Oireachtas Joint and Select Committees

Thursday, 16 February 2017

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Report on Cost of Motor Insurance: Minister of State at the Department of Finance

9:30 am

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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The purpose of the meeting is to review the published report on the cost of motor insurance from the working group chaired by the Minister of State with responsibility for financial services, eGovernment and public procurement, Deputy Eoghan Murphy, relative to our report on the matter. I welcome the Minister of State and his officials to the meeting and invite him to make his opening statement.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I thank the joint committee for this invitation to discuss the recommendations of the cost of insurance working group on motor insurance.

The background to the report is the fact that pricing in the non-life insurance sector, and particularly in the motor insurance area, has been subject to a lot of volatility in recent years from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience of large increases, particularly since 2014. The purpose of the report is to address this volatility through a set of recommendations and actions to tackle the factors that have caused this repeated cycle of excessive swings up and down. I believe that its implementation will lead to greater stability in the pricing of motor insurance and while there is no single policy or legislative silver bullet to immediately stem or reverse price rises, I am confident that it can lead to a more stable and accessible insurance market which will deliver fairer premiums for consumers without unnecessary delay.

It is against this backdrop that the Minister for Finance, Deputy Michael Noonan, established the cost of insurance working group which I was asked to chair last July. It brought together the relevant stakeholders on the Government side - the Departments of Finance, Transport, Tourism and Sport, Jobs and Enterprise and Justice and Equality; the Personal Injuries Assessment Board; the State Claims Agency; and the Central Bank of Ireland to examine the various factors contributing to the increasing cost of insurance. The working group held 12 meetings in its consideration of the issues affecting the cost of motor insurance. Four sub-groups were also created to conduct much of the background work. Between the working group and the sub-groups a wide range of stakeholders were met with to get their perspective on how we could address this cost issue. The stakeholders included AA Ireland, Auto Records Limited, the Consumers Association of Ireland, the Freight Transport Association of Ireland, the Irish Brokers Association, the Irish Car Rental Council, the Irish Road Haulage Association, Insurance Ireland, the Law Society of Ireland, the Motor Insurers Bureau of Ireland, Tiomanaí Tacsaí na hÉireann, and the CEOs from AIG, AXA, Aviva, FBD, Liberty Insurance, and RSA Insurance. Further submissions were received from other interested parties and these were considered as part of the process. I also personally met a number of stakeholders to help me develop a greater understanding of their perspective on this complex issue.

At the end of October, I provided the Minister for Finance with an emerging recommendations report and I appeared before the committee in November to provide an overview of these. One of the conclusions I drew from this engagement was that there was a considerable overlap in our respective approaches to addressing this issue as it was clear that many of the recommendations of the Oireachtas committee report were also being considered by the working group. The hard work put in by the joint committee helped provide additional clarification to the cost of insurance working group as to the direction we should take with our recommendations. The fact that the committee's hearings were in public added to the public's understanding of this issue. Following this appearance, the working group worked to finalise its report on the cost of insurance and made 33 recommendations with 71 accompanying action points. The report was finalised and presented to the Minister for Finance in December and it was subsequently published following its approval by the Government at its first meeting this year, on 10 January.

I would like to give a brief overview of the main recommendations. One of the key findings of the report is the need to enhance transparency and facilitate the use of data sharing and collection to the level that we see in other jurisdictions. This was a common theme of discussions with a wide range of stakeholders and is a matter which needs to be addressed. Currently in Ireland, claims data related to motor insurance are available from a variety of sources. However, they are not collected or produced for the purpose of improving transparency on emerging risks within the market. The working group developed a phased approach to tackle this issue. In the short term, the working group recommended commencing a short-term publication, on a quarterly basis, of a number of key aggregated claims-related metrics to be provided by the insurance sector. This initial publication method will be built upon by the establishment of a national claims information database by the middle of 2018 which will facilitate a more in-depth annual claims trend analysis. The Central Bank will hold the database.

The second area where data availability is an issue is in the field of uninsured driving. Figures from the Motor Insurers Bureau of Ireland, MIBI, show that the level of uninsured driving in Ireland rose from less than 5% in 2011-2013 to 7.1% in 2015. The MIBI is responsible for meeting the claims of those who have been in a collision involving an uninsured or untraceable driver. They pay out between €50 million and €60 million annually to meet such claims and this cost is passed directly onto motorists. The insurance industry estimates that this adds about €30 to each motorist’s premium. It is therefore imperative that we tackle this issue without delay. The working group has recommended the establishment of a fully functioning database of insured and uninsured drivers to enable gardaí to check motor insurance compliance effectively.

A project group has been established between the MIBI and Insurance Ireland to create a central database which will contain certain information required by the Road Traffic Act 2016, such as the driving licence number and policy number of each policyholder. The ultimate aim is to provide An Garda Síochána with a mobile app on an authorised user basis, to allow for roadside access to the database. The report sets a deadline of Q3 of this year for the database to go live in relation to privately owned vehicles.

Fraud, like uninsured driving, has been highlighted as an area where more information can reduce its impact on the cost of premiums. While the vast majority of claims are genuine, there is a perception out there that insurance fraud is a victimless crime. However, nothing could be further from the truth in my view and such claims, whether of an opportunistic and exaggerated nature or through highly organised crime rings, need to be made as difficult as possible to get away with. In this regard, the insurance industry has estimated that fraud costs them in the region of €200 million each year, adding approximately €50 to each premium. The report recommends the establishment of a fully-functioning integrated insurance fraud database for industry to detect patterns of fraud by the end of next year. That database will be modelled on the UK system and will be funded by industry but managed by an independent not-for-profit body. This will be progressed in tandem with actions to address data protection-related issues.

Another core recommendation is the establishment of the Personal Injuries Commission to investigate and make recommendations on processes in other jurisdictions which could enhance the claims process in Ireland. The terms of reference for that commission are set out in the report and they include the commissioning of medical research, benchmarking of international awards for personal injury cases, analysing and reporting on international compensation levels and compensation mechanisms, and reporting on systems where detailed grading of minor personal injuries is in operation. The need to begin this work immediately has been recognised by the Government and on 10 January the Minister for Jobs, Enterprise and Innovation appointed former President of the High Court, Mr. Justice Nicholas Kearns, as chairperson of that commission. The other members are representatives from stakeholders that include the medical, legal and insurance sectors as well as relevant Departments and agencies. The commission met for the first time on 10 February and has agreed a work plan.

While the above measures could be seen as the core recommendations, the report should very much be seen as a package of reforms, which when implemented together will provide for greater stability in the pricing of motor insurance and will help to prevent the volatility that we have seen in the market in recent times. This package of measures also addresses the issue of protecting the consumer through, for example, the extension of the current renewal notification timeframe by five working days. Additionally, the Department of Finance is working with Insurance Ireland to develop protocols to require insurers to set out reasons for large increases in premiums, and to assist returning emigrants by requiring insurers to accept driving experience from abroad where a person has previous driving experience in Ireland.

A portion of the recommendations also centres on reducing costs in the claims process in tandem with the running of the Personal Injuries Commission. These actions will seek to maximise the usefulness of the Personal Injuries Assessment Board and to improve the book of quantum. Further reviews will also take place to examine the impact of the changes in the court jurisdictional limits, the setting of the discount rate in PI lump sum awards, and the introduction of periodic payment orders. The implementation of the review of the motor insurance compensation framework is also ongoing, with heads of Bills proposed to be brought to Government by the second quarter of this year.

