Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank Deputy Michael McGrath for putting forward this motion and his Fianna Fáil colleagues who participated in the debate so far. The Government is not opposed to the motion calling for a task force on motor insurance matters.

It is important that Ireland has an insurance sector that is not only financially stable but that contributes to economic activity. The insurance sector makes a vital contribution to the Irish economy, through employment, attracting global capital and serving the needs of consumers and businesses. I see this motion as a valuable opportunity for the Dáil to discuss the important matter of insurance costs, to highlight the actions the Government is currently taking to address the issues and to reach a shared understanding on the way forward.

Differing reasons have been put forward by various interested parties to explain Ireland's current increasing insurance costs. Motor insurance appears to be particularly affected, with the cost of premiums increasing significantly in the past 12 months. A number of factors drive the cost of insurance. Reasons often presented include the increased level of insurance claims and the increasing value of compensation awards. Others acknowledge that the highly competitive nature of the domestic market for non-life insurance in recent years has begun to impact on firms' underwriting profitability, with underwriting losses reported in 2014 for a number of high-impact firms.

I have been conscious of these issues for some time. To examine them in more detail and to assess the options for the Government, I have established a task force in my Department to undertake a review of policy in the insurance sector. This task force will report to me shortly on the first phase of its work dealing with the insurance compensation framework. Its work will be completed over the coming months. The first phase deals with the fallout from the collapse of Setanta Insurance, which, as Deputy Michael McGrath will recall, was incorporated in Malta. I expect to have that report within the next couple of weeks. The work of the task force also includes an examination of the issues being debated today, namely, the factors which have led to the significant increase in motor insurance costs over the last year. The work is being undertaken in consultation with the Central Bank of Ireland, Government Departments, agencies and interested bodies. The outcome of the review will be recommended measures to improve the functioning and regulation of the insurance sector.

As I have stated previously, the availability of relevant and timely data is necessary to facilitate an in-depth analysis of the insurance sector. The current lack of data presents difficulties from a policy analysis and development perspective. Accurate, timely and accessible information on claims in particular would assist insurers, including new entrants, in assessing the Irish insurance marketplace.

The new risk-based European supervisory framework for insurance, Solvency II, came into effect on 1 January this year. A key aim of Solvency II is improved transparency. For many parts of the European insurance market, this means a significant change in the provision of publicly disclosed information and should provide for greater transparency of insurance industry information. The issues being examined in the review of insurance policy include the issue of data, and the work of the task force will include examining options such as a national claims register and motor insurance policy data. This work will take into account what information is currently available, and what will be provided via the introduction of Solvency II, and identify any shortfalls.

Consumers of insurance are directly affected by the costs of claims - both the costs of using the legal system often used to settle disputes and the compensation awards that result. A number of significant changes have taken place within the motor claims environment in Ireland in recent years, leading to an increase in claims payouts. Claims frequency has increased as a result of rising economic activity and increasing miles travelled per car, and this has not been counterbalanced by a drop in the number of accidents. Average claims costs are also increasing, which presents significant challenges to the insurance sector by making the claims charge per insurance policy significantly higher and more volatile. As I have stated previously, the Government welcomes proposals to reduce the uncertainty and volatility of the claims environment in Ireland and this is a core issue being examined by Departments in the review of insurance policy.

The introduction of the Personal Injuries Assessment Board in 2004 was an important and positive change to the legal system in Ireland. The board provides an independent assessment of personal injury compensation claims. The objectives of the board are to reduce the costs of delivering compensation by avoiding litigation where possible and also to speed up the delivery of compensation to victims, where legal issues are not in dispute. My colleague, the Minister for Jobs, Enterprise and Innovation, is currently reviewing the injuries board legislation and a general scheme of a Bill is being prepared with a view to seeking Government approval for the drafting of a Bill to strengthen the legislative framework in terms of operational issues. To assess claims, the board uses an extensive set of data on actual litigated cases and cases settled through negotiation, as summarised in its book of quantum. The book of quantum is essential for the successful operation of the injuries board. The injuries board is currently reviewing the book of quantum, which was last produced in 2004, and expects to have a revised version ready as soon as possible.

