Ms Moyagh Murdock:

I thank the Vice Chairman and members of the committee for the opportunity to contribute to the pre-legislative scrutiny process for the upcoming Insurance (Miscellaneous Provisions) Bill 2021. I am joined today by my colleagues, Jacqueline Thornton, director of regulation and policy development; Mike Curtin, manager of regulation and policy development; and Florian Wimber, director of advocacy, public affairs and communications.

I am joined by my colleagues Ms Jacqueline Thornton, director of regulation and policy development, Mr. Mike Curtin, manager of regulation and policy development, and Mr. Florian Wimber, director of advocacy, public affairs and communications.

Ireland is a thriving global hub for insurance, reinsurance and emerging insurtech companies. Ireland’s insurance market is the fifth largest in the EU, and our reinsurance market is the second largest. Our members represent around 95% of the companies operating in the Irish market, making Insurance Ireland a very strong leadership voice for the sector.

Insurance Ireland members are progressive, innovative, and inclusive, providing competitive and sustainable products and services to customers and businesses across the life and pensions, general, health, and reinsurance sectors in Ireland and across the globe. In Ireland, our members pay more than €13 billion in claims annually and safeguard the financial future of customers through managing €112.3 billion in life and pensions savings. In addition, our members contribute €1.6 billion annually to the Exchequer, and the sector employs approximately 28,000 people in highly skilled careers.

The primary role of Insurance Ireland is to advocate on behalf of our members with policymakers and regulators in Ireland, Europe and elsewhere to ensure a sustainable and stable market; to promote the value our members create for individuals, the economy and wider society; and to help customers understand insurance products and services available in the market so they can make informed choices. Insurance Ireland represents over 130 members, serving 25 million customers in Ireland and globally across 110 countries, including 24 EU member states, providing protection and peace of mind to individuals, households and businesses and a firm foundation for the success of the Irish economy and wider society.

When I joined Insurance Ireland as CEO in April 2020, it was made very clear to me by the board that it wanted me to lead the organisation to represent the interests of members and advocate for a sustainable and stable market that is attractive for new entrants and new products while retaining existing loyal providers. The board also made it clear that it wanted me to have a strong consumer focus and to build this into the new five-year strategy for Insurance Ireland.

With regard to today's discussion on the Insurance (Miscellaneous Provisions) Bill, I am delighted to have been asked here today to share our thoughts. Overall, our members support the general intention of the Bill as it can provide some clarity on certain aspects of the current legislation, such as the proposed technical amendments to section 18(4) of the Consumer Insurance Contracts Act.

It is worth noting that, in respect of the proposed enhanced disclosures to policyholders, insurers continue to develop clearer and more explicit disclosures to policyholders while also bearing in mind the legal nature of insurance contracts, and the regulatory framework that insurers must operate within, such as complying with the consumer protection code, CPC, which provides comprehensive protection for consumers regarding how claims are accepted, processed and settled. While our members are always working towards more streamlined, jargon-free information for policyholders, this is sometimes challenging considering the legal and regulatory framework we are subject to.

Other heads of the Bill enable the Central Bank to collect data from insurers where they deduct State supports from settlements paid in respect of insurance claims, in such instances where an insurer may be contractually entitled to make such deductions. Under the proposed Bill, insurers will also provide enhanced disclosures regarding deductions of such State supports that are made in regard to the settlement of such policyholder claims.

We note the requirement for the Central Bank to report on differential pricing, and we are very happy to have been given the opportunity to discuss this important issue with the committee. It is important to discuss the Central Bank report in the context of the miscellaneous provisions Bill.

We welcomed the final report and public consultation following the Central Bank review of the private car and home insurance markets. In our view, the proposed reforms are balanced and proportionate. Our members have proactively engaged with the Central Bank over the course of the review to ensure all market participants operate in a consistent and consumer-friendly manner, and we were pleased that the Central Bank acknowledged that to insurers last week and at this session. The insurers reacted promptly to the “Dear CEO” letter. Our members did not wait until the outcome of the review to implement changes.

From the outset of the review, we have been proactive in providing feedback on the proposed legislation. I assure the committee of the importance that our members attach to continuing to deliver fair consumer outcomes through the provision of a continued range of innovative products and services and the fact that we believe the proposed rules outlined in the Bill should support this objective.

The Central Bank report found that differential pricing benefits some consumers who are engaged and shop around for their insurance to obtain the best price for their needs. It is important not to disincentivise this engagement.

On foot of their initial report regarding differential pricing and the impact it could have on some consumers, Insurance Ireland and the members of the general insurance council undertook to implement a comprehensive and well-publicised shopping-around campaign throughout 2021. We engaged with Age Friendly Ireland and Age Action to obtain more insight and target all cohorts to ensure the best outcomes and help secure the best deals for policyholders renewing insurance policies. We plan to continue the awareness campaign in 2022. Our latest consumer campaign is Insure Yourself Wisely, the essence of which involves being insurance savvy.

As part of our ongoing commitment to address the issues raised within the Central Bank’s report, Insurance Ireland has commissioned a comprehensive consumer research exercise considering the experience and perspectives of Irish adults regarding insurance generally.

Insurance Ireland welcomes the Central Bank’s proposed reforms, which are balanced and proportionate. We agree with the approach outlined by the Central Bank whereby “price walking” is banned for consumers who remain with an insurer beyond two years. The pro-competitive option for new business discounts is retained, which will benefit consumers.

The effect of the proposed measures is difficult to predict but it will be for each insurer to independently assess how it will implement them and determine the implications for it and its respective portfolios. Ultimately, it is about how its customers will be protected.

Insurers are now providing five-year premium information on their policies, which brings enhanced visibility and transparency. This, in itself, will help with making more informed decisions.

I would like to address the provision and development of the National Claims Information Database, NCID, under the Bill because it is important to point out the importance of the database. It has been a key element in understanding the drivers of the costs of insurance and of underpinning policy measures to address those. The establishment of the NCID has served to significantly improve data availability in the Irish insurance market and support policy analysis, which is contributing to addressing the issue of the high costs of insurance in several areas.

The high-level trends we have seen in the reports published so far include the considerable legal costs and significant time period associated with settling injury claims through litigation. We heard about this from the previous speaker, Mr. Peter Boland. As acknowledged by the Central Bank, the data outline that the significant differences in legal costs greatly outweigh the differences in compensation outcomes. The performance of the sector since 2009 and the profit- and loss-making periods over the intervening period demonstrate great volatility.

As with any business, insurers cannot sustain indefinite losses and have to take steps to return to stability. A loss-making and volatile market is not in the interest of policyholders. Our members wish to operate in an environment that is less volatile and that delivers more consistent outcomes for consumers.

Insurance Ireland sees the analysis provided by the NCID as an important and valuable tool for legislators and the regulator in understanding practices in the insurance market in Ireland, thus allowing for more informed decisions to be made on how to address the issues driving the cost of insurance.

The proposed measures in the Bill amount to a significant change for the market and how insurance has been traditionally managed. We expect significant IT system changes, and that will probably be the biggest challenge to implementation. We do not want there to be any negative impact for our ongoing projects, in particular our motor third-party liability database, which is an important initiative that want to be delivered in 2023 as a priority. Therefore, we consider it important that appropriate implementation time is given and we will propose that 18 months be the timeframe to implement all measures. I thank the Vice Chairman for the opportunity to contribute to the pre-legislative scrutiny process and look forward to engagement with the members on any questions they may have.