Actions have also been recommended to develop a protocol to require insurers to require proof of NCT certification and to promote compliance with road safety legislation. Insurance Ireland will also present the working group with a report in the use of telematics in Ireland by the end of year. I will continue to drive the effective and timely implementation of this action plan over the next two years through the working group. The second phase of the working group's review of insurance costs has commenced. Based on submissions we have received from the small business sector in particular, we will review and make recommendations to tackle the rising cost of employer and public liability insurance. This is an important issue from a competitiveness perspective, and we will be meeting the relevant private sector stakeholders over the next couple of weeks.

I hope that members will see today that many of the recommendations contained in the committee's own report have been included within the cost of insurance working group report with specific and time-bound actions through an action plan which are addressed to particular bodies to ensure implementation. The implementation of many of these recommendations has already commenced, and I am confident that the report's 71 actions will be implemented by the end of 2018, with 45 due for completion this year. The working group will continue to meet regularly to consider the implementation of the report and will prepare quarterly reports on the progress of the implementation of the action plan from the end of the second quarter this year, and these will be published on the Department of Finance's website. I can provide an update today if the committee so wishes.

I am determined to ensure that this important work progresses at a pace, and that it meets its implementation deadlines. As I mentioned at my last appearance before the committee, I am happy to come back to provide regular updates. These, in addition to the quarterly updates to be published on the Department's website, will assist members to see progress in this area. I am happy now to take any questions or to provide clarifications to assist the committee.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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People will be looking for the various actions that will bring about an immediate downward adjustment to their premiums. While both the Minister of State and our reports are excellent starting points, the reports will be judged by the action the Minister of State takes. It is important that he avails of the opportunity to spell out what actions have been taken to date and what the outcome is. What is the response of the insurance industry? Since we have met, premiums are going up and, during the hearings, the committee came under pressure to include in our deliberations the cost of insurance to pubs in Dublin and other areas. We received numerous letters from the public giving us real examples of how they were being ripped off by insurance companies.

I have not seen any change of attitude from the companies. In fact, I would say their attitudes have hardened. In the actions outlined and taken to date by the Minister of State does he get any sense the insurance companies are taking note of his work and his determination to decrease insurance premiums? Does he detect any difference in the Central Bank's attitude on the regulation of insurance companies and the protection of the consumer? It is clear that consumers are being ripped off and, as of yet, they have not felt the safeguards in place and not acted upon by the Central Bank.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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An important piece of the work done by the Oireachtas committee and the working group was to focus on the consumer from the get go, and ensure everything we endeavour to do is to protect their interests in being able to get insurance at an affordable rate. With regard to the attitude of the insurance industry and the companies, I have had nothing but positive assistance from individual insurance companies in trying to help understand the difficulties they were facing so I could understand their problems, because we also hear from the other side with regard to stakeholders affected by this. I had to have a number of robust discussions with Insurance Ireland, the representative body, but I have noticed a change in its attitude since our discussions began. As the committee will see from the action plan, it is involved with some of the actions. I can spell out the detailed work already under way, but Insurance Ireland is co-operating with us in a very positive manner and I am glad to see it. The relevant Department, as the lead owner, will always drive this to ensure the insurance industry works at the same pace as us.

I have never had a question about the Central Bank's ability to regulate and protect in so far as the industry is concerned, but I note it is now doing more. It will host the national claims information database that will come online next year.

The working group never spoke about an immediate reversal in the increase in premiums. We knew this could not be possible as the Government could not step in and set the price because of the various issues the committee has discussed in detail. We have shown determination and we have 71 actions with a detailed timeline and much support behind them to get them done. We know what we want to achieve, we know how we will achieve it and I am quite confident we can do so.

The Chairman spoke about employers and mentioned pubs. While we were doing our work we received correspondence from people with regard to employers' liability. Although the report relates to motor insurance, work is happening already which will relate to public and employers' liability, such as the personal injuries commission. This is very important work. It will feed across to the sector. We have already begun to plan out the terms of reference for engagement with the industry on employers' liability. We will meet our first stakeholders in this regard very shortly. I have met some of them informally already.

I have a detailed update of the work already commenced, because certain actions have a deadline in the first quarter of this year. Will I read it into the record?

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will circulate it to committee members.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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In the report we have committed to quarterly reports. I will endeavour with the working group to ensure we will give an interim quarterly report to show that work has begun. It runs to approximately 30 pages.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is it what is contained in the action plan?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We have already started the work.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Do we have this document as part of the Minister of State's report?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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No.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is an update.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Yes. I will endeavour to give quarterly reports to the committee starting in the second quarter, but because I was coming here today I asked the working group to give me a specific line by line report of what it has done, including what meetings have been held, what terms have been set and everything else. I have it and it is approximately 30 pages.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will get it from the Minister of State and circulate it.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I was going to read it into the record, but I might prepare it in a letter for the Chairman. Will I circulate it after the meeting?

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We were finalising it last night.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is important that we get it.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It is a demonstration that the work has begun, which is important, and people need to see it.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is important.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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The Chairman asked the question I was going to ask on the action points and what specifically has been done. Does the Minister of State have any figures on whether there has been a movement in the cost of insurance over the past four months since we started this?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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CSO figures before the end of the year showed a decrease, but it was only a one-off set of figures and not enough to establish a trend. All I have heard are anecdotes that prices are increasing and decreasing. I have requested more detailed information on what trends are being established. It is important as we do our work that we monitor the trends. We all need to be alive to this. I do not want there to be an impression that we are all waiting for the end of a two year process before the premiums will change. As each quarter passes and each action is implemented it should help bring about a condition whereby the insurers feel it is prudent to be able to reduce premiums. We need to be able to track this ourselves. I want to caution people who contact Oireachtas Members looking for a 50% reduction that it will not happen. We have included as a consumer protection recommendation extending the period of time during which people can shop around. I have heard from people anecdotally, and we have received a number of submissions, that the initial quote they received was extremely high, they went to another company which offered them a lower term that was more acceptable and they returned to the original company which met the lower offer. We want to give as much space and detail to the consumer to be able to do this, recognising it is a market and sometimes we must shop around, unfortunately.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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Until we actually see the specific actions it is difficult for us to have an in-depth discussion. An issue raised was that there was no transparency in the bills received by customers as to what justified the rise. Has this been changed? When can people expect to receive bills which will outline clearly why the premium has increased or decreased?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The first recommendation speaks to the insurers and sets out the reasons for the large premium increases, and the idea is that we will develop a protocol by the second quarter of this year. If necessary, we will put in place legislation to underpin this. Insurance Ireland has informed the Department of Finance that an implementation committee nominated by the insurance company CEOs has been formed to progress this issue. They are already working to establish this protocol, which is shared by the committee and the working group. It is a question of whether I am happy it is robust enough with regard to the previous exchange I had with the committee and Deputy Doherty on what we want included in it. It will form the basis for putting it in place by the end of the first half of this year. We will see where we go from there.

The second recommendation is the insurers will provide additional information on the premium breakdowns. This will provide further transparency to help people understand the various component parts. In the action plan the timing is for the second quarter of 2018, but the Central Bank has informed us its consumer protection directorate has included specific action points in its work plans for the second half of 2017, in line with the timelines in our report. It has also provided a point of contact for the Department of Finance for consumer protection related topics. We are working across a number of Departments and agencies, and from the feedback I have received to date I am happy that everyone is taking this as seriously as the Government and the Oireachtas, and they are already putting place measures this year, either personnel or action plans, to ensure they meet their obligations as outlined in the action plan and report.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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The Minister of State is saying by the second half of this year people can expect to receive bills which will show itemised costs which they can clearly see.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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As per the action plan, the protocol is to be developed in the second quarter of 2017. It will depend on when the customer's premium is renewed as to when he or she will receive the breakdown. It will be rolling, depending on the consumers' renewal dates. It is the first action point under the first recommendation and is for the second quarter of this year.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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We hear all the time that people are claiming more. I would put it the other way around. Many people are not claiming because they are so afraid that if they claim it will increase their premiums even further so they try to pay the costs themselves when they are involved in accidents. Transparency and the availability of raw data was a big issue. Is more being made available?

