Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

I welcome the opportunity to address the rising costs of insurance and, more generally, the ongoing increases in the cost of living in Ireland. The Social Democrats campaigned on reducing the cost of living and we will pursue this goal in this Dáil term.

During the campaign, it is fair to say there was broad political agreement across all parties and the Independents on the need to put money back in people's pockets after eight years of austerity, and it is something we can probably all agree on in this House. Where we differ is as follows. Fianna Fáil, Fine Gael and Labour propose to do this by cutting taxes to make work pay, even though the OECD has just shown we have one of the lowest tax wedges on labour in the 34 OECD countries. The Social Democrats do not believe the way to put money back in people's pockets is to cut taxes, which we believe is irresponsible.

We need a stable and an ongoing tax base to invest in infrastructure, supporting small businesses, sorting out the housing and homelessness crisis, policing, tackling child poverty and so forth. We must find ways to put money back in people's pockets. We believe the way to put money back into people's pockets is to systematically and ruthlessly address the costs of living in this country. They were too high to begin with. We now know from the Central Statistics Office that these costs are increasing across the board.

We are debating insurance costs today and they are a good example of this. They were too high to begin with and are on the rise. The CSO data show that insurance costs are rising across all measures except one, that is, travel insurance. Last year insurance costs increased on average by more than 11%, an extraordinary increase. Most people pay a plethora of insurance premiums. Most households are already at the pin of their collars in trying to make ends meet and pay the bills at the end of the month. An average increase of 11% on insurance bills will push many people over the edge. It will force people to cancel insurance, for example, health insurance. I wish we did not need health insurance in this country but many people believe they have no choice but to pay for it.

Car insurance deserves a special mention because it increased by one third in the past 12 months. There has not been a one third increase in the number of crashes, whiplash cases or fatalities, thank God. However, car insurance has gone up by one third. That is an extraordinary additional bill for many people. Some drivers have been asked to pay up to 50% more. The Freight Transport Association has reported receiving premium rate increases of between 50% and 70% over 2014 and 2015. Home insurance costs have gone up by 10% in the past year. An additional 100,000 people took out health insurance in the past year because of lifetime community rating. However, although the base has increased by 100,000 people, health insurance costs are up 3.5% this year. Premiums for hundreds of thousands of VHI customers are to increase by a further 3% in May. This will be the second increase for them in the past six months. Businesses are suffering. We know that hauliers have seen significant increases in their insurance costs. The Small Firms Association has estimated that insurance costs have increased by 30% for small and medium enterprises since 2011. Let us think about that. Since 2011 there has been significantly less economic activity and yet small businesses in Ireland are paying nearly one third more in insurance bills than they were paying in 2011. That suggests a serious lack of focus on this issue by the last Administration.

Why are costs going up? We know that the book of quantum is past its sell-by date. Whiplash injuries account for 80% of motor insurance claims in Ireland. In some other jurisdictions, the corresponding figure is 3%. Perhaps Irish people have extraordinarily delicate necks or maybe we rear-end our fellow motorists 20 or 30 times more than in other jurisdictions but it is highly unlikely. More likely, we have a litigious culture where people claim to have whiplash and the costs associated with firms defending or trying to disprove those claims are such that the firms simply pay out. What happens in this scenario? Everyone else suffers.

The book of quantum currently gives guidelines for remuneration of €14,400 for a neck injury lasting up to one year and €16,300 for back injuries. As someone with a long-suffering back injury myself, I believe that in many cases there is a need to pay. However, given that 80% of claims are for whiplash versus a corresponding figure of 3% in other jurisdictions, clearly something is not right. The book of quantum was introduced in 2004, some 12 years ago. To the best of my knowledge, it has not been updated. It needs to be updated quickly.

The price for legal services continues to rise. I recall a meeting we had with members of the troika when they were here. They were very exercised about legal costs. They showed us a graph with many lines starting in 2008 and going downwards over time. The presenter pointed to a particular line and explained that it referred to the accountants. He pointed to another line and said it referred to the consultants. He pointed to yet another line and said it referred to someone else. All the lines were trending down very quickly. However, there was one line that was going up and up. The presenter explained that this line referred to the lawyers. Somehow, even though we have solicitors and barristers who are unemployed and are screaming for work, legal fees have bucked the trend of those in all other professional services and have managed to increase significantly. Obviously, this needs to be dealt with very quickly.

What do we do? Average claim costs need to come down. We need to reform how awards are set by the Injuries Board and the courts. We must have better non-litigation options in order that legal fees are reduced or, in as many cases as possible, abolished. We must have better information sharing in the industry such that fraud can be more readily tackled. We need to make it easier for drivers to switch premiums for car insurance. We need to make insurance options far more readily accessible and consumer friendly. I heard an analyst explaining health care insurance policies on the radio one day. I imagine many people listening that day had blood coming out of their ears while trying to understand the plethora of different options and non-options available. There needs to be a serious focus on consumer friendly products and simplicity in the market. AA Ireland has suggested that the Government should set up a task force to bring all relevant Government agencies together. That is something the Social Democrats strongly agrees with.

While we are systematically and thoroughly addressing the increasing costs of insurance and ensuring that not only do they stop going up but that the 33% increases we have seen in motor insurance start coming down, we must do the same for the costs of living more generally because Ireland is an expensive country. It is simply too expensive to live here. Rental prices have gone up by 9% in the past year, education costs have risen by 4% and the cost of third level education has gone up by 5%. Child care in Ireland is already the first, second or third highest in the world but it has actually increased by 1% at a time when inflation is essentially 0%. What do we need to do? Here are some of the things we need to do. We must improve State funding for child care and cap fees for parents. We have to introduce paid parental leave for 12 months and legislate for better work flexibility. We have to introduce truly free primary education by covering the cost of school books and transport. We have to cap third level fees. The Social Democrats has proposed a cap of €2,000, which is far closer to the European norm. We have to end water charges.

I am pleased the Dáil is taking this seriously. I hope we see some very focused and targeted reductions in insurance. However, we must broaden the conversation to reducing the costs of living in this country quickly and significantly.

See this speech in context