Pearse Doherty (Donegal, Sinn Fein)
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I have spoken on the record for a long time in respect of this issue. There has been a dragging of heels on this. On 2 July 2015, a letter was sent to the Central Bank under section 6(a) in respect of the insurance sector, yet the committee is only beginning to get its work together. The second meeting was held only on 1 September. In the meantime, every person in the State has received an increase in his or her insurance premium. The Minister of State has not given us any clear deadlines in terms of when he expects work to begin. I believe this should have been the priority work of the committee.

My next question concerns regulation. One of the major issues discussed in respect of the motion that was agreed by the Minister of State and others was that we would look at the regulation of the sector.

The Minister of State did not mention the regulation of the insurance sector at all despite the fact that in the past number of years, we have seen three insurance companies that were operating here go into liquidation, receivership or administration. Enterprise Insurance, which is one of the most recent examples, ceased trading a number of weeks ago. Although it was regulated in Gibraltar, one of the other companies was regulated here. The Central Bank has a role here. What is the Minister of State's response to Patrick Honohan's very clear request on 18 August 2015 when he asked the Minister for Finance to give the bank the power to regulate the insurance holding companies? Has the Government given the bank the power over the past year because in the mean time, we have lost another insurance company? People who were insured are basically up the creek without a paddle. They have lost their investment. In the same letter, the then Governor said that he wanted to strengthen the supervision of the non-life insurance sector, which includes the motor insurance sector, and asked for the consolidation of disparate insurance regulation in a coherent whole. Has this happened or when will it begin to happen? The Solvency II Directive was the other issue that was raised but that has been dealt with. I would like clear answers relating to all of these issues in terms of progress.

I spoke about the role of the committee. Could the Minister of State send the terms of reference of the working group to the committee, including the terms of reference of the four subgroups and the actual membership instead of the Departments that are represented on it? Will any of the subgroups look at how the regulator allowed an unusual market failure?

I received a letter dated 18 August 2015 from Patrick Honohan to the Minister through a freedom of information request. The letter said that a number of non-life insurance companies took a very optimistic view of the future economic outlook, built up an unsustainable overhead and followed an imprudent pricing and underwriting approach across most business lines which resulted in companies' business plans becoming less resilient to downside risk such as an increase in the frequency and severity of claims. This was the former Governor of the Central Bank telling us that companies which the bank regulated were following an imprudent pricing and underwriting approach. I want to know how the Central Bank allowed this to happen. The Central Bank has a responsibility. If this happens with a financial institution, it has an responsibility to step in and make sure that there is no imprudent pricing. The definition of imprudent is "without due regard to the consequences". The then Governor was telling us that these firms, and I am sure he was not just talking about ones regulated in Gibraltar, were following an imprudent pricing and underwriting approach. The Central Bank has a responsibility to step in there and make sure they are not doing this. In fairness, the Central Bank has made very strong statements. At a major meeting earlier this year, Philip Lane asked the insurance sector not to chase risky investments because of the effects of quantitative easing. Why did it allow it to happen at that time?

Transparency is key to all of this in terms of the payout of claims and all of the different types of data. In light of the CSO review of strategy, where it wrote to this committee asking us to input into its strategy in the next few years, I have written to it asking it whether it would consider taking on a role in terms of publishing data relating to the insurance sector. I draw the Minister of State's attention to the fact that the Institute and Faculty of Actuaries in the UK regularly compiles and publishes this type of data. This role should be taken on by the CSO, which has carried out excellent work in respect of collating and publishing data in other sectors, aside from the GDP figures, which were not its fault. Again, Apple was to blame for that one.

There is a need for this because, even in his speech, the Minister of State referred to the difficulties with claims and so forth. If one looks at what is available in Britain, one can break it down. One can go into different regions where one can see the claims that were paid out, the number of uninsured drivers, the frequency of accidents and so forth. That is a role I would like to see.

Young drivers being refused a quote and a system being in place to ensure they will be afforded a quote when all others refuse to quote them was mentioned earlier. While the system is in place, usually the quote they get is unfair. There is a serious issue where legislatively all drivers are required to be insured but we do not force the industry to provide a fair quote. I understand the difficulty is with EU rules and we cannot impact on pricing. There is an issue, however, that needs to be dealt with. What are the Minister of State’s views on other models of insurance? Are we going to examine other models such as those in other parts of Europe and New Zealand which are different from the one here that requires every driver to have insurance?