Noel Coonan (Tipperary North, Fine Gael)
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I welcome Mr. Éamonn Downey, acting president, Irish Claims Consultants Association; Mr. Brendan Dempsey, Society of St. Vincent de Paul; and Mr. Paul Kavanagh and Mr. John O'Donoghue, managing director, Owens McCarthy, claims specialists. I draw attention to the fact that, by virtue of section 17(2)(l ) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable.

I advise you that the opening statement and any other documents you have submitted to the committee will be published on the committee's website after this meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

We have considered the issue of flooding for a number of weeks and have heard much evidence. This is our penultimate hearing of evidence on this topic and I am interested in hearing the views of the Irish Claims Consultants Association and, separately, the views of the representatives of Owens McCarthy Limited, a claims specialist. It is apt that we have invited insurance brokers to address us today because they are the people on the ground dealing with the householders who take out home insurance and seek compensation for the damage and inconvenience they suffer when their homes are flooded. Accordingly, brokers have a clear insight into the difficulties faced by householders and how these difficulties are accommodated or otherwise by insurance companies. I ask the witnesses to be open and direct in their comments. We need to consider the issue in its full complexity and take cognisance of all aspects. I invite Mr. Éamonn Downey to address the committee.

Mr. Éamonn R. Downey:

Gabhaimid buíochas ó chroí leis an choiste agus leis an Chathaoirleach as an deis a thabhairt don ghrúpa labhairt inniu. I thank the Chairman and distinguished members of the committee for meeting us and I also thank the clerks to the committee, Mr. Eugene Ó Cruadhlaoich and Ms Caitríona Dunne, for their professionalism and courtesy in getting us to this stage. We are amateurs in this forum.

My friend Mr. Brendan Dempsey has appeared before the committee previously. Mr. Dempsey is a stalwart of the Society of Saint Vincent de Paul, SVP, in Cork and when he was in charge locally we read his strong comments to the newspapers regarding the way in which people were being treated by insurance companies. We subsequently made contact with him and have been working with him and other members of SVP over the last three years. When I say "we" I refer to my own company, Owens McCarthy Limited, which is a firm of insurance claims specialists, also referred to as public loss assessors, and not to be confused with the insurance loss adjusters who are paid by and represent the interests of insurance companies.

Many of the claims specialists in Ireland got together over the last two years to form the Irish Claims Consultants Association with the aim of setting high professional standards for our members, regulating the profession and, in the future, offering formal education and examination. John O’Donoghue is the managing director of Owens McCarthy and was involved with many of the cases in which we were able to assist clients of SVP. Separately, Mr. Paul Kavanagh, managing director of McCarthy Insurance Group has assisted SVP on related insurance problems and we all now work in the same group with SVP which, I hope, explains why we are here together. Mr. Kavanagh has real knowledge of the marketplace in terms of obtaining flood cover for homeowners, the attitude of insurance companies and related aspects and will speak after me. Mr. Dempsey can provide examples of the difficulties being faced by homeowners, many of whom face life challenges not confined to flooding and insurance. My area is claims handling. I commenced my training in 1978 and spent 25 as a loss adjuster before I changed sides and began loss assessing in 2003.

I appreciate the role of this committee and its brief but when I watched its meeting with the Irish National Flood Forum I was heartened by the honest comments of both Mr. Dempsey of SVP and Ms Seosaimhín Ní Bheaglaoich of the Dodder Flood Group. No reasonable person could fail to be impressed by the passionate and honest way in which they described their experience of dealing with insurance claims. I believe I can assist this committee in better understanding homeowners' experiences of insurance claims and the manner in which they are treated by their insurers. While some of the bad practices are down to a small number of individuals, the remainder tend to follow suit. I would welcome the opportunity to expand on any of the following points, which arise from the Cork floods in 2012 and from our general experience in these matters. Insurers have not given a true commitment to fairly advise homeowners when they notify a claim of their right to retain their own representative. The spirit of the consumer protection code is ignored on a daily basis. Insurance companies retain part of agreed claims settlements incorrectly and contrary to their practices outside of Ireland. Many of them are headquartered outside of Ireland and they behave differently abroad. This is known as "retentions" within the insurance industry.