Can the Minister of State see it in his dealings? Are more raw data being made available for analysis than heretofore?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I thank the Senator. Improving the availability of data has been a key challenge for a number of years. We have really tried to get our hands on them since last year.

I will speak directly to the points we have set out in the action plan. I refer to objective No. 2. We have decided that it will take a little time to establish a national claims information database and have three action points that set out how we will to go about it. Action point No. 22 is to obtain specific key aggregated metrics for immediate publication and to commence the development of a national claims information database. We are aiming to put in place the legislation by the fourth quarter and have the database established by the second quarter of next year. I did not want to have to wait that long to start receiving information from the insurance companies. They were feeding information to us during the process of putting a report together. What is happening and what has begun is that, together with the Society of Actuaries in Ireland and Insurance Ireland, we are putting together metrics that we can publish quarterly until the national information claims database goes live. I have seen a change and believe it is a positive in terms of the information being supplied, but it will not be perfect. Once we have in place a national claims information database hosted by the Central Bank, it will be a strong, robust system, but we want to obtain relevant, pertinent information as quickly as possible. Therefore, it will not be complete, but it will I hope be enough to represent a start in the revealing of transparency. We hope that in itself will have an important effect on the market also.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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We heard a presentation yesterday by the Irish Lobby for Immigration Reform on the theme of returning emigrants. One of the big points concerned the huge premiums people returning to the country were being charged. Has anything specific happened since the report came out to ease the burden on those who are being refused insurance or being charged huge premiums?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I had a detailed conversation with Insurance Ireland about this issue and then with individual companies. One of the points I put to every company was concerned how they treated returning emigrants. There were different policies. A number of insurance companies did not have a problem with providing insurance if someone was coming from a former Commonwealth country in which people drove on the same side of the road. As we saw that there was inconsistency, we decided that we had to set out a number of measures for the insurance industry to enable consistency to be brought to the issue.

Recommendation No. 6 in the report and actions Nos. 10 to 13 speak about putting in place standard information for consumers. Action No. 11 relates to accepting driver experience abroad where a person has previous driving experience in Ireland and is coming from a country in which people drive on the left side of the road. Action No. 12 relates to accepting driver experience abroad where a person has previous driving experience in Ireland and is coming from a country in which people drive on the other side of the road. Action No. 13 relates to Insurance Ireland making a report to the Department on exactly what it has been doing in that regard. The first report will be presented in the second quarter of this year. We will receive a final report at the end of the year to make sure it does exactly what Senator Rose Conway-Walsh wants it to do. A brief update on recommendation No. 6 is that Insurance Ireland is already examining information on the different approaches that have been taken to date by different insurance companies. As it is to come back to the Department of Finance very shortly, we will then be able to see the different approaches adopted and work with it in deciding what the standard approach should be.

Photo of Rose Conway WalshRose Conway Walsh (Sinn Fein)
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I ask the Minister of State to report back to the committee on any of the actions that have been implemented, or where he sees progress being made. We can keep it monitored to keep up to speed to know that all of the meetings we have had with all of the actors in the industry have paid off, as well as having the Central Statistics Office, CSO, figures, which will tell us whether premiums have gone up or down. The proof of the pudding will be in the eating. We always said we did not want to feed into a report that would be left on a shelf and that would not have the desired effect - making the insurance industry accountable and bringing down premiums across the board.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That would be very helpful because, from my perspective, there was no point in us doing all this work and putting in place a timeline with action points if people would not actually hold us to them. We will have quarterly reports, but I will also make myself available if the Senator ever wants to come and receive an update on where exactly we stand, or if something appears in the media about which she might be concerned, for example, a reference to a report from the Minister or the Minister of State, and she is wondering about what has actually happened in the last month or two. I will be more than happy to do that.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Action point No. 7 concerns the Department of Finance transposing the insurance distribution directive. The Minister of State says it is for action in the first quarter of 2018. Why will it take so long to transpose?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That is the deadline for transposition of the insurance distribution directive. As I said, the timelines are deadlines. We are not trying to hit them, rather I am trying to have everything done earlier, if I can.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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What will happens in the lead-up to it or in preparation for it?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We are preparing the-----

Mr. Cathal Sheridan:

We are engaging with the industry. There is discretion provided in the directive. I am not dealing with it directly, but I know that we have engaged with the Irish Brokers Association and Insurance Ireland and that we will engage in a public consultation process in the next few months. A decision will then be made on how to transpose the directive which will take effect from February 2018.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that the normal process used?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Yes.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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I was just wondering.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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I thank the Minister of State for honouring the commitment he made to us the last time he was here that he would come back regularly to update us on progress in implementing his own report and the recommendations made in the Oireachtas joint committee's report. The Chairman and Senator Rose Conway-Walsh touched on quite a number of the points I might have made. I have questions about how the the driver database is going to work. We heard during our hearings that the automatic number plate recognition, ANPR, system was not been very reliable. One in four was a positive hit. Will the Minister of State update us on where we stand with the ANPR system? There are many drivers who do not own cars and there are cars which are driven by multiple drivers. We hear of people who insure their children and allow them to drive, but technically they are not insured because they are learner drivers and should not be driving unaccompanied. How are we going to make sure the person driving a car is insured? I know that driving licences are part of the equation and that some motorists have open driver insurance policies and so on. We heard of staggering cases - I think in one instance the driver may have been from outside the jurisdiction - in which people had 400 or 500 convictions and multiple disqualifications. These are the people who cause accidents and have clearly breached road safety rules and they seem to be getting away with it entirely, with no realistic sanctions. They may be put off the road and may not be able to obtain insurance, but they are still driving. How are we going tackle this behaviour? From where does the uninsured driver statistic come and how is it calculated? Obviously, the people concerned are not insured and there is no record of their being uninsured. Is it a guesstimate or is it based on some methodology?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I will address the Senator's last point first. It is very difficult to quantify the numbers of uninsured drivers. Last year there was a report which showed an increase in the level of uninsured driving. There are different ways to calculate it. One might be to look at the numbers of vehicles that are taxed and insured and try to find a space between them, but that would not be a very accurate way of doing it.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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If a car is untaxed and the driver is uninsured, they will not be caught.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That is exactly right; sometimes people will get through the net. When there is an accident and the driver drives off, the information will go to the Motor Insurers Bureau of Ireland, MIBI, which would be responsible for making a payout in such a case. It might be logged as potentially involving an uninsured driver. He or she might have had insurance but for whatever reason did not want to be caught as having caused an accident. The key point concerns the linking of information that is being collected but which is not being linked in the appropriate fashion. There was an attempt to roll out automatic number plate recognition technology, but it did not work because the database was not robust enough. If the Senator looks at recommendation No. 28 in the action plan, as well as actions Nos 61 to 63, they are to put in place from the third quarter of this year the first phase of a fully functioning database which will be integrated to identify uninsured drivers. It also means that we will have to compel the insurance companies to obtain driver licence numbers and look at the national driver file, as well as the national vehicle file.

