John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister of State, Deputy Eoghan Murphy, and his officials to the meeting. I invite the Minister of State to make his opening statement.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for this second invitation to discuss the emerging recommendations of the cost of insurance working group. I would like to update the committee today on the work I have been doing in the Department of Finance with the cost of insurance working group, which brings together all the relevant Departments and offices involved with the process. In September when I last appeared at this committee, I welcomed the initiative of the Oireachtas committee to hold public meetings in order to produce its own report on this urgent matter. I am, therefore, pleased to see that the committee has published its report with its own set of recommendations, many of which complement the emerging recommendations published by the Department of Finance.

Both strands of this work are hugely important. The Irish insurance sector has been subject to a lot of volatility in recent years, as the committee will know.

When one looks at the inflation data from October 2016, one will see that insurance prices have increased by 47% since January 2011, motor insurance prices have increased by 51% during the same period and by 8.5% in the 12 months to October 2016. These kinds of increases – these so-called “super-cycle” trends – while down from September, are very damaging to the economy. They hit consumers hard and they undermine competitiveness. The future for insurance in Ireland must have certainty, clarity and transparency at its core.

In that regard, the Minister for Finance, Deputy Noonan, set up a task force to look at the insurance sector earlier this year. I was asked to chair a working group under this task force to examine the various factors contributing to the increasing cost of insurance. The cost of insurance working group was established in July. It brings together the relevant stakeholders on the Government side, namely, the Departments of Finance, Transport, Tourism and Sport, Jobs, Enterprise and Innovation and Justice and Equality, as well as the Personal Injuries Assessment Board, the State Claims Agency and the Central Bank. The objective of the working group, as set out in its agreed terms of reference, is to identify and examine the drivers of the cost of non-life insurance, with particular focus on motor insurance, and to recommend short, medium and longer-term measures to address the issue of increasing insurance costs, taking account of the requirement for an economically vibrant and financially stable insurance sector.

The core areas being examined by the working group in this first phase are the motor insurance sector generally, at present and in recent years; the effects of legal costs and litigation processes on insurance costs, the current claims compensation arrangements and the cost of claims, insurance data and information, the impact of accident rates, the impact of unlawful activity on the insurance sector and other market issues.

As the issue of the cost of insurance is complex and multilayered, I decided as a starting point to establish four subgroups to examine particular issues in detail. These issues were understanding the motor insurance market, improved data availability, the cost of claims and other public policy issues. Chairs were appointed to these subgroups, which have been meeting on a weekly basis since September. The outputs of these subgroups are currently feeding into the regular meetings of the working group. The working group has held ten meetings to date and will continue to meet every two weeks to the end of 2016.

The consultation process is ongoing and to date, the working group and the four subgroups have met with representatives from AA Ireland, Auto Records Limited, the Consumers Association of Ireland, the Freight Transport Association of Ireland, the Irish Brokers Association, the Car Rental Council of Ireland, the Irish Road Haulage Association, Insurance Ireland, the Law Society of Ireland, the Motor Insurers Bureau of Ireland, Tiománaí Tacsaí na hÉireann, and the chief executive officers from AIG, AXA, Aviva, FBD, Liberty Insurance and RSA Insurance. In addition, submissions received from all interested parties are being considered as part of the process. I have also personally met a number of stakeholders to help me develop a greater understanding of their perspective on this complex issue. In that regard, I have had informal meetings with representatives from a number of key stakeholders including: Insurance Ireland, AA Ireland, the Injuries Board, the Irish Brokers Association, IBEC, FBD, the Bar Council of Ireland, and the Central Bank of Ireland.

Undoubtedly there are a number of specific issues contributing to the increasing cost of car insurance in Ireland and because of this, I believe it is generally recognised that there is no quick-fix solution to this problem. In addition, in considering solutions the group has been very conscious of the need to ensure the maintenance of a stable financially solvent insurance sector to ensure that risks to policyholders and the wider financial system are minimised. Consequently, the importance of insurance companies meeting regulatory requirements and maintaining adequate reserves cannot be understated in examining the pricing of insurance products. Moreover the constraints imposed by Solvency II on the State’s ability to influence insurance pricing must be factored into the overall approach to satisfactorily resolve this issue.

A key part of the work of the group has been to try to build consensus on appropriate actions, which then need to be implemented as soon as possible to restore some stability to pricing in the motor insurance market. Another important aspect of our work is to make Ireland more attractive for new entrants. It is likely that some of our actions may take time to implement, particularly if legislation is required.

In order to progress this agenda, however, political consensus among the different parties and Members in the Oireachtas is essential. Consequently, for this reason I welcome and am appreciative of the work of this committee in conducting public hearings on this matter and in producing a report.

At the end of October, I provided the Minister for Finance with emerging recommendations. The emerging recommendations touch broadly upon nine areas and between high level and lower level contain about 40 actions. One area relates to consumer protection. It seems clear to me that we need better and more proactive information on the part of insurance companies when quoting for insurance or renewing insurance, including providing more information on how a person’s premium has been calculated and the reasons behind changes year on year and so forth. Other issues, such as providing greater recognition of previous driving experience outside the State for returning emigrants, are also the subject of a recommendation. In summary there is a host of well-documented consumer issues to which the emerging recommendations speak. I believe this committee's report has identified similar issues, as well as solutions.