Companies also encourage an adversarial and combative approach in their investigation and handling of claims. This is deliberate and particularly common where a householder employs his or her own assessor. The next point I will make is more nuanced now than when it originally arose. Insurance companies used their builders' price as a measure of indemnity or how much should be paid. They have the fall back position that their builders are available to carry out repairs for this price. However, the agreed rates are not representative of the construction market and they give rise to an issue that should concern the committee, namely, builders operating in the black market. Through a myriad of actions, insurance companies appear to want to foster an atmosphere in which the repairs are carried out by VAT unregistered contractors, hence saving them money. This is the most pronounced effect of the retentions issue. They attempt to use builders from panels they have set up, thereby removing the right of choice and attempting to use a scope of works that does not represent the damage caused. Variants of this scheme include the ridiculous situation of insurers insisting on using unrealistic prices they refer to as agreed rates for repair work. Sadly for me as a former loss adjuster, they force these practices on loss adjusters, the majority of whom are professional men and women. The whistleblower legislation cannot be introduced quickly enough for us. I pray for the emergence of individuals who will reveal the inside stories of what insurance companies do.

I cannot get my head around the similarity of certain practices or how some insurance brokers are influenced - I use that word cautiously - not to advise customers of the need for independent advice. The amount of claims and the amounts of settlement are usually a distance apart. Members may recall the story Mr. Dempsey told about the small builder who was flooded. The builder claimed €180,000 and settled for €80,000 because that was the amount he needed and he knew the game. Insurance companies ask for a premium for a risk, whether on motor insurance or whatever, knowing that they are unlikely to get this sum. Negotiating over a deal is a practice from time immemorial but when I submit a complete and full claim, perhaps with some trimmings for negotiation, they faint with shock. They do not suggest fraud because the law of the land is clear on this and they know I would have them in the High Court fairly quickly. However, they advertise constantly to warn people about fraudulent or exaggerated claims. Ordinary decent people are made nervous by this type of advertising and many will not submit claims because of the fear of being associated with something that is wrong. Irish society cannot encourage false or fraudulent behaviour in any part of our lives and this responsibility applies to insurance companies also.

I cannot conclude my contribution without commenting on the Central Bank of Ireland, which has direct responsibility for insurance companies. In our dealings with the bank, both as individual firms of assessors and as a young representative body, we have experienced only courtesy and professionalism. It has a heavy schedule of responsibilities and it is dealing with large commercial organisations with vast sums of money and vast experience of protecting their position.

Mr. Paul Kavanagh:

As a broker with over 32 years' experience on the flood plains of west and north County Cork and Cork city, I have built up a strong database of knowledge on the flooding issue and, indeed, was myself flooded in Fermoy over 20 years ago. The house in question has changed hands a few times over the years but it has been denied flood cover despite the fact that it has not been flooded since that occasion. It is on the south side of the River Blackwater and the flood defence work currently being carried out by the OPW will not be complete there until 2014. However, although work is completed on phase one on the north side of the river, its twin house on that side is also being denied flood cover. This is a major issue. I appreciate how much the Government is spending via the OPW on flood works in Clonmel, Mallow, Fermoy and, as announced last week, Skibbereen.

That is to be welcomed. However, pressure must be put on the insurance companies to talk to the OPW and form an opinion as to when and how we can again provide flood cover for the premises concerned, for which protections have been put in place.

At a meeting of this committee two weeks ago, the IIF reported it had been in consultation with the OPW. I noticed that this has been the case only since January 2013. The works have been in place for the past four or five years. There needs to be constant and meaningful dialogue, and it needs to be published. We need to know what is going on.

Another major issue concerns the flood victims, those who have been left behind. Some 95% of them are left without flood cover. Those with cover may have their premiums quadrupled. The householder is left in a perilous situation in which he cannot afford to pay for house insurance, with or without flood cover. This is a very dangerous set of circumstances. We have a moral obligation to help those people who are left stranded.