Where we want to go with this is to have a master licence record. This is a plan that was already in place and we are now expediting it through this work, whereby all of the information that a driver might have is linked appropriately in the one file in the one place so that it can be checked quickly and robustly when the Garda Síochána needs to do so.

The Senator mentioned other issues. Some of them come down to Garda enforcement. The quicker we get our databases in place and the quicker An Garda Síochána can use automatic number plate recognition technology, the better. When An Garda Síochána finds that there has been a fake insurance disc used or a lack of insurance disc, there is usually something else happening as well, such as the person not paying tax on the car or something else that might be even worse. The Chairman has paid a lot of attention to telematics in previous contributions that he made in public. This is something that is really going to change the insurance industry in the next ten years, though it is very hard to get an idea of how much it will. In the same way, the use of technology is really going to help An Garda Síochána as well. We could get to a point at which a garda might have an automatic system on his or her jacket without even having to turn it on that checks number plates automatically as the garda walks down the street.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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When is some of that stuff going to happen? There was an ANPR system but it did not work. When will an ANPR system that does work become operational, whereby a Garda car can be on a motorway or a city centre street and can detect plates, as it should be able to do all the time, whether it is on the garda’s jacket or the dashboard of the car? When will that come into operation?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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An Garda Síochána already has the technology in a number of vehicles-----

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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But the database behind it was not working.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That is it. Exactly. We are-----

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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When will that be working?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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-----focusing on the database. In the third quarter of this year, we are going to go live with the first phase, which relates to privately owned vehicles. Phase-----

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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What is the difference? Do privately owned vehicles exclude commercial, rental and-----

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Yes. They exclude fleet vehicles. The problems with fleet vehicles are that there could be multiple drivers and that the vehicle that has been insured on a given day or week might change. Therefore, it is a bit more complicated. That is phase two. That is for quarter three of 2018 because it is a more complex piece of work.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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That relates to the fleet vehicles?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Yes. There are other problems in the fleet area as well, as the Senator is probably aware of. There are a couple of things that are being worked on there. Our priority, which we think is more important, is the privately owned vehicles. That will be in the third quarter of this year.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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I did touch on road safety. Garda traffic numbers are obviously not in the Minister of State's Department, but the working group is obviously cross-departmental. The Garda traffic corps numbers are down. That is acknowledged. When are we going to see more enforcement? We had the Minister, Deputy Ross, in the Seanad yesterday alluding to road safety. The statistics for road safety are terrible. The trend is getting worse in terms of detections over Christmas, detections for drink-driving, road deaths and so on. They are not improving.

There are more people on the road and the economy is doing better than it was. One could understand how there could be a small increase based on extra volume. However, our roads are better than they used to be and our cars are probably better than they used to be. Yet the trend is unfortunately going the wrong way. Most of us who are out on the roads would acknowledge that we do not see huge amounts of Garda vehicles or checkpoints that are able to check for whatever bad driving is going on, whether it is speeding, drink-driving or drug-driving. Is there any emphasis within this report on people feeling that they are more likely to get caught? It seems that people do not think they are going to get caught and therefore take chances they might not have taken if they felt they were going to be caught. We spoke before about cars getting on at the Red Cow and getting off at the Jack Lynch Tunnel and being able to have an average speed for that journey time, as is equally the case with the Dublin to Galway and Dublin to Limerick roads. They are very easy to clock on and off. They are in other countries. Are we going to see average speed cameras and that kind of thing?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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My understanding is that those averaging speed cameras are coming into the port tunnel quite shortly. Those types of operational issues for the Garda Síochána did not and do not come under my remit. We did have contact with the Garda Síochána through the representatives from the Department of Justice and Equality on the committee. There are representatives from the Department of Transport, Tourism and Sport on my working group as well, of course. However, I had to keep my focus as much as I could on the insurance aspect of this. Things like the Garda resources or how they are deployed were not matters that came before my working group. We have five action points under objective No. 6. They involve small things that might help to promote road safety and reduce collisions. The types of issues that the Senator speaks to are really matters for the Department of Transport, Tourism and Sport or the Department of Justice and Equality.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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They are, but insurance payouts are based on claims and accidents. We can argue about the fraud aspect of it. Some people have one view of fraud and others have a more benign view of the level of fraud or do not believe it is as bad as others believe it to be. Ultimately, under the current insurance model, insurance companies pay out based on claims. If there are more claims, it is because there have been more accidents. If people were driving more carefully and making fewer claims, there would be fewer claims and the amounts of those claims would be smaller. It is a part of the model. It is the not the fault of the Minister of State, but it is unfortunate that the remit of his group does not appear to include road safety. I believe that if road safety was better than it was, insurance payouts would be lower.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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There are obviously a number of factors that will have a bearing on an accident and what might come from that in terms of a claim, but our remit was to look at the costs involved in this process, in so far as they might be drivers for increased premiums. We look at the personal injuries commission and the idea of bringing forward more detailed granularity to the book of quantum or better definitions of medical injuries in order that people can get a better or more realistic award. That is where our focus has been because we have been looking at the different factors that we understand affect the price of the premium. Our focus was not to look at the wider picture of actually reducing the need for insurance, which is what the Senator speaks to.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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There is always going to be a need for it. It is a legal obligation to have insurance. However, the less the insurance companies have to pay out, the less they have to charge the customers.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We look at the situation after the claim is made. My remit was not to look at the piece before that or actually prevent the need for making a claim. That comes under a different Department and is a much wider issue.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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Okay. The very first meeting we had with the Minister of State gave us all a bit of a laugh. The Minister of State said that we need to manage expectations. He has alluded to that again today. My insurance is coming up in March and everyone else's will come up at some time during the year. I know the Minister of State might not be able to say it, but what are people supposed to expect this year? Does he think the rates will go up or down? What can we do to try to make sure they stay down? We have talked about our report and the Minister of State's report. However, people will get that notice in the door, usually with a massive increase, as the Minister of State said. People will shop around a bit and then go back to the original company and get a big increase, though not as big an increase as it was. Where are we on that?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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One of the most helpful things that happened last year was this committee's public hearings. The committee got to hear what I was hearing privately, which was the complexity of the issue. I knew from the outset that I could not have a direct influence on the price or set the price due to a number of reasons we have gone through before about the companies having to price on risk and the different EU laws that guide that. I knew that we would have to make sure that we were clear in our objectives, that we had a clear timeline to meet those objectives, that there was support across the House to get that work done, so that as the legislation comes up we can get it through, and that there will be regular reporting to demonstrate that we were doing this. In each of my engagements with the individual insurance companies and my regular engagements with Insurance Ireland, I made sure to ask them that if we give it clarity on exactly what we want to do would that bring stability in terms of the insurance industry's ability to price the market? It said it would. In bringing stability, it gives the opportunity to deliver fairer premiums for consumers. A fairer premium is one that does not see a 30% jump when there has been no change in driver behaviour, no new penalty points, no change in car and so on. That is what we are trying to do with this. Unfortunately, I cannot tell the Senator what type of change person A or B will see in month C or D, because it will come down to his or her specific circumstances. A driver might feel it very unfair that because he or she has three penalty points, he or she will see the insurance jump up-----

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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People who did not change their cars or jobs and became a year older along with their cars saw 35% to 40% increases in their premiums for no reason other than that is the market and that is it. The insurance companies will say that they are paying out more, there is Solvency II, they priced too little in the first place - all the things we heard over many days of hearings. Is the Minister of State expecting 10%, 20%, 30% or 40% increases? Is he expecting stability? Is he hoping that there will be a drop? Can he give any consumer any hope that when the letter drops in the door next Monday, Tuesday or whenever it is, there will not be a 40% increase on last year?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The hope is in the report. It is in the 71 actions, the detailed timelines and the owners of the actions. It is in the fact that this committee has spent so much time focused on this as well.