A key area where change is required is in the claims environment. We need to enhance transparency and facilitate the use of data sharing and collection that we see in other jurisdictions. A resource, either in the form of a claims database or a claims register, is needed for the sector so that among other things, we can see what claims are being made against property or for personal injuries, the legal and other costs that are being incurred and the channel of resolution and what impact that has on the final settlement. This happens elsewhere and it should happen here. It is my view that greater transparency in the claims environment should lead to greater stability in the pricing of motor insurance and should help prevent these “super cycles” both up and down that have occurred regularly in the Irish market in the past. I note the emphasis the Chairman also place on transparency in his preface where he states “This Committee, above all, requests the publication of 'raw' insurance data and that transparency becomes the norm within the insurance sector ... from this day forward.”

Significant concerns have been raised around the uncertainty of the claims process, its cost and the method for making awards for personal injuries. I am fully respectful of the right of Judiciary to set awards but I have heard concerns expressed on the need for more consistency in the setting of those awards. Again, I note this is an issue on which this committee's report has a particular focus.

The working group is therefore going to make a recommendation to establish a personal injuries commission to look at those areas that speak directly to the cost of personal injuries. Subject to Government approval, I hope this commission can be up and running as soon as possible and will work alongside the ongoing reform of the book of quantum and the Personal Injuries Assessment Board. Its terms of reference have yet to be finalised but we have already scoped out the priority areas for it to look at. These include conducting an exercise to look at the average awards in other jurisdictions, as well as the grading of personal injuries. I hope this committee can be broadly supportive of this proposal, as I believe it covers some of the areas highlighted in its report. If, from their engagement with the industry and others, members of the committee or the Chairman believe they can identify a person or persons to nominate to this commission, such a proposal would be very welcome.

Two other important areas that need to be tackled are uninsured driving and fraud. In regard to uninsured driving, the working group is likely to recommend that a fully functioning insurance database to allow An Garda Síochána to check insurance compliance through the use of technology such as automatic number plate recognition be finalised. Much work has already been done in this area, however, I would like to see the roll-out of such a database to be expedited.

On the fraud issue, we are exploring what can be done to improve data sharing around suspected fraud, through the possible establishment of a fraud database. The legal requirements of such a database such as, for instance, data protection issues are being examined by the working group and any recommendations must be conscious of them. I note this committee's recommendation in this area that fraudulent and exaggerated claims should be pursued and tackled more aggressively by the Office of the Director of Public Prosecutions and insurance companies and I have no issue with it. Other recommendations that are emerging include giving consideration to reviewing relevant legislative provisions in the Civil Liability and Courts Act 2004, as well as Road Traffic Act 2004. The group is also looking at some sector-specific issues in light of concerns raised by hauliers and taxi drivers.

Since providing these emerging recommendations to the Minster for Finance, the working group is working to finalise the report and developing an action plan to enable the relevant Departments and offices to commence the implementation of agreed priority actions. The report and action plan will detail any legislative or regulatory changes that may be required and will include a detailed timeline for implementation. I am determined to ensure that this important work progresses at a pace and that it meets its implementation deadlines. I am taking a hands-on approach as chairman, working closely with Department of Finance officials and liaising closely with the four subgroups that are now established. Our plan is to publish a report in December of this year.

In conclusion, our work is about taking action on credible solutions to address the problem of the increasing costs of motor insurance with a view to implementing them as soon as possible. While we cannot direct insurance companies on pricing of insurance products, I hope these recommendations will settle the current uncertainty we are seeing around premium prices. As these recommendations work their way through, I believe we will then see a sustainable reduction to more appropriate insurance premium prices. We can achieve that for the customer, while also protecting the stability of the insurance market and ensuring it is a market worth being in. I have asked my officials to review the recommendations of the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach with a view to incorporating aspects that complement the analysis of the cost of insurance working group.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State. The joint committee has made 71 recommendations and it took time, deliberation and conversations with the various stakeholders to arrive at the recommendations. We believe a number of the recommendations can be dealt with immediately. For example, section 4 of the Personal Injuries Assessment Board Act 2003 provides for the Minister to confer additional powers on the Personal Injuries Assessment Board. It is necessary also to reform solicitor's fees. Could the Injuries Board be reformed so that it takes a greater role in settlement?

More cases might be settled at that level rather than being pursued through the courts with the greater degree of costs and so on. There is also the other legislation, namely, the Civil Liabilities and Courts Act 2004 and the Personal Injuries Assessment Board Act 2003. These are steps that can be taken alongside the work of the Minister of State's working group. This committee wants to work closely with the Minister of State and that group to achieve the implementation of the wide-ranging recommendations we have made. One of the issues that arose today, and from our recommendations, was to do with the Irish Road Haulage Association and a submission made by its president, Verona Murphy, which indicated that hauliers are obtaining insurance elsewhere in the market in the European Union. It is a point that we did not develop fully in the context of our recommendations. We expressed an interest in the area and support the case being made but there is a need for the Minister of State's group to look at this in more detail. This might be something that he may comment on and maybe resolutions to address the issue could be brought about pretty quickly. I would like to see that happen.