My job in recent times has been to help the victims of flooding in Cork. We are trying to get them flood insurance. If we cannot do so, we will try to get them cover excluding flood cover so they can maintain their mortgages. There is pressure being put on the victims by the banks. Once the houses have been flooded, they cannot be sold. The value of the house drops dramatically. One cannot buy or sell in the area, and subsidence is another issue of concern. Cork city is probably more prone to the latter than anywhere else. There are now areas in Cork city that have been doubly hit with subsidence and flooding. One cannot buy the houses; they are worthless. We cannot insure them and our hands are tied. The insurance companies have all acted together and will not provide flood cover, subsidence cover or a combination of both in the areas in question.

The Irish Brokers Association, of which I am a member, carried out a survey of all its members in the Twenty-six Counties and combined the information with available insurance company statistics, only to discover that there are between 40,000 and 50,000 properties, at least, without flood cover. We are trying to put a figure on it. The figure was denied in this room by the IIF two weeks ago. At the same time, it also denied that any insurer was taking an action against the ESB in Cork. We understand quite clearly that there is a case for hearing this autumn by a leading insurance company for damage caused by the release of water from the Inniscarra dam in Cork. We are getting incorrect information and not getting the full story. It is incumbent on this committee to get to the bottom of this and release its findings. If the IIF had said the matter was sub judice, I could accept it, but I cannot accept it has no knowledge of its members taking actions against Cork City Council in respect of occurrences in Douglas or against the ESB for the flooding it caused.

There are uninsurable houses in the Lee Valley and there are business premises that are uninsurable. There are those who want to open businesses in the areas affected but we cannot obtain flood cover for them. They cannot get funding from the banks until we produce flood cover.

Noel Coonan (Tipperary North, Fine Gael)
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I thank Mr. Kavanagh for the presentation. Mr. Downey stated insurance companies want to foster unregistered building contractors. This is pretty serious. How widespread is the practice?

Mr. Éamonn R. Downey:

Enormously widespread. It is a first cousin of-----

Noel Coonan (Tipperary North, Fine Gael)
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Is Mr. Downey talking about the prominent Irish insurers?

Mr. Éamonn R. Downey:

Absolutely. It is a first cousin of what they are doing. They do not set out with this deliberate intention. Our country needs insurance companies and they play a very important role. The IIF officials whom we met are very professional and it is a pleasure to meet them, but their agenda is different from ours, which is basically a St. Vincent de Paul agenda which has led to other matters.

What happens in practice with a traditional household insurance claim in Ireland is that the amount of the loss is agreed after a protracted period. Consider the case of Ms Seosaimhín Ní Bheaglaoich and others, perhaps known by members. The time element is considerable. When the damages are agreed – at €10,000, for example – one may receive a payment of €6,500 initially, with the balance to be paid when all the work is done and when VAT invoices are produced for it. This could be one, two or three months later. At that stage, eight or nine months might have elapsed.

My colleague, Mr. John O'Donoghue, will tell members about our experience in other countries, where the practice is known as claims fatigue. The companies wear one down. I refer to the first party under the policy, not to a third party in a motor claim; it is the company's own customer. The company slows down the claim and does not pay one in full, and only does so when the conditions I described are met. The claimant cannot afford this and becomes fed up of dealing with the company and also his own assessor. He may say, "Good luck to the lot of you," and take the €6,500, leaving €3,500 with the insurance company. The claimant, through his valuation, the loss adjuster and the assessor might have agreed on €10,000 as the cost of repair. The repair is done through the black market, by painting oneself, trying a bit of rewiring or not replacing a carpet for a year, two years or three years. We heard an amazing story about a cooker that dried out and was reused. The Society of St. Vincent de Paul had to buy a new one six months afterwards. What I describe is common practice among insurance companies. The attitude is reasonably common knowledge.

Insurance was always a very honourable profession. Insurance companies were careful about how they spent their money. When I began, there was small print but the companies improved. Society developed and we started to become more realistic. To achieve more profit, companies have changed their attitude and culture. The retention practice is not evident in Belfast or Bristol. If loss adjusters from Belfast are sent from my company, a national company, to a major flood in Galway, the circumstances I describe do not arise. We have a totally different approach. We negotiate, but on a professional basis. This was the way things were done in the past. Some bright spark has come up with the idea of trying retention in this State and the companies are getting away with it. This started with a figure of 10%.

