given their remote location and distance from fire services in the event of a fire. The insurance of buildings such as thatched cottages is a specialist area and advice from a suitably qualified and experienced consultant, insurer or broker is often necessary. In his recent "Report on Insurance and Fire Safety in Thatched Properties", Frank Keohane noted that 90% of the properties surveyed are over 100 years old, 70% are thatched and almost half of those surveyed have been with their insurers for between five and 20 years.

Incidences of fire in thatched properties have traditionally been much higher in Ireland than in our closest neighbour, the United Kingdom, with Frank further noting in his report, in a five-year period, that 72 fires occurred within approximately 2,300 Irish thatched properties, while under 150 occurred in the UK, which has 50,000 thatched properties. Further, given the size of the Irish thatched property market, scale is an issue. As noted earlier, we understand that there are currently approximately 2,300 thatched properties in Ireland, which is a much smaller pool than other jurisdictions with thatched properties, including 50,000 in the UK, 55,000 in Denmark, and between 30,000 and 50,000 in Germany. Given the increased risk of fire, the higher incidence of total loss and the small number of thatched properties in Ireland, a single total loss fire claim could exceed the annual premiums collected in total, in essence completely depleting the pool of premiums. Insurance is provided on a basis of total reinstatement. In a situation where a total loss occurs, this should provide the owner with sufficient funds to completely rebuild the property to the same design and quality, using the same materials as before and in line with current building regulations.

In recent committee discussions, compulsory insurance was raised as an approach for consideration. Insurance Ireland shares the opinion of the European Commission in its letter dated 28 August, in that there is nothing in Directive 2009/138/EC, the Solvency II framework, stopping compulsory insurance being introduced for property insurance in Ireland. However, as noted in that same letter, "insurers are expected to require a level of premiums that is commensurate to the risk they accept and the level of uncertainty for the insurer." The letter continues, "insurance coverage for specific risks and for specific policyholders may require high insurance premiums, which in some circumstances could also be considered unaffordable by the prospective policyholders." It is important to note at this point, in his report, Frank Keohane noted that 69% of respondents had a premium of between €500 and €2,000. Those without insurance, almost 50% of respondents, noted their main reason for not taking out insurance was unaffordability.

Insurance Ireland would further caution that such an approach may have unintended consequences for other parts of the property insurance market, requiring that property insurance be compulsory for all properties in Ireland. Similar to motor insurance, which is compulsory in this country, a means of identifying non-compliance and certifying compliance and enforcement measures would need to be introduced. When it comes to a way forward, Insurance Ireland is committed to working with all stakeholders to work towards a viable solution for thatched property owners. We will continue to work with our members and the Departments of Housing, Local Government and Heritage and Finance to progress with this issue and hope that the positive results from the recent Department of Housing, Local Government and Heritage survey will continue in their positive trend.

Insurance Ireland has met with colleagues in Brokers Ireland and has been heartened to hear some new capacity is coming into the market through the brokers channel. We will continue to engage with Brokers Ireland so that the organisations can provide the most up-to-date information to thatched property owners. In his report, Frank Keohane noted that 90% of owners of thatched properties are interested in forming an owners property group. Insurance Ireland has seen some success in consumers coming together to seek a co-operative approach or a group scheme that would encourage thatched property owners to consider such an option.

In conclusion, Insurance Ireland recognises the cultural significance of thatched properties and empathises with thatched property owners who are struggling, but it must be said that there are significant risks that need to be mitigated before insurers will look to increase capacity in this area. We welcome the great work carried out by the Departments of Housing, Local Government and Heritage and Finance with regard to insurance for properties. Insurance Ireland will continue our work with these Departments into the future. I thank the Cathaoirleach for the opportunity to present our position and I look forward to answering any questions you may have.