People can see that those of us who have responsibility for this area in terms of bringing about reform are committed to bringing about that reform, doing what we can to protect the consumer, reducing the cost of claims in the claims process and examining the different elements the insurance companies have spoken about that give such uncertainty. As we remove those uncertainties from the process, it will lead to a more stable market. We cannot continue to see that up and down volatility. I expect there to be lower premiums but they will not become dramatically low like they were in the past because that would not be prudent either. As these actions are implemented over the quarters - this comes back to one of the earlier questions - and we start to see the measures take effect, I would hope to see a calming in that volatility and a reduction in premiums. However, I cannot speak to percentages or when exactly it might happen. This is something that we need to work together on. We need to keep the iron to the feet of those who are responsible including the relevant bodies and the lead owners who have been identified in the action plan and the report.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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I have a couple of final points. In terms of co-operation from all of the various players, is the Minister of State finding it more difficult to get engagement or traction with any particular parts of the system? I think he managed to meet all the chief executives of the various insurance companies. In terms of the legal and medical professions and so on, has everyone been co-operative? Rather than saying in a year's time that they were not really helpful, will the Minister of State outline if he had any difficulties with anyone?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The difficulty was with managing the time in terms of the amount of people that wanted to make an input, which is why we broke up the work into subgroups almost immediately and they began meeting weekly. Everyone has been constructive. I think everyone sees the difficulties that exist. As I mentioned earlier, we had robust discussions with Insurance Ireland to ensure that it was clear as to how determined we all are to see action on this issue.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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How did the legal profession, which is sometimes a bit hostile to criticism, perhaps equally as much as the insurance industry-----

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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As was the case with my engagement with everyone else, there was never an issue with the legal profession in terms of its trying to help feed information into the report and to give its perspective. Our role - my role and Senator Horkan's role - was to use our own judgment to decide where things lay. We were then able to draw data from some areas to try to remove some of the myths that exist or the accusations that were being levelled. It is helpful that the blame game has stopped and we should keep it stopped and just get the work done. It was not helping people. Senator Horkan himself would have seen how, after the committee would have had a hearing, the next day people would be on the radio or in the Sunday newspapers trying to get their point across. They have got their point across. It is being considered and we now have a programme of action.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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In terms of the wider insurance industry, representations were made by both the Licensed Vintners Association and Vintners Federation Ireland, which represent Dublin pubs and rural pubs. Will the Minister of State commit to meeting them? They wanted their issues to be aired here. They have seen huge increases in premiums and massive increases in payouts from insurance companies and they feel very vulnerable to huge increases. There are not many insurance companies operating in that industry. They need to engage not just with us in a public forum but with the Minister of State's group. Will the Minister of State commit to meeting both those organisations?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Absolutely, I will. As I stated, some of the actions in the report, particularly the personal injuries commission and that work, will feed across into that area, so that work is already beginning----

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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They are more concerned with public liability than employer liability. Employer liability is an issue but public liability is the one that really concerns them.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The working group met two weeks ago or so and we have decided our terms of reference for the engagement and how we will meet those different bodies. We already have one of them lined up for the second round of engagements. Representatives of vintners will be coming in during the last week of February or the first week of March.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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Will the Minister of State ensure that both organisations-----

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I will. Representations have already been made. They were made last year.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will take up the discussion on Senator Horkan's last question and why we met both vintners groups, that is, the one representing those in Dublin and the other representing the rest of them. It is true to say that their experience is a negative one and one that is being felt by everyone in the SME sector. The increases in insurance premiums for public liability, employer's liability and the rest of the insurance range are massive. As we address motor insurance, the claims experienced by the SME sector and generally are the same. We then go back to the book of quantum. One of the tasks that we spoke about but did not undertake was to examine the book of quantum and to compare what happens here with other jurisdictions. Does the Minister of State think it would be worthwhile to conduct that analysis in order that we could easily compare on a spreadsheet whiplash awards in Ireland with those in the UK and perhaps somewhere else in the European Union? That book of quantum and the comparisons could be given to judges. At the end of the day, the people missing from this debate and discussion are the judges who will make the decisions. I see nothing wrong with informing - not influencing - them on what the payouts are and how they differ. I come in here every day and am willing to be educated and learn more. I do not see why they should not be in the same position given this is having a huge and negative impact on our economy. Does the Minister of State see merit in his undertaking of that comparison and analysis and making it available to the Judiciary?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The Chairman put it perfectly well. This is about providing as much information and detail as possible to help them make an informed decision on what the payout should be. If we look to page 100 in the report, it gives the terms of reference for the personal injuries commission and exactly what it will examine. It is about giving them that level of detail and not just detail on what the award level is in another jurisdiction but how it is arrived at and about introducing this idea of a 100% award for the most extreme disability cases and working our way down so that awards are not given in a vacuum but bear a relationship with the injury.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will it take the working group long to do it?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Objective 3 in the action plan refers to the establishment of the personal injuries commission, which has already taken place. It has already met. Its chairperson, Mr. Nicholas Kearns, is a former judge.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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I note that the working group did not take our recommendation.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We considered the recommendation, but a recommendation came from the members of the Department of Transport, Tourism and Sport on the working group and it spoke exactly to that point.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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I would have thought our committee would have carried significant weight.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It carries incredible weight, but we had to weigh up other considerations which, as the Chairman pointed out, included the Judiciary and the importance of ensuring that, while we cannot dictate, we bring as much information as possible and go about this in the correct way. Judiciaries in other jurisdictions publish their version of the book of quantum and I would like to arrive at that point. It was recommended to me that someone who had come from that part of the system might be best placed to help do that work. We can have the very detailed personal injuries commission with experts that drill down, but we should also work with the Personal Injuries Assessment Board, which develops the book of quantum, to try to bring about a position where we either have a whole new book of quantum that includes the international piece every year or we have a book of quantum that is published alongside the international piece, whereby eventually we would get to the point where the Judiciary, potentially, is doing it itself. There is a number of actions that speak to it in the report.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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The committee recommended legislative changes. One of the areas we focused on was that of the provisions that increased the monetary jurisdiction of the courts in 2014. We recommended that those provisions be reviewed. A further number of provisions in the Personal Injuries Assessment Board Act 2003 and the Courts and Civil Liability Act 2014 were not yet commenced. The committee felt that it might have a positive impact in terms of the task at hand if those provisions were commenced. Will the Minister of State comment on those observations?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I think the Chairman is referring to section 30 in the Courts and Civil Liability Act. In the report, we have recommended that this be reviewed with a view to possible amendment. We noted in our work that the section may need to be improved to make it more robust so that, if it were put in place, the database would have better information that we could track. We have that in the report as a specific action, that is, to have the provision reviewed, possibly amended and then implemented. On the jurisdictional limits, we were told by insurance companies that this was feeding into the increased cost of incurred claims. These are claims that have not yet been paid out but there was an anticipation that there would be higher costs because they were going into a lower court but with a higher limit for payout. We do not have enough data yet to be sure of that, but another action in the report refers to doing a deep dive into the information as it becomes available and as awards are granted to see exactly what is the impact. If it has had a negative impact and there has been an unintended consequence, changes can be made to the legislation to reverse what has happened.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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Any statement in the context of change of legislation or the book of quantum, which the Minister of State spoke about earlier, sends a very clear signal to the market and the public that we are not just writing reports but are serious about our business and that actions will be taken. That is often measured in the context of the book of quantum and the legislation and so on. It would be important to focus on those issues.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Absolutely.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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In regard to the Personal Injuries Assessment Board, PIAB, the committee makes the point that if some legal fees were allowed to be granted in those cases, it might actually encourage people to settle the case at that level rather than to go to court where it costs a great deal more. Given the success of that board, it is timely to consider strengthening it and including the payment of some fees at that level.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Chairman, that is an interesting point. I can understand how, having heard from PIAB that the establishment of the board never really removed the solicitors who were in the background - but of course they could not be awarded costs, apart from particular instances - that in the short term it might lead to a greater acceptance of the awards granted at the PIAB level. However, there is a risk that it would be incredibly inflationary in the short term. It could cost as much as €24 million in a year, given the number of cases that go through PIAB, if one were to award solicitors' fees at the time as well, without a guarantee that the awards would be accepted. One could see an inflationary cost on the insurance companies and therefore on the consumer, without necessarily getting the other end of the tail, which would be the acceptance of the awards. There is a risk in that.