Mr. John O'Donoghue:

Ten percent and 15%.

Mr. Éamonn R. Downey:

On Friday afternoon, a very respected loss adjuster who does some assessing work told me that he has been asked to retain 40% directly by the insurance company in respect of a major commercial loss. The companies are chancing their arm.

Kevin Humphreys (Dublin South East, Labour)
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I welcome the delegates and thank them for attending. I realise it took some time to travel here.

The committee has done considerable work on this matter. Mr. Kavanagh outlined that engagement between the OPW and IIF only began to take place in January 2013. This is a direct result of the work this committee has done in highlighting the OPW's work and the lack of communication. However, it is really talk about talks. The parties are still trying to talk the same language. The OPW operates to an international standard applying the figures of 100, 150 and 200. The IIF is dragging its heels regarding the acceptance of the international standards. The talks should now be concluded. We know the international standards and the bill design. In fairness to the OPW, it is actually very professional. Where I have seen its work done, it has been to a very high standard.

Ms Seosaimhín Ní Bheaglaoich was mentioned. Shortly after the committee meeting she attended, there was a lot of rain. I was with Ms Ní Bheaglaoich's neighbours on the Friday evening. They were concerned that there would be more flooding of the kind we saw in the Dublin area. The Dodder rose to a very high level, as did the Tolka.

Sometimes, the first people to react are public representatives and they ask what can be done. Have the delegates considered outlining the first ten steps one should take after one's home has been flooded? Most affected people are in a state of panic and have lost their livelihood. They have lost the pictures. It is not necessarily the cooker that they are worried about. Older people, especially, are worried about the photographs and memories. An older person's husband or wife might have died and they might have lost the keepsakes.

Money is the furthest thing from their minds. It would be useful if there were a ten-step process put in place to assist people in such situations. Has any work been done in this area?

The federation can only advise its members on best practice but has no power to enforce it. Is there a best practice guideline available? This issue affects not just Cork but areas in Galway and Dublin. Over the past two years nearly every week someone has been in contact with my office explaining how the sale of their house has fallen through because the purchaser could not get mortgage approval as the house would not get flood insurance. The geocoding that has been done so far is very poor. In my own area, there has been large Office of Public Works, OPW, flood relief work yet no one can sell their homes because house purchasers cannot get flood insurance. I believe the figures from the delegations today are closer to the truth than the insurance federation's. I can give example after example of houses built in the 1800s that were never flooded but now they cannot get flood insurance because of geocoding. Is there a way around this?

Caít Keane (Fine Gael)
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I welcome Mr. Dempsey and the delegation back to the committee for its discussions about this important subject. The same issues concerning insurance claims in Cork referred to by Senator Clune are arising in Dublin. South Dublin County Council councillor, William Lavelle, explained to me that he got the council to send a letter to an insurance company explaining how flood relief works had been done in an estate in Lucan yet the insurance company refused to give them cover. There is no excuse for that.

Mr. Downey said that insurance companies are all acting together. In any language, that sounds like a cartel. As cartels are outlawed in so many spheres of life, the committee should investigate if this is happening with the insurance industry. We need to investigate the statistics in this case. As was said, there is a different insurance regime in Belfast? Why is that the case? I accept every company must turn a profit but we need to examine what amount of profit is being turned here. It was stated one insurance company has a retention policy of 40%. That is other people's money that this company is holding. When we have a body of evidence that has been brought to the committee today by the delegations, this committee will need to consider it.

Something has to be done. We cannot leave home owners without insurance. It would seem the insurance companies are hiding behind the geocoding information. We have much information we can use to explore what is happening in this problem. The delegation stated it was looking forward to whistleblower legislation being introduced. Many other groups are looking forward to it too.

Even during these financially straitened times, the OPW and the Minister of State, Deputy Brian Hayes, have done tremendous work in flood relief along with the local authorities. It is recognised that flooding must be tackled. I have seen much relief work done in my area, Templeogue, on the River Dodder. While we must do this efficiently, the insurance companies must also match our efforts.