The Government believes that these measures will help to ensure that the role of the injuries board is optimised to bring about the lowest cost and most efficient resolution mechanism for uncontested personal injury claims and that the book of quantum will provide certainty and clarity around award values. Reducing uncertainty regarding compensation levels should impact the ability of insurers to add precision to their pricing. False and exaggerated claims affect insurance costs, and I agree there is a need to consider as part of the review the proposals that may be appropriate in order to reduce such claims.

Making our roads safer is a key priority for Government. In order to tackle the issue of uninsured driving, it is essential that insurance companies provide accurate and timely information to the Garda Síochána on the insured status of individual vehicles to assist in enforcement. My colleague, the Minister for Transport, Tourism and Sport's Road Traffic Bill 2016 - which is currently awaiting passage through this House having been passed by the Seanad - provides for an amendment to existing requirements and allows for more robust enforcement by the Garda Síochána. This, in turn, should help reduce the number of uninsured drivers on Ireland's roads. Consideration will be given to a review and consolidation of existing road traffic legislation, and this will commence following the passing of the Bill I have mentioned. Improvements in road safety in recent years have been driven by a series of road safety strategies, supported by a partnership approach between relevant agencies and stakeholders. New Garda resources proposed by the Tánaiste and Minister for Justice and Equality will give the Garda Commissioner the capacity to maintain and extend the excellent traffic enforcement work of recent years, and contribute to further reductions in road deaths and serious injuries.

The regulation and supervision of insurance in Ireland is of a high quality. It has been further enhanced with the recent introduction of Solvency II and enhancements to Central Bank supervision, including materially increased on-site inspections and a revised approach to supervising low-impact firms. As of 1 January 2016, the new risk-based European supervisory framework for insurance, Solvency II, became applicable. The key objectives of Solvency II are to ensure financial stability and enhanced consumer protection in the European insurance market.

In view of the high degree of cross-border trade in insurance products, the Central Bank of Ireland has informed me that it strongly supports convergence in supervisory standards, which would contribute in a significant way to the long-term resilience of the financial system in Ireland and Europe.

The Central Bank seeks to continually develop and enhance its approach to supervision and the bank advises me that it is currently undertaking a significant recruitment campaign to fill vacancies in its enforcement division.

The non-life insurance sector is an important sector, both in its own right and in terms of its role in facilitating activity, both commercial and non-commercial, in other sectors of the economy. It is important for consumers that insurance is provided on a competitive basis. Healthy competition within the insurance industry should facilitate this and the National Competitiveness Council emphasised that a resilient and well-functioning insurance sector contributes to economic activity and financial stability. Last year, the National Competitiveness Council considered the commercial insurance market in Ireland as part of its costs of doing business in Ireland for 2015 report. It subsequently set out a range of potential actions that could help facilitate enhanced cost competitiveness in the non-life commercial insurance markets. These were set out in its competitiveness challenge 2015 report and presented to the Government by the Minister for Jobs, Enterprise and Innovation.

Many Departments and agencies are directly involved with the motor insurance sector. The Government is taking a whole-of-government approach to ensuring the correct policies are in place so the cost of motor insurance is addressed. This is being led by the Department of Finance task force. The Government will await the completion in the corning months of the existing Department of Finance insurance task force work, which involves examining the factors contributing to the increasing cost of insurance and identifying what short-term measures can be introduced to help reduce the cost of insurance for consumers and businesses. The Government will them consider what further longer term options may be required, including the possible establishment of a broader structured task force on motor insurance as outlined in the motion. In concluding, I thank the Deputies for their work on this motion and I look forward to hearing the interventions of Members from across the House.

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