Recommendation 59 in our report into the rising costs of motor insurance recommends that Government examines the reasons Irish businesses, in particular the transport sector, are procuring motor insurance abroad with a view to reversing this trend. The committee also recommends that government engage directly with businesses in this regard. I know the Minister of State has done that and maybe he has not examined all these recommendations in detail but I would like his opinion on the possibility of implementing some of those recommendations in the short term or having the legislation examined in the short term to see what parts of the legislation were not enacted, what could be enacted, what would impact on the premiums immediately and so on. I would like to hear the Minister of State's comments on that and I will leave it with him. He also mentioned who we might recommend and there are people in the Gallery who might-----

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Chairman and I might have a similar opinion but I will wait until later on when the working group has completed its work, if I may. It is a group I chair and I would need to consult with it. I will, however, speak directly on the issues raised by the Chairman. An initial point is that I very much appreciate the public consultations that took place because the meetings of the working group did not happen in public and people were not able to hear the concerns we heard in the working group. The work done by the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach gave a real opportunity to different stakeholders to put their part of the case across publicly and to have their position challenged, which is important too. It has played a very important part in terms of the understanding we are coming to. From the chance I have had to look at the committee's report, which is very detailed and has a number of recommendations, I see a lot of alignment with the work done by the working group, and there is no surprise there. The Government and the Oireachtas share concerns around doing something to protect the consumer while also ensuring a stable and attractive market for these companies to operate in and to provide the necessary insurance. This process has evolved in a good way and I hope the way we have worked together to date can continue because it is in everyone's interests. If legislation is to come from government, I hope it would be agreed by the House so it could be implemented swiftly.

It is important to note that we are not coming at this from a standing start. Work is already under way, not just in our working group, but also in reviewing certain legislation, which the Chairman mentioned, and in technological developments that are already at an advanced stage but perhaps have not been implemented as quickly as we would have liked. When we publish the working group report in December, the timelines, actions and priorities we have will speak to the fact that work is already under way in certain areas and those areas will have shorter timelines. Where we see that priority action can be taken, because it can be an early win, we will certainly prioritise that action, always bearing in mind the fact that we will not be able to solve it overnight but should try to move quickly when we can. Pace is absolutely essential because it will send the correct signal to all the market players about how serious the politicians are to do something to protect consumers from the unfair spikes they have seen in recent years.

When one talks about section 4 of the Personal Injuries Assessment Board Act 2003, for example, the review is already ongoing, so we are not coming at it from a standing start. Reform of the Personal Injuries Board is essential and we have spoken to it in terms of our emerging recommendations. I note also that the Personal Injuries Board is part of our working group. We are aligned with it in what we hope to do, which is another important factor. There is no point in the committee or me coming out with recommendations for the Personal Injuries Board which it does not agree with or which it might not think were a priority. We have been able to make sure that our thinking is aligned with those people who want a similar outcome from this process.

Data is the key to understanding everything here and we just do not have the data we need. There is not the requisite transparency there is in other jurisdictions. Let us be clear, there are companies operating in Ireland which operate in other jurisdictions where they share data and are transparent with the data on a level that Ireland is nowhere near close to being. That really concerns me and it very much concerns the working group. We have strong recommendations which speak to that and to getting that data. Of course, it would be very helpful if the insurance industry was willing to come forward with the data in a way that the Chairman speaks of it. We would like to propose an independent body - this has to be finalised in the report - to decide on the defined standard sets to feed into the data, to then control it and share it in a transparent way with everybody. Data should not be held by certain parts of the industry and data should not be presented in such a way that it is not meaningful to the work we want to do. Data is key to understanding what we need to address around the claims channels and settlement channels in terms of understanding exactly what is happening and for those 70% of cases where there is no transparency. Some 10% of cases go to court and 20% go through the Personal Injuries Board but there is a mystery over what happens to the 70% of other cases. We need to lift the veil on that mystery, which is a crucial act which the Government and the Oireachtas need to take. We have recommendations that speak to certain sections of the Civil Liabilities and Courts Act on the review of the sections and the commencement of other sections. Since we published the emerging recommendations further sections have been brought to our attention.

The Chairman spoke about the hauliers. We looked at that initially but we need to look at it a bit more. We met the Irish Road Haulage Association. It is important to understand that hauliers who are getting insurance abroad have had to relocate in order to do that. There are a number of factors that might compel or attract a haulier to operate outside Ireland and insurance is one of those factors but, as the Chairman knows, there are other factors at play. These factors have been raised with the Committee on Transport, Tourism and Sport and with Government and there are a number of issues at work there. We think there is a potential difficulty at EU level with what the hauliers are looking to achieve, namely, to remain registered in Ireland and to purchase insurance from companies in another jurisdiction which do not operate here, do not have freedom of services here and are not registered with the Motor Insurers' Bureau of Ireland. There is not going to be a quick win there. If it requires a change at EU level, it will take time. We need to be clear about that with the hauliers. I believe I have addressed the issues raised by the Chairman in the first round.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

With regard to the issue highlighted by the Irish Road Haulage Association, and in spite of the fact it may take time in terms of the European Union, that cannot stop us and the Minister of State from highlighting the issue, from being determined to bring about the necessary changes and from having a focus on the issue. I have said it umpteen times today that the Minister of State is the Minister with responsibility in this area. We know what is happening as do the participants in the business. We just need to engage and make these recommendations work. Is it fair to ask that at the end of February or March 2017 we carry out a review of how far we have come since the publication of this report or the Minister of State's working group report, which was in December? Can we set milestones, achievement dates and so on? Does the Minister of State think this would be fair?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There is absolutely no point in this committee or the working group publishing reports if we do not have a detailed timeline around it. I have met the insurance companies and Insurance Ireland on this and have said to them that we are going to come with an ambitious and a detailed timeline for the implementation of every single recommendation we put forward. We want to show a determination that we are serious about this to all the players in the market. That is why when I talk about it, and I hope the committee sees this, and when we come to publish the working group's report with the detailed timeline reflecting all the good work done by the Oireachtas committee and in showing the determination to get things done and to take action, it will have a calming influence on the recent spikes we have seen in the cost of motor insurance premiums.