Deirdre Clune (Fine Gael)
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I am not a member of this committee but this topic is of interest to me. I have been following the committee's hearings on this matter. I have also written to the insurance federation, the Minister of State, Deputy Brian Hayes, and the OPW on the problem. There was no engagement on the issue until January and I hope it is because of the committee's work. As Senator Keane said about a letter from a local authority to an insurance company, the direct line of communications on this matter is not very clear as the local authority and the OPW work separately. Which agency does one go to?

Kevin Humphreys (Dublin South East, Labour)
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However, in Dublin the OPW and the local authorities work together. Letters from local authorities outline the standard to which the works were carried out.

At the beginning, when the letter was issued, it was accepted by many insurance companies, but then after approximately 18 months they all changed and the letter was no longer acceptable, despite the fact that senior engineers in my area and Cork supported it.

Caít Keane (Fine Gael)
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South Dublin County Council supported it.

Deirdre Clune (Fine Gael)
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That is not our experience.

Kevin Humphreys (Dublin South East, Labour)
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It was supported by the OPW because the local authority is the lead authority and the OPW works through it.

Caít Keane (Fine Gael)
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They should be made to accept those letters.

Deirdre Clune (Fine Gael)
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There seem to be different understandings of it. The two heads need to come together. If work is being done to alleviate flooding, the insurance companies must respond to that. Geomapping is obviously not reflective of ground conditions and does not recognise undulating ground or hilly territory. This is a small country with a few flooding hotspots and heads must be brought together on the issue. We have all heard similar comments to those made today about individuals who cannot get insurance against flooding despite the fact that works have been carried out and assurances have been given. I hope the work of this committee will help to produce a definitive statement. The fact that the issue is getting an airing and that the committee is having these hearings is worthwhile.

There have been a number of issues in Cork and we had another in the past week which got a public airing. If work is being done, it must be communicated to and accepted by the insurance companies.

Noel Coonan (Tipperary North, Fine Gael)
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I remind Mr. Downey that this is not solely a Cork and Dublin issue. I come from the heart of the country, where I believe people suffer even more because they have very little prospect of getting work done and are ignored by everyone. There is strength in numbers, but rural areas do not have huge numbers affected. Adding to the problem in the country is the fact that due to the work being done by the OPW on geocoding, areas where some people are living are being categorised as possible flood areas. Those people may never have had a flooding problem, but now because they are identified as being in a potential flood area, they are finding it extremely difficult to get insurance or any help. There is nothing they can do about this as they cannot pack their bags and leave. This is another issue.

Mr. Éamonn R. Downey:

I and Mr. Dempsey met the Minister of State, Deputy Brian Hayes, Tony Smith from the OPW and members of the Irish national flood forum, under Enda O'Donovan, on Thursday morning in Skibbereen. We are out of our depth here, but it was heartening to see their level of knowledge on the issue, because that will eventually lead to the problem's being sorted out. Insurance companies can pick and choose what risks they want to take on. This is an open market and markets traditionally balance themselves over time. What we are trying to avoid is disadvantage. I will ask Mr. Kavanagh to speak about the unavailability of insurance, the reasons insurance is sometimes not available and the solution to that.

Mr. Paul Kavanagh:

It is all down to the geocoding. Nearly every insurance company has its own geocoding "machine". At this stage, I have the geocoding details of the various areas in Cork at the top of my head and if I am given an address in Cork city, west Cork, Clonakilty or Bandon, where I work on the ground, I will know whether there is flood cover available there, because the insurers all follow the same pattern. The geocoding was designed by engineers. The first example I saw after the floods of 2009 basically excluded every house between Castletownbere and Youghal. It excluded the whole Lee-Blackwater valley. There have been many examples of similar geocoding.