If we achieve what the Chairman wants with the book of quantum and the acceptance by the Judiciary of those figures, that will cease to be a problem in terms of there being a negative incentive for a solicitor to advise a client against accepting the PIAB award and to let the case go to court because they will not get a figure that is much different. All they will have to do is get their costs paid. I hope that work at the tail end will reduce the incentive that the Chairman is trying to get immediately upfront. My worry is that, this approach, while there is logic to it, could be very inflationary in the short term.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Minister of State mentioned the figure of €24 million but one has to measure the possibility of that type of cost against the cost of going to a higher court and being awarded the legal fees and greater compensation.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Absolutely, Chairman. Let us say that were we to decide that from the beginning of 2018 we were going to do that and that insurance companies saw an upfront cost of €24 million, the solicitors might still decide to test the case in the courts so that in the years 2018 and 2019, one might have additional costs for the insurance company and therefore the consumers while solicitors are still charging in the courts, so the insurance company is still reserving for an ever higher award potentially. One will not have seen what one had hoped to see and that would take a period of between five and ten years to see that change come about. In a shorter period, given the time coming up for the personal injuries commission and the review of the book of quantum, if we can bring greater consistency there, then there will no longer be an incentive to not take the PIAB award. Even if people fall out of the PIAB process, because we are going to put in place pre-action protocols, they will go into that instead or if we can do it, we will find a new mechanism whereby they cannot establish their PIAB application as a brand new case in the courts. All that brings additional costs, additional time and additional reserving by the insurance companies. That is, I think, a better way to go about it, without risking - and I think it is a risk - an inflationary element at this point when we are actually trying to calm prices.

Photo of John McGuinnessJohn McGuinness (Carlow-Kilkenny, Fianna Fail)
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I take the Minister of State's point on that issue. I suppose it is only by taking some of the steps that we are outlining here that we will see what other steps are needed.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I was breezing through the report and the page that is open in front of me relates to the Garda Síochána. Obviously we have been very much engaged with issues in respect of Garda and Garda accountability and how the Government handled the latest Garda controversy.

Recommendation No. 26 is that the insurance industry actually funds a section of the Garda Síochána. I know this was drafted. I can understand the intention and one could argue that if there are major sporting or community events they have to provide a contribution towards that. However, what is being put forward is something different: it is a specialised and dedicated insurance fraud unit in the Garda Síochána, funded by the industry. This is not a contribution to policing of a community event. This is basically defining those policing the event as the Garda insurance squad and the insurance industry pays their wages. I think that is very risky. I can understand the sentiment behind it, which is to question whether the insurance sector should make a contribution or pay a levy. When one has that type of direct engagement between members of the Garda Síochána and the industry that pays them, I think it is quite risky and we should pause.

It is one of the recommendations that did not jump out at me earlier on. I am now issuing a very clear warning in this regard.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I think Deputy Doherty is absolutely right to highlight that risk. I want to be clear that we had a lot of discussion around this in the working group about what this might mean - exactly as the Deputy laid it out - the fear of capture of our Garda Síochána by a particular industry because there was some direct relationship in pay, which I think is what the Deputy was hinting at. It is a concern that we debated and which we are still going to look at. Because it works and because we have seen that it works in the United Kingdom as a successful model, the insurance companies thought it might be a good thing to pursue here. One will see in terms of the actual recommendation that it is to explore the potential for their co-operation between the insurance sector and An Garda Síochána in relation to insurance fraud investigation. This is one potential avenue that is being spelled out here in terms of doing this but it still needs a lot of discussion between the relevant Department, which is the Department of Justice and Equality and the Garda Síochána as to its actual implementation. It is being pushed very strongly by the industry side but I think it is absolutely essential that on our side, the Government and Oireachtas side, we remain cognisant of those different issues. The reason that it has got some traction is because it happens in the United Kingdom and they have those same concerns but the concerns have not been realised.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Let me repeat that I am issuing a very clear warning shot that this is a very slippery slope. I understand the Minister of State is dealing with all the different recommendations and precedent and all the rest. At the extreme level it could be viewed as the privatisation to a certain nature of a certain section of the Garda. We know that in respect of the Central Bank, that regulation was being funded by the industry itself led to, in a sense, regulatory capture during a period of time. This is not the way to proceed. There should be an obviously beefed up and specialised fraud unit in the Garda Síochána and it should be paid for without any connections to the industry. If we believe the industry should be paying more, then they should pay it to the central Exchequer. There should not be those types of direct lines, regardless of what type of structure one would put in place. It is impossible in my view when one has an industry - and we are talking about a multi-billion euro industry - directly paying and employing a section of the Garda Síochána who will try to stamp out fraud. I am not suggesting that the Garda would be doing otherwise, but when they are doing it on behalf of the industry as opposed to on behalf of the State it is a completely different matter.

I know we are engaged in consultation and an examination. I hear what the Minister of State has said, that it is being pushed by the industry and that he has raised concerns. I am surprised it has made its way into this document. I would ask the Minister of State to step back from that. Obviously it would require legislation and all the rest.

Senator Gerry Horkan took the Chair.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Absolutely, if one were to go down this route, as they have done in the United Kingdom, there is absolutely clear separation between the money that would go into the entity and the actual operational powers and the decisions that get taken on a daily basis. One would absolutely have to have, not just a Chinese wall, all sorts of protocols and everything else in place to keep them separate.