That is my hope. In that regard, the feedback I have received from the industry has been positive.

The report of the working group will be published in December. Since giving our recommendation to the Minister for Finance, Deputy Noonan, in October we have been trying to draw out those timelines and put in key performance indicators for the different milestones we have to hit and when we must hit them. Once that is in place and published, I will be happy to come in at any point and speak to this committee about the progress that has been made under each of those action points.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for being here. It is hugely important to have an ongoing evaluation of this matter, even if we were to have short spaces allocated each month to review so that we can tick off the ones that have been completed.

Has the Minister of State sought, or does he intend to seek, formally the legal position on the Single Market? I am afraid that the whole idea of being able to access the EU Single Market will get lost in EU legislation. Therefore, has the Minister of State formally sought the legal position on it for hauliers or taxi drivers so that they can get insurance abroad? I am referring to formally seeking the position from our own legal advice here and from Europe. Has he done it?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In so far as a monthly review is concerned, I have no problem with appearing every month before this committee to talk about what the working group is doing. From January, we will have two tasks - ensuring that the implementation of the recommendations is taking place, but we will be moving to other areas of the non-life insurance market as well. No doubt members of this committee have been receiving submissions from business people about their insurance costs. I do not mean their motor costs, but in terms of insuring their premises and what they do. I want to get to that quickly and January will be the starting point for that once we have published our report. I am happy to come in on a monthly basis and we will be doing other work as well. Some of the recommendations will have a longer tail, so there may not be immediate progress from month to month on a particular recommendation. I ask the committee to bear that in mind.

In so far as the Single Market and hauliers are concerned, it comes back to a point the Chairman made which I want to address. As it is not possible now or because it might seem like a tough ask to change European law, it does not mean we will not seek it. We have sought the legal position and have had an initial legal consultation on this. There is an ongoing court case, so it is something we will have to revert to, but it is part of what the working group is doing between now and December to understand how best we can progress this particular issue of concern. I know that it is an issue concern and I have met with hauliers who put their case forward. In talking about the future of the Single Market, there is a good argument to be made there as well.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

If the Minister of State obtains that legal advice perhaps he can let the committee have it also.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To correct something I just said, the court case has concluded and that is why we are waiting for the updated legal advice based on the conclusion of the court case. As regards sharing legal advice, I will have to check on that because we have had difficulties previously concerning what legal advice can be shared, and what happens to it upon sharing it. I cannot therefore give a commitment on it now, as I will have to check what the legal status of the advice is.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Perhaps the Minister of State could do so and then let us know.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will, yes.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is hugely important. I am glad we all agree that the State can no longer be a neutral actor in all of this, given the dysfunction we have seen in the insurance market. While much of our rhetoric is aimed at the industry, most of our recommendations are about what others can do. The Minister of State's working group has the potential to put more radical suggestions on the table. Can he reassure us that he will talk to the industry and not just work around the issues thus dealing with everything except the elephant in the room. The industry has profited wildly but is now facing less profits, and now simply wants to ramp up prices. In that context, how confident is the Minister of State that premiums will start to reduce? I know they have fallen slightly for motor car insurance in the last month, but maybe the Minister of State can give us an opinion on it.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To clarify, when the Senator spoke of the elephant in the room, was she talking about these super-cycle trends whereby the insurance industry players follow each other up and down the hill depending on where the market is?

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Yes.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Senator is right to say that the State must not be a neutral actor in this. The State must intervene to protect consumers as well as protecting the insurance market. We need reform across a lot of areas. As the Chair also said, there is no silver bullet policy issue here. There is a range of complex policy responses that need to be taken. That is what our emerging recommendations, and the committee's report, speak to. Reforms have taken place arising from the financial crisis, including the introduction of solvency measures, that prevent some super-cycle trends from happening in future. One of the first things we must do, however, is stabilise the current spike in premiums that people have witnessed particularly over the last 12 months. I hope we will be able to give a strong message to all aspects of the market in our recommendations and timelines. That is the feedback I have received in some of those areas.

Once the recommendations begin to work their way through I would expect to see premiums come down. Insurance companies may tell me they are adding €50 to the cost of every premium due to fraud, but we will publish ambitious and radical ideas on fraud. These include a fraud database to be shared not just between the Garda Síochána and insurance industry, but also potentially with the courts. Technology to automatically detect number plates will also be used to detect uninsured drivers and other behaviour. As those type of actions are implemented they will no longer justify an additional €50 increase on a premium. Whiplash claims add €130 to premium costs while uninsured drivers add €35. As our recommendations work their way through, the industry will no longer be able to make a defence for loading premiums in such areas. I hope our recommendations will bring about changes in behaviour in each aspect of the market. That is what we are all working towards.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Yes. I suppose it is about having information on insurance companies making wild claims, yet not being able to substantiate them. They certainly do not produce raw data in a way that others do, so that the claims can be contested. When representatives of the Central Bank appeared before this committee, I asked them if they were satisfied they were getting data that had been requested. When I asked them if they had ever requested data from insurance companies and been refused, they said "No". That leads me to believe that the Central Bank has not been asking the right questions that would help it to fulfil its consumer protection role.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Data are the key to understanding everything, including the claims resolution process in the 70% of cases we cannot see. Data are also crucial to understanding how insurance companies are operating themselves, as well as being essential to consumers understanding exactly how their insurance premiums are priced. Data are also necessary to check fraud and cut out uninsured driving by introducing transparency around that. We must bring our insurance sector out of the stone age, which I feel it is in given some of the engagements I have had, and make the market grow up. That is the key to attracting other entrants in to ensure we have a healthy and competitive market.