The issue of geocoding and insurance must be tackled. I understand insurers are working on the issue, but they need to work together. We need a common geocoding practice. I acknowledge the work done by this committee and the pressure it has put on the IIF to meet the OPW. This has been fantastic, but we need more of this. We now need pressure on the issue of geocoding. We need a standard practice of geocoding. We need to know that if we have a problem in Clonakilty, Bandon or wherever, we have that problem. As we explained to the Minister of State with regard to the problem in Skibbereen the other day, the OPW plans to start work there in 2014 and it will take it two years to complete its work, which will take us to 2016. However, I guarantee this committee that unless we put serious pressure on the IIF companies, we will be unable to get any insurance cover in Skibbereen until 2020. Today, one cannot get flood cover in towns such as Clonmel, which has been protected from flooding now for two or three years. Mallow and Fermoy are the same. People in these areas cannot get flood cover even though the OPW has completed works. At the moment, we must take every case as we see it on merit. I read of one man whose property was 50 m above the River Lee, yet his policy was loaded 100%. When he rang the insurance company, he was told this was on account of flood risk, despite the fact he was in Shanakiel and 50 m above the river. Stupid decisions are being made with regard to geocoding. We and other brokers try to support each case, but insurance companies have Fermoy, Clonmel, Blackpool, Blackcastle and other areas listed in their computers as black spots. That is an easy solution for them, but we need to get around that. Our estimation of between 40,000 and 50,000 houses affected is not out of the way. People say we have underestimated the number affected.

Kevin Humphreys (Dublin South East, Labour)
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I have a question about something that came up at other hearings, which was raised by Mr. Dempsey the last time we were here and on which we challenged the federation. Mr. Dempsey said that in a case in which a person gets a letter in the post saying his insurance is due for renewal, and that person seeks other quotes but is refused insurance by those other firms, if he returns to the firm offering insurance and does not declare he has been refused insurance by other firms, he is not covered. Is that correct?

Mr. Paul Kavanagh:

It depends. I am not sure of the background to this question. However, it may depend on whether there has been a claim or a flooding incident in an area. One of the questions on all proposal forms asks whether a person's house is within 100 m of a water source, whether a stream or a river. If one does not declare that and takes it as read and the house is only 50 m from the water, this amounts to a non-disclosure on the policy and the claim will not be paid.

Kevin Humphreys (Dublin South East, Labour)
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The proposal form also asks that a person who has been refused insurance by another insurance company make that disclosure. Let us say, as an example, that I have a household insurance policy. The renewal notice is issued for my house, which is in a flood plain, and I seek other quotes but am refused insurance on the basis that I reside in a flood plain. If I do not disclose that to my original insurance provider, does that make my insurance policy with that provider null and void?

Mr. Brendan Dempsey:

No. The householder took on the original contract on the grounds and questions asked on day one and, provided he answered all the questions honestly and disclosed all the relevant information as asked for at that time, he is covered.

Kevin Humphreys (Dublin South East, Labour)
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A lot of household insurance business is conducted over the phone. The householder gets a quote and accepts it and pays up. When I took out household insurance initially, I did not fill out a proposal form, but provided information over the phone. Therefore, I would not have been asked whether I was 50 m from a stream. That is something that is quite new on insurance forms.

Mr. Paul Kavanagh:

That is correct. I would advise everybody to complete proposal forms. I am not an advocate of doing the business over the phone or on the Internet, where many assumptions are made. Websites assume X, Y or Z or assume a house is more than 100 m from a water source and in an area that has never had flood or subsidence issues. However, as we now know, in both Glanmire and Blackpool we have come across hundreds of people who thought they had cover, having bought it on the Internet, but then discovered they had no cover because they did not answer the question correctly, as the assumption was made otherwise.

Kevin Humphreys (Dublin South East, Labour)
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I understand some of that information is personal and covered by the legislation on data protection, but could Mr. Kavanagh provide details on this to the committee? Could he provide us with examples, without including names and addresses? This would be helpful.

We need practical examples when we are challenging people. I will conclude by mentioning that the OPW did fantastic flood work along the lower end of the River Dodder as part of the planning conditions for the Aviva Stadium.

Noel Coonan (Tipperary North, Fine Gael)
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Is that the Deputy's end of the river?

Kevin Humphreys (Dublin South East, Labour)
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It is my end. People in the area see the word "Aviva" when they look up at the stadium-----

Noel Coonan (Tipperary North, Fine Gael)
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No commercials.

Kevin Humphreys (Dublin South East, Labour)
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-----but they cannot get flood cover from the same insurance company that has put up so many big banners in the local area.

Noel Coonan (Tipperary North, Fine Gael)
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I will allow Senator Keane to ask a supplementary question.