The Deputy makes a strong case against it. This is a debate that we had internally. It has been seen to work in the UK and on that basis I believed it merited further consideration. That is the reason it is in the report.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The precedent is terrible. Do we allow big business to fund sections of the Garda Síochána that would be of benefit to big business if more resources were put into X, Y or Z? That is the difficulty.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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No precedent is being set. I am happy to engage in a lengthier debate on this issue when we have more information about how it might work and when I have received an assessment from the Department of Justice and Equality and An Garda Síochána of where they stand on the issue.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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With respect, a precedent has already been set. This is a Government document approved by Cabinet which recommends consideration by Government of allowing big business to directly fund a section of An Garda Síochána. We have not yet gone down the road of implementation and my advice to the Minister of State is to step back from that.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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All we are doing is exploring the idea. We have seen it work in a similar jurisdiction, namely, the UK. There are things which if they can work should be considered. We did not have the time to do that during the relatively brief timeframe available to us last year. This measure is one of 71 actions contained in this report and I believe it is worthy of further consideration. No decision will be made in the near future. There will be proper scrutiny of the issue and there will be plenty of further opportunities to debate it when the time comes.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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If this report had been implemented three years ago what, in the Minister of State's view, would have been achieved? Would it, in his view, have limited the massive increases in premiums over the past three years? If the Minister of State believes it would have done so then perhaps he would explain the particular recommendations he believes would have led to that.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That is a difficult hypothetical question to answer. The Deputy is asking if this report had been in place three years ago would it have prevented some of the things that have happened in terms of the increase in premiums. Many years ago there was a severe reduction in insurance premiums, from which the insurance industry is still recovering. The spike we have witnessed in the past year or more is based on some of the uncertainties that have come into the market from the insurance sector perspective, including the Setanta case, the impending introduction of periodic payment orders and so on. While the personal injuries aspect has not changed that much in three years, we still appear to be outliers. A number of uncertainties that have arisen in the past year or two, including the change in court jurisdiction limits, have driven the spike. Issues such as the difficulty to find yield in the investment environment, the low cost of premiums that were being offered, which were unsustainably low, arose earlier than two or three years ago. The Deputy's question is too difficult a hypothetical question to answer.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The Minister of State mentioned a number of uncertainties but some of them have not taken effect. For example, payments have not changed and, as stated in the report, the legal cost has not been a major factor. Fraud only gets a footnote in the report which would suggest that fraud is not an issue. As mentioned by the Minister of State, the real change is that previously there was a race to the bottom in terms of premiums which resulted in under-pricing by the companies who were competing against each other and there has been a huge reduction in the yield return in terms of bonds. While many of the recommendations in this report are sensible and welcome - some of them are being long fingered but I will deal with that later - I am not convinced that what is proposed would have done much to prevent the massive increases in premiums. The boom-bust cycle is still there. I am not sure what is proposed will break it. All it will do is give us a bit more information in terms of when things are going boom or going bust. It will not stop that from happening.

The Central Bank has allowed this spike to occur. The spike in cost is not only in the motor insurance area. The Central Bank is behind the curve on a lot of things. For example, under PPI, which is another insurance issue, 70,000 plus customers received refunds for what I would call insurance fraud by insurance companies, some of which are also providing motor insurance. Some 22% of all policies that were sold in this State were mis-sold such that €70 million had to be repaid to customers. It is only two years since that happened. As I said, the Central Bank is behind the curve on all of this. It only investigates when people make a complaint such that it is often only following a complaint and investigation of that complaint that we learn that one in four people was sold fraudulent policies in respect of which the providers were required to refund the consumer. The same applies to tracker mortgages and so on.

Can the Minister of State point to me where in this report provision is made for an increase in the powers of the Central Bank to put an end to this type of boom and bust policy whereby premiums are going to low positions and then dramatically increasing? People are happy when premiums are low and unhappy when they are high but the biggest problem is when they increase by 30% or 40% because people cannot budget for that type of increase.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It is difficult say that if this report had been in place three years ago it would have prevented some of the things that have happened because they might not necessarily have happened at all given the uncertainties that arose that were not necessarily expected. I cannot speak for the Central Bank but I am sure it would point to Solvency II and the changes that occurred in that regard play a huge role in addressing in the super-cycles that we have seen in the past. The Central Bank has been an active participant in the working group which I chair. It will be hosting the national claims information database which will help us to see these trends and to plan for the future in that regard. I have not read the transcript of the Central Bank's discussion with the committee but I am aware representatives of the bank appeared before it and were able to answer all of the questions put to them. They would have felt that they intervened at the appropriate time in terms of ensuring that insurance companies were reserving adequately. What the Central Bank cannot control is the uncertainty we have seen around legal issues which is causing the cost of incurred claims to increase rapidly.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Is the Minister of State saying that legal claims are causing the cost of claims to increase?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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No, I said uncertainties around the legal area are doing so, including the change in jurisdictional limits and the possible reduction of PPOs. As a result of the Setanta issue insurance companies are now incurring more cost in a claim even though it is not paid out. They are now reserving a greater portion of money. The report speaks to that increase. It has happened. The cost of claims being paid out has not increased dramatically over the last number of years but the quantum that insurance companies are putting aside for the potential pay-outs into the future has increased. As the Deputy knows, it is difficult for an insurance company to close a book in any given year because a court case might take five plus years. This means there is a long tail in terms of working out these factors. It is not easy to turn around a ship like this in a two or three year timeframe.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I mentioned earlier that while I welcome some of the work that is being done many of the issues are being long-fingered. This work has been ongoing by the Department for a while now. Most of the recommendations are to either commence consultation or a review process. People were hoping for a bit of action. Recommendation No. 2 relates to the provision of additional information on the premiums breakdown to consumers, which is something Sinn Féin and the committee have called for. In regard to when we are likely to see something happen, the first action is to occur in quarter 4, 2017, which means we might have a consultation beginning before New Year's eve; that is ten months away and we might see legislation introduced in 15 months. Why do we have to wait another ten months before a consultation on this issue commences?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We do not. As I have said before, we are not trying to hit those deadlines; we are trying to get ahead of them.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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When then is the deadline not quarter 1 or quarter 2?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The Deputy will note that 71 actions have been recommended. There is a lot that has to happen. We have prioritised certain actions over others. As I said previously to the Deputy where we can we will, under protocol, put things in place quickly and we will then bring in legislation to ensure there can be no row-back from that position. We have already commenced discussions around what this might mean in terms of providing additional information on premium breakdown to consumers and so on. I do not think it is fair to take from the report that consultations will only commence at the end of this year, just before New Year's eve. I have already had discussions with the Central Bank on this issue. The deadlines are not the start or end point for anything. This is to make sure that we have the work done in an appropriate timeframe.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Yes, but the quarter 4 deadline has been chosen. The deadline in respect of recommendation 1, which is to work with Insurance Ireland to develop a protocol for the reasons of large increases in premiums, is quarter 2.

Both of those are very important issues, which I stressed when the motion was debated in the Dáil. I have also raised it with the Minister of State at committee. There is a protocol for quarter 2. What will the protocol consist of? What will large increases mean? Will it mean that they will be able to say, because of prevailing economic issues and the pressures on the insurance industry, that they believe they have to increase insurance premiums? Will it be specific? Your report is not specific.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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A large increase would be something over 20%. We are currently working out exactly what information we want to see communicated to the consumer. My hope is that can be done with the protocol, and that the protocol is robust enough that the Deputy is satisfied with it. If it is not, that is where the legislation comes in.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I am quite taken aback by the 20% figure. An increase of a fifth per year would be far beyond what is reasonable with reference to the consumer price index. Insurance for a 21 year old now is €3,000. There could be a €600 increase here without the insurance company having to justify it.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We are developing this at the moment. In that particular case, of course 20% is a very large increase. We can be flexible and see if we might come to a lower figure.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The deadline the Minister of State has set for recommendation No. 2 is that the consultation will begin, at the latest, by New Year's Eve, with legislation coming in, if required, up to six months later. The working group recommends in the report that insurers be required to break down the premium cost to set out the cost of mandatory motor insurance, that is, third party, in addition to the non-mandatory comprehensive insurance. If that is all they are going to do, forget about it. That is not what was wanted. It is not what the Minister of State suggested before the committee. He suggested the key issues were how much of it was fraud, how much of it was legal costs and so on. I agreed with him. Third party and comprehensive quotes provide a certain amount of information, but there is not sufficient transparency. This needs to shine a light on insurance companies. If they continue as they have done for the past three years, customers need to know that they are shafting them. This is a preventative step to ensure that insurance companies will have to justify their rates, and not be able to get away with saying things like 50% of a customer's claim is in fraud.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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My view has not changed. It is very important that we make clear what the cost of the minimum mandatory insurance is, along with any additional costs. That is what we are currently developing. The Deputy talks about the timeline. We are guided by what the Central Bank will be able to do and prioritise. Certain issues have been prioritised accordingly. Their main involvement will be the national claims information database, which we want to have up and running next year. A number of actions need to be taken. These things do take time. The report has priorities on action deadlines.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I understand a lot of things are happening at once. The Minister of State has made recommendation No. 2 It is black and white. All he is asking is for the insurance companies to set out the mandatory third party costs and the non-mandatory costs.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Can the Deputy give me the page of the report?