I cannot and will not speak for the Central Bank. I saw a transcript of what its representatives said when they appeared before this committee. The Central Bank sits on my working group and we have spoken on data issues in the sub-group with the different actors that have come in. As regards its prudential function, the Central Bank would have flagged that matter with the working group if it had an issue with it. We are looking at various data concerning fraud which affects extra premium costs. Up to this point, the insurance industry has been trying to manage those data itself and build a database to be shared between the industry. That is not happening quickly enough, however. In addition, I do not like the idea of them managing the data. That is because from a public interest viewpoint the data should be managed independently by a State agency. There is a recommendation in the committee's report on who should collect, handle and manage that information.

We will need the committee's support in determining that body. Not everyone is seeking to do this work. In our various engagements to date, we have seen some reluctance. We all need to work together to settle on what the right agency or body is to manage these data and get the right data sets. Doing this quickly will be important.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

In the Minister of State's engagement with the industry, has he encountered resistance to the suggestion of data publication or transparency?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have. In terms of the commitments that have been given to me by the insurance industry at our meetings, the industry has agreed that we need this database and it is willing to perform the necessary functions. We are using legislation to do this so as to ensure that there can be no uncertainty about what information is being sought and how it is to be presented. Following engagements of the working group with the industry, I have sought particular information that was committed to in the room, but the companies or their representative bodies then explained that they had experienced difficulty in providing it over concerns about where it would be shared, could it be subject to freedom of information requests, what would that mean for commercial sensitivity, etc. I take it in good faith that these are their legitimate concerns, but it speaks to the need to clarify legislatively for industry and ourselves the data protection and commercial laws in this regard so that, instead of going on a commitment that is given in a room or in writing, there will be no confusion at a later stage. It is important that we proceed legislatively, which I intend to do. Once the legislation is ready, I hope that it can be moved quickly through the Houses at the appropriate time.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I would welcome that. What collaboration has the Minister of State had with the Judiciary? Has it approached this project as something that it wants to be a part of or has it retreated in any way so that it can make some point about independence? What has it indicated to the Minister of State about its approach to the new book of quantum?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am speaking at a remove because the Judiciary is the Judiciary and I represent the Government. The separation of powers is important. Everything that has been happening in the UK post Brexit only underscores the importance of that separation to the people's faith in their judicial system and in their ability to have their natural and civil rights protected by an impartial system. Nonetheless, the Injuries Board liaises with the Judiciary and is on the working group. The recently published review of the book of quantum was managed in a helpful way in terms of some of the signals from the Judiciary and there have been a number of interesting judgments since the publication. The costing of an award by the Judiciary is a matter for it, but we can give it much more information to help it set those awards better, for example, through the granularity of information contained in the book of quantum.

Through the personal injuries commission that I want us to establish, we will be able to conduct international benchmarking of the level of personal injury awards in a detailed way and determine how whiplash, for example, is graded abroad. We can consider the use of an independent panel of medical experts to help in assessing injuries that are brought before the courts. We can also consider relativity between awards for injury types. One of our recommendations speaks to that. In this way, we could move away from being outliers. This work needs to be done in tandem with the review of the book of quantum and of the legislation underpinning the Injuries Board. That is how I want to proceed.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Has the Judiciary expressed a willingness to consider this matter?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have had no interaction with the Judiciary.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I cannot speak for the Injuries Board in this regard either. However, I have heard no negative feedback about the examination being done by the board and the Department of Justice and Equality of the legislation that underpins the board, which has already commenced in line with the recommendations, or about the review of the book of quantum and its possible future iterations. As regards what we all want to achieve, I have heard no negative feedback.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

There will be a missing link if we do not get buy-in from the Judiciary, notwithstanding the independence that it needs if we are to operate effectively. It needs to be on board with this no less than the Central Bank, which has a role to play in protecting consumer rights. I am not confident that the Central Bank has been playing that role in the way that it should. This has in part allowed for the dysfunction in question in the insurance industry.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

From my interactions, I would not assume that there has been no buy-in from the Judiciary into what we want to achieve.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State. The committee's report suggests a special regime for whiplash and soft tissue injuries, but I am not 100% convinced about this. Would it be constitutional to work such a regime in practice?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have not seen the report's detailed recommendation. In our work, however, we have come up against certain constitutional road blocks that affect what we can do regarding personal injuries, including soft tissue ones. What is clear from the relevant data that I have seen is that we are outliers when it comes to award levels and the number of claim applications. A personal injuries commission could, if set up in the right way, do much to tackle this issue. The current system is an incentive for fraud and exaggerated claims. It also incurs a higher and uncertain cost for industry in terms of its work, its provisioning, etc. That issue is a large part of the picture.