Caít Keane (Fine Gael)
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Mr. Downey mentioned that agreed rates are forced on loss adjusters, particularly because of the black market situation. I would like him to make a recommendation to the joint committee regarding something we could do to flush out the black market. When builders submit contracts to public bodies, they must have C2 and VAT registration. Could it be made compulsory for people who apply to do work of this nature to have this kind of registration, perhaps for insurance purposes? What kind of recommendation does Mr. Downey think he could make?

Mr. Éamonn R. Downey:

Although my colleague, Mr. John O'Donoghue, practices as a public loss assessor, he is also a solicitor. The Senator's question is right up his alley.

Mr. John O'Donoghue:

We are dealing predominantly with contracts of insurance - contracts between the insurer and the insured. That sets out the basis of claim settlement in the contract. Insurers have decided to adopt practices that suit them but not the consumer. These are outside the scope of the policy. Mr. Downey spoke about retaining 30% of the agreed claim payment, which is not in the policy. Traditionally, these policies were policies of indemnity, which meant that those who were insured would receive a payment of money and go off to do whatever they had to do with it. The insurers would like to have full power over how the property is reinstated. They have suggested the use of their own builders in some cases. Many of the policies entitle them to do that. In the retention cases, they are saying to the policy holders that they will not pay them all of the money. Instead, a balancing payment will be made to the policy holders after they have funded the difference between what they are initially paid and what they end up being paid. If a policy holder wants to draw down a balancing payment, he or she will have to submit a VAT invoice from a contractor who is registered for VAT purposes. VAT is an inherent part of the settlement.

I will explain what many policy holders are now doing. Mr. Downey used the figure of €10,000 as an example. If a person in such a case has a policy excess of €1,000, his or her net initial settlement would be €6,000. He or she would be expected to find the difference between €6,000 and €10,000. He or she would then have to prove to the insurer that he or she has spent €10,000 before the balancing payment of €3,000 could be made. At the moment, the only thing that is sought is the submission of VAT invoices. In addition, a reinspection is carried out to ensure all the work has been done. The question is whether a demand, to the effect that these works be carried out by a contractor who is C2-registered and VAT-registered, should also be included in the policy. Nothing like that is included in policies at present.

Caít Keane (Fine Gael)
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Does Mr. O'Donoghue think it should be?

Mr. John O'Donoghue:

I would not go that far because it would take a great deal of choice away from the consumer. That was one of the issues with the reinstatement of properties. I refer to what happened when insurance companies refused to pay any moneys and demanded that properties be reinstated on their terms by their builders. A builder might come from Ballybofey to Dublin, or from Derry to Cork, to carry out repairs on behalf of an insurance company.

Caít Keane (Fine Gael)
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I am just looking for a small way of getting rid of the black market in these circumstances.

Noel Coonan (Tipperary North, Fine Gael)
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One could ring the Revenue Commissioners.

Caít Keane (Fine Gael)
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That is the whistleblower approach.

Mr. John O'Donoghue:

Our feeling, which is based on anecdotal evidence, is that policy holders will use competent and registered contractors when they know they will be compensated properly by their insurers. If they receive less than a full indemnity at the outset, that encourages them to use unregistered contractors. That is what Mr. Downey meant when he said it is fostered by insurance companies. At this point, they must have a decent idea that this is what is happening. Fewer and fewer people are coming back to claim the retained portion of the agreed settlement. They are not coming back because they cannot provide the documentary evidence required.

Noel Coonan (Tipperary North, Fine Gael)
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I thank the members of the committee and the witnesses for their presence here today. The submission made by the delegation will be of excellent help to us when we reflect further on this matter. I thank Mr. Downey, Mr. Dempsey, Mr. Kavanagh and Mr. O'Donoghue for attending this meeting. That brings our consideration of this topic to a conclusion. At tomorrow morning's meeting, the joint committee will discuss the issue of climate change with Ms Cecilia Kibe Muthoni, who is the co-ordinator of Kenya Climate Justice Women Champions; Mr. Mithika Mwenda, who is the co-ordinator of the Pan African Climate Justice Alliance; and Ms Maanda Ngoitiko of the Pastoral Women's Council of Tanzania. I will have to improve my pronunciations before tomorrow's meeting.