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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It is page 69. It goes on to say that it is noted by the working group that any changes to non-life insurance regulations would be subject to the Central Bank of Ireland's usual consultation process, which is the process followed when enhancements to the regulatory framework are being proposed. This consultation process would need to engage with consumer stakeholders and with insurers to determine an appropriate lead time for any necessary changes to IT or pricing systems to reflect the requirements for the additional breakdown in the premium make-up. The working group is not seeking to prejudge the outcome of the consultation. The Minister of State is setting out that there needs to be a breakdown between mandatory and non-mandatory insurance, but he is also recognising that he does not have that ability as Minister of State for Financial Services, eGovernment and Public Procurement, because the Central Bank would have to carry out a consultation if that were to happen. The Minister of State has not asked for it to go beyond those two points. That is a weakness, although I believe it is not his intention. However, there is no guarantee that he will be the Minister responsible for this in a few months’ time. He may be moved to a more senior position.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Or a more junior.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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However, people will refer back to what is in the recommendations. That section is not in the spirit of what the Minister of State put before the committee.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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Deputy Doherty should be aware the committee must be finished by 11 a.m.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I am only on point 2.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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The Deputy still has 20 minutes.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It is unfortunate that the Deputy is not in the working group . The idea was to produce a public report to give people an understanding of the different issues considered, and the action plan to show where we are going and how we are going to get there. Very detailed conversations were had on each of these points. This is not like a piece of legislation, where the insurance company can pick a sentence and say they are only going to be bound by that. We have a very active engagement now with Insurance Ireland, probably on a weekly basis, to progress each of these points. We also work with the Central Bank and others to ensure the right steps are being taken. I cannot prejudge the outcome of the consultations. It is for the Central Bank to see exactly what can be delivered. Both the Deputy and I know what we want to achieve. As the Deputy's colleague said, the proof of the pudding is in the eating. I present progress reports and update the Deputy as to what has been achieved, and he can accept or reject that. He will keep me to account, and that is how I will keep the insurance industry to account.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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We can only hold the Minister of State to account by what he has published and what the Cabinet has signed off on, not what his thought process is, or that of the working group.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It refers to consultation. There is a wide scope for things to be achieved. This is not legislation.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The consultation is on the implementation of the timeline. There has to be consultation. The Minister of State has no power to require the insurance industry to take steps. There is an obligation on the Central Bank to carry out that consultation.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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However, there is legislation that may need to be amended.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Yes.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That will bring a requirement.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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That takes me to recommendation No. 3. The Central Bank is to amend legislation for the minor issue of changing the notification for renewal from 15 working days to 20 days. This is to make it easier for motorists to compare pricing when purchasing insurance. We may see that in 15 months. There are very clear commitments on issues that potentially affect consumer rights. Why does it take 15 months to deal with them? This is not a contentious issue. There is no increase in paperwork for the insurance industry, they just have to process it five days earlier.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The Central Bank has a number of obligations and responsibilities under this report. The changing of legislation regarding the Central Bank is no small thing. There are a number of different proposals for legislation that has to be changed. There is nothing to say that it could not happen before the deadline. We are engaging with the Central Bank and Insurance Ireland all the time. This is an important aspect of the report, though not the most important. Other areas in the report have been prioritised.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Objective number 13 of the action plan is the long-term claim-by-claim register. Why have we not settled on a claim-by-claim register?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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It does not exist anywhere else in the world. We do not know how long it would take to build or how much it would cost. We do not know how useful it would be if we then have to aggregate the information.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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So this time next year we are going to establish a sub-group to look at that issue.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The national claims information database is going to do what we need it to. To ensure that we remain in line with issues raised by the committee, we will give it further consideration.

However, on the basis of the conversations we have had with State agencies and others, this could take considerable time, cost a considerable amount and not have the utility that we want it to have in terms of what we are trying to do with the national claims information database. This has never been done. I could not include a priority recommendation for something that would be open ended in cost and time when we-----

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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Will the database, which the Minister of State hopes to have established in approximately 15 months, be available to the public?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The database will become available in the middle of next year. I did not want to wait that long to get useful information into the public domain. That is why there will be quarterly reporting by my Department on metrics we are agreeing at the moment to try to ensure an initial air of transparency and to show people this is moving in the right direction. The work is being done now and that will happen from the next quarter onwards with a view to moving to the national claims information database hosted by the Central Bank. The outputs will be public.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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What does the Minister of State mean?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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We are trying to agree the metrics, including what information the database will contain, how it will be managed, who will make the inputs, and how it will be collated. The outputs will then be made public. I am not entirely clear if the Central Bank will conduct and publish a trend analysis or whether its spreadsheet will be made publicly accessible online.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The UK publishes detailed information, which is publicly available, broken by region, sector and so on.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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Is that a claims underwriting exchange?

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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I have to stop Deputy Doherty now. He will have an opportunity to take this up in the House later.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I have one more question. Recommendation No. 22 relates to the impact of legal and other fee and personal injury awards and states, "Establish a reliable set of data by the end of quarter 1 2017". I acknowledge the Minister of State said these are not deadlines. Has he a reliable set of data relating to legal and other fees? If so, can that be made available to the committee?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The Department of Justice and Equality has informed us that a working group on the implementation of the new office of the legal cost adjudicators, OLCA, has been established and is commencing its work. The design for the establishment of OLCA will take account of the dataset requirement for this deliverable, which is recommendation No. 22, actions 45 and 46.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I asked about the availability of the dataset.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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The new office has been established and has commenced its work. The design of this office to take account of the dataset requirement which needs to be deliverable under this recommendation has to take place.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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I am not interested in the office; I am interested in the action which is to be concluded within six weeks - the establishment of a reliable set of data in respect of the impact of legal and other fees and personal injury awards. Has that been established or will it be established within six weeks?

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I am told the office has commenced its work but I do not have any more detail.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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The Minister of State may come back to the committee on it.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I have an update on each of the recommendations, which will be forwarded to the committee. The ambition was quarterly reporting but because I was appearing before the committee prior to the end of the first quarter, I gathered as much information as I could to date.

Photo of Gerry HorkanGerry Horkan (Fianna Fail)
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We received a 30-page update on the recommendations, which will be circulated rather than read into the Official Report and taking up half the meeting.

I thank members for their contributions. Deputy Doherty will have an opportunity to pursue this discussion in the House later. Central Bank officials will appear before the committee on Tuesday, 4 April.

I thank the Minister of State and his officials for attending. We should engage regularly to monitor progress in implementing the recommendations in both our report and the Minister of State's.

The joint committee adjourned at 11.05 a.m. until 4 p.m. on Tuesday, 21 February 2017.