We have had conversations on whether there is a claims culture or environment in Ireland, but we need to examine the situation because it is adding a cost for everyone who drives responsibly. Accidents happen, as do penalty points and whatnot, but we all suffer because some people may be taking advantage of how personal injury claims are settled. I hope that the fraud database will address this issue. It is another key part of the architecture that we need to put in place as part of the reforms that we are trying to introduce.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

To suggest a special regime for it-----

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am unsure as to what the Senator means by "special regime". I have not read the recommendation.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

-----would be unconstitutional. It should be borne in mind that whiplash is the most common injury in car accidents. People should not be excluded. I detest how the motor insurance has held up whiplash victims of road traffic accidents as the main cause of the significant increases in insurance costs. It is not right and we should not feed into it.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Senator is right. The idea that we would blame people who have made a legitimate claim is unfair. The purpose of an insurance company is to pay out on claims when an accident happens. That is insurance. We must maintain that at the core of a properly functioning insurance market, but we must also recognise in the information that we have seen that fraudulent or exaggerated claims are being made. We have recommendations that speak to this matter.

We are examining the recommendations of the committee's report and determining what further research might be necessary in order to incorporate them. I want us to work together on this.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I look forward to working with the Minister of State in the coming months to make a difference to this issue. I appreciate his work to date, but the proof of the pudding will be in the eating, in how many of our recommendations we can implement and in how quickly legislation can be introduced to make the changes.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Absolutely.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am sorry for being delayed, but I followed some of the discussion in my office. I welcome the Minister of State to the committee and wish him well with his final report. When he appeared before us previously, I asked that he would request of the industry a number of cases that were outliers in terms of insurance increases. We are familiar with the CSO figures on annual increases in premiums, be they in the 25% or 33% range depending on which cycle one is considering.

Deputies and Senators are aware of many cases where individuals have seen their premiums increase by two, three and higher percentage ratios. At that time I asked the Minister of State to request the industry to provide a sample of the outliers and to ask the industry to justify how that has happened on the basis of risk. Has the Minister of State made that request to the industry to provide him with the figures? If that has happened, what was the outcome of the examination?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy. We just touched on this with his colleagues on the committee around getting the right data. In our emerging recommendations, which will be finalised in December, we will be doing this through legislation. The working group has found it difficult to get the information we want from the industry, in so far as trying to drill down into some of the problem areas, including the one raised by the Deputy at the committee. After our engagement we went to industry with a request for different types of information, not just the type of information Deputy Doherty was looking for, but also the information I was seeking. Commitments were made, about which the industry was completely genuine, and there was desire by the industry to work with us. When we actually tried, however, to get that information, it was not as forthcoming as I had hoped. Different reasons were given around data protection, commercial sensitivity and whether or not information given to a working group in the Department of Finance can be subject to a freedom of information request and what that might mean. On that point, I take the industry on good faith, but it indicates the very serious need for us to make sure that, through legislation, we are able to grab all the data we need and in the right manner for publication. That is why we have a recommendation that speaks to the national claims database or register. It is also why one of our recommendations for the future is that whenever there is an increase on premiums at renewal, the increase would have to be explained to the consumer. There would have to be something behind that and it would not just be an automatic increase when driver behaviour had not changed. That is what we are working to, and while I do not want to repeat myself, I have already said that data is the key to all this. We need to make sure that the type of data we are looking for is clear in legislation and that the data can be given.

As the committee is aware, there are insurance companies operating in Ireland that are also operating in other countries. They are giving that type of data elsewhere for publication but they are not doing it here. The industry says it is trying to, and that it going to, but it is not happening quickly enough. I want the Government or an independent body to be in charge of it and to have ownership of the matter. That is where we are heading and where our work should be going.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I appreciate that and we are at one on the importance of data and raw data. Reference was made earlier to the statistics released by the industry rebutting claims by the Law Society of Ireland. This information, which was provided by the industry to the Minister of State on request, was about the average increases in legal costs over a three-year period. Everybody knows that when one controls the data, one can very much abuse the data also, and the way it is presented, to make a particular argument. Even at a quick glance, it was very clear that the information was presented in a way that suited the narrative the industry was peddling. The data shows the levels of compensation but there is no reference to the additional numbers of motorists on the roads between 2013 and 2015. This increase in driver numbers is a factor. As there are more cars, there will automatically be more claims, unfortunately. On the increase in legal costs, the industry made the issue that the insured person's legal costs were running at around a 12% increase over three years. When we actually look at the industry's own figures, the increase in claimant legal costs is shown at about 8% between 2014 and 2015. This is exactly the same as the legal costs for the industry itself over the same period. Again, it is about how the data is put forward. When it controls the data, it allows it to provide it selectively. That is an aside but it is important that we get the data availability right.

I welcome the fact the Minister of State has made the point a number of times now about reasons behind increases. When the motion was going through the Dáil, it was one of the areas I focused on, and that it was not a case that we were just looking at 33% increase on average. Individuals must have a right to an explanation as to why insurance premiums are increasing above the average in the sector. If he would not mind, will the Minister of State pursue that issue again? The argument he has received from the industry do not hold water; it is bull. That is the reality. We are not looking for names and addresses of individuals. We are looking for sample cases such as Mary Jo in Fanad was insured for €350, had no claims, is driving the exact same vehicle and has no penalty points but her renewal premium is €985 and this is the reason for it. That can be a fictional person but based on a real case file. There is no reason the industry should not provide the data to the Minister with responsibility for this issue. If the industry does not provide it, let me be clear that it is basically shunning the work of this committee. The request from this committee, through the Minister of State, for this type of data to be made available is so that we can be satisfied that the insurance industry gouging its own customers or that it is not doing so. That is what we need to know and, if he would not mind, I ask the Minister of State to pursue that again, bearing in mind that he requested it earlier.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Doherty is absolutely right when he speaks of the control of data being key and data being presented in a certain way to make a certain impression. This has been part of the difficulty we have all had in trying to get to grips with what has been happening over the past number of years. Companies have used their data in their own way as part of this blame game, and that needs to end. We will need, through legislation, to very clearly define exactly what data we are looking for, how it is to be presented, what it means and how we intend to publish it. The control part is key and that is why it needs to be by an independent or a State body, and not the insurance industry. I want to let the Deputy know about an exchange I had with one of the industry companies that came in. It may have been a little bit indicative of the exchanges we have been having. I put the point across to the company that we need to know, and a person needs to know, why a premium has increased. The company is providing the service, the person is paying for it and needs to understand why there is an increase. I asked the company if it could commit to doing that and it said that it could. I asked if a person would get a detailed understanding of why a particular premium had increased. The company said it would not be the particular premium and that the reasons a premium had gone up would be in general terms. That is not helpful to anyone.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

No, it is not.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This is the way the interaction has gone. I do not want to paint a particular picture of the industry but the control is an issue and the fact that a commitment given is interpreted one way, either intentionally or not, and then afterwards it does not stack up. Legislation has to be brought in and this is going to be one of the priority areas for that legislation.

I did not mean to interrupt the Deputy but I just wanted to come in there.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

No, I appreciate that and the Minister of State knows that we will try to work to ensure the legislation is as robust as possible to make sure we get to the outcome both he and this committee want to see in this regard. While I was driving back to my hotel in the early hours of this morning after dealing with the Finance Bill, I listened to the Minister of State and George Hook, although, obviously, the Minister of State was not on "The Right Hook" at 3 a.m., so it must have been a repeat. Forgive me if I picked this up wrong, as we had quite a long session on the Finance Bill, but when George Hook focused on the issue of fraud, the Minister of State said that he had seen evidence or information provided by the industry that suggested a level of fraud takes place. We know from the industry and from cases that there have been staged accidents and so on, but that does not amount to the level of fraud being suggested. The industry tends to come up with the figure of €50 per premium to cover fraud costs. Has the Minister of State seen any data to quantify or stand over the figure of €50 on each person's premium to cover fraudulent claims?

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We talked about-----

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am sorry if it-----

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We did not actually talk about it as a question. I mentioned the €50 figure in an earlier exchange. One of the things I was able to do during this work was to take an in-depth with an actuary into how premiums are calculated and all the different metrics that go into the calculation, including a person's credit rating potentially, which happens in other jurisdictions, the colour of the car, etc. The type of information and the different variables that are put into computers now to spit out what a premium might cost is incredibly impressive in that regard. We spoke about the issue of fraud.

It was put to me by one particular company that essentially it was a guesstimate. If those who engage in fraud are successful, it is not detected; therefore, there is no decent set of data behind the €50 figure.

The various concerns raised such as exaggerated whiplash claims, the fact there is no integrated fraud database to check or that certain sections of legislation have not been implemented by the courts are pointed to in suggesting solutions to the fraud problem. Let us solve each of these problems. As we implement the recommendations made, the figure of €50 will not disappear because there will always be fraud. We must try to figure out a way to calculate the level, but the number should come off the premium charged. That is the intention.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The numbers should never be repeated. If it is a guesstimate by the industry to justify the premiums charged without it being able to back it up in any way, it is wrong for us, as parliamentarians, to repeat it. There must be something to underpin it. It must be underpinned by some material figures, as opposed to someone thinking one sixth of every premium is made up of the cost of meeting fraudulent claims, even though he or she has no evidence or information which suggests that is the case.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will check with my officials to see whether a body such as Insurance Ireland has produced anything to back up the figure of €50 put on the level of fraud. I understand the industry is looking at what is happening internationally. I disagree with the Deputy; we should absolutely use the industry's figures. If it states the figure is €50, we should say we will tackle the issues it has highlighted to us. If its information is not substantiated through research or by the evidence, we can use it against it. We should do our own work to tackle the cost of premiums.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The only way to tackle fraud is by enforcement. We cannot tackle fraudulent whiplash claims by reducing payouts because we would affect genuine claimants. We need to prosecute in order that it will be seen as a deterrent to engage in fraud. Many of the measures mentioned by the Minister of State such as medical assessments by the PIAB might offer a way to deal with it, but we also need to challenge the figures produced. I cannot state the insurance industry is making a profit of €200 on everybody's premiums and absorbing it to pay salaries and fat pensions. It would be wrong for me to answer, when the Minister of State asked me from where I had got the figure, that it was guess. I would have to be able to show from where it had come.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The rationale the industry has given is that it cannot know how many fraud cases will get through but that it has ways to calculate the figure. It has mentioned a figure of 1%. I am not saying I am satisfied with this answer from it, but there are a number of recommendations emerging that speak to how we can combat fraud such as looking at the sections of the Civil Liabilities and Courts Act which are not being used and have not been implemented, or creating a proper database that could be shared between the Garda, the insurance industry and, potentially, the courts. These measures to tackle fraud are key. We could use automatic number plate recognition technology to make it easier for the Garda to identify uninsured drivers. Uuninsured driving is another source of fraud. There are a host of measures we could use to take the issue of fraud off the table and we could be quite successful in doing so.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am not suggesting for one minute that there is no fraudulent activity, as obviously there is, but I have stated previously that this is a sector in which, given the large companies involved, it is almost acceptable to add a little extra on top of a claim. What the Minister of State has said is quite interesting. If we look at the campaign conducted here on the €50 added to every premium, it is identical to the one conducted in Britain. It goes to the heart of the issue. As the Minister of State mentioned, the figure is based on the level of fraud internationally. Ireland is no different from anywhere else. If it is happening all over the place, it is a wider issue.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Given the spikes we have seen, €50 is not a significant element. We have spoken about information and data being central to everything. Some companies claim €130 is added to every premium because of the high prevalence of whiplash claims and the high awards made. Various figures are added, including €35 for uninsured driving and €50 to €55 in respect of Setanta Insurance, depending on how the issues involved might be resolved. We have tried to obtain detailed granular information on how the figures are calculated in order that as our recommendations are worked through, we can consider how they can be lowered. There is a huge onus on the industry to front-up in providing data and information. It speaks constantly about the economic incentive to settle early, but this is causing a problem in providing an incentive for some people to chance their arm, the expression which might have been used by the Deputy, which impacts on everyone. To go back to the point made by Senator Rose Conway Walsh, let us not come out of the committee trying to support the impression which some are trying to give that the reason is people suffer from whiplash as a result of an accident. That is not the impression I would like to give. There are a number of problems in the industry. That is why a number of reforms are needed to tackle what has been happening in recent years.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

We will examine the report in detail and deal with the registration legislation at pre-legislative scrutiny stage. It is important that we tackle all of these issues. Some of them may be minor, but they should be tackled because it will help to reduce premiums a little. The increases stem from the investment end of the companies' portfolios - that has been the main driver - and imprudent practices in recent years. Having said that, I am concerned that the Government's approach will be to reduce the existing safeguards for motorists and those with a legitimate claim, for example, through providing care, not cash.

There is an idea that the prevalence of whiplash claims in Ireland is way beyond what it is anywhere else. I made the point in private session that - no harm to them - certain comments made by individuals in the debate were over the top. They received headlines for their comments on the weakest necks in Europe and such nonsense. Yesterday I made the point in private session that in a fire the injuries suffered would be burns, while in a car accident typically they would be damage to soft tissue and whiplash. The idea that this is the dominant claim in the sector should not, therefore, come as a surprise.

In tackling these issues to try to push down premiums I am concerned to ensure we will not reduce the safeguards for motorists and benefits. It should be borne in mind that many people do not claim from motor or home insurance companies when they have legitimate reasons to do so. I have been in that situation. Somebody hit my car while it was parked outside Leinster house. On another occasion I damaged my car and it cost money to fix it. The reason people do not claim is their premiums will increase and they will lose their no claims bonus. As a result, they put their hand in their pocket and pay themselves. If paint falls on the carpet, homeowners do not claim because they know their insurance premium will increase. Two years ago my oil tank leaked causing an oil spill in my garden. Obviously, I had to have the soil removed. When I telephoned the insurance company, I was told I should not claim because I would lose my no claims bonus and that there was an excess.

I said "Yes, but what about the cost?", which was ridiculous because the amount of damage was small but the cost was approximately €27,000, a quarter of what it cost me to build my house ten years ago. The point I am making is that many people who have legitimate claims do not claim from the insurance industry, which is profiting as a result of the fear it instils and the model it has in terms of people who take out insurance for damages that occur to themselves, physically, to their vehicles or to their homes. People do not claim, even though they are insured, because of the structure of the industry's business model. In a way, the insurance industry is committing the fraud. My point is that in dealing with this issue and trying to drive down premiums, it is important that we do not reduce the type of support and protections that are there for legitimate claimants.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is a very important point. It was strongly made within the working group - by one of the subgroups that is examining the claims element of it - in the context of ensuring that we would not do anything that would undermine the protections that are currently in place. The point of insurance companies is to pay out on claims. That is why they exist and that is why we have insurance. It is important, though, that we have a claims environment that can deliver some certainty for all involved in terms of the time and the cost to make the claim and to pay out on the claim. That is something we want to protect.

In January, the working group will start to look at other areas of non-life insurance in which spikes have also been experienced. I mentioned to some members earlier that businesses, particularly in terms of their premises, have been experiencing those spikes too. From January, we will adopt a twin-track approach that will involve monitoring the implementation of our recommendations to our performance indicators and milestones and then moving on to those other areas in non-life insurance to which an importance also attaches. Some of the practices are similar as well as to what it happening on the side of the insurance companies, so some of the work we have done already will feed into that area naturally.

Rose Conway Walsh (Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is also fraudulent to take money off somebody under false pretences. When the data are not there to back up the circumstances whereby companies are taking money off people, one can also turn it the other way around. I will conclude on that point. I look forward to working with the Minister of State in the coming months on the implementation of the process.

Gerry Horkan (Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State and his team for the work they are doing and for coming in to us this afternoon. We look forward to reading the Minister of State's report when it is published in December. It would be very useful if perhaps next February or March he would come back to the committee and outline the progress that has been made at that stage. I accept that it will be early days but we would still like to know what has happened, what is in train and what is going on. As the Chairman said earlier, we do not want our report or the report of the Minister of State gathering dust on a shelf. We want as much progress as we can get because it is clearly an enormous issue for so many people. Almost every house in the country has a car, if not more than one car, and it is affecting how we all do business.

Eoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Vice Chairman.