Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I welcome the opportunity to address Dáil Éireann this evening on the report on the cost of motor insurance produced by the working group I chair and the report of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. A significant amount of work has been done by both groups and we have had a number of engagements, including one this morning. I will put some of the details of the working group report we have produced on the record of the House.

I am very aware of the importance of these reports and of the higher premiums people throughout the country are paying and the impact on their lives, businesses and ability to afford things generally as they go about their working week. This is why there has been a special commitment on the part of the Government to address this issue. It is why the working group's report has this dedicated timeline and these dedicated 71 actions. The Government is taking action on this, as is the Oireachtas. If we work together, we can bring stability to the market for motor insurance and deliver measures to ensure fairer premiums for customers. Our focus is on protecting the consumer while ensuring that we have a modern, transparent, stable and competitive insurance sector. I acknowledge the work of the report on motor insurance produced by the Oireachtas joint committee chaired by Deputy McGuinness and the work of the members of that committee and the significant amount of time they have put into this area. I thank Deputy McGuinness for his summary of that report and his earlier comments in the committee this morning. There is a considerable overlap between our respective pieces of work. In implementing the action plan outlined in the working group's report, which already has commenced, the Government will address many of the recommendations contained in the committee's report. The manner in which the committee has worked with the working group is the way we all should approach our work together to try to come to constructive solutions we can get through the House as quickly as possible.

I will put on record some of the action points in the working group's report in order that people can be clear about what we are trying to do with our 71 actions. Last July, I was asked to chair the working group report dealing with the various factors contributing to the increasing cost of insurance. We brought together various Departments to do that work, including the Departments of Finance, Transport, Tourism and Sport, Jobs, Enterprise and Innovation and Justice and Equality. The Personal Injuries Assessment Board was on the working group, as were the State Claims Agency and the Central Bank of Ireland. The objective of the working group was to identify and examine the drivers of the cost of insurance with particular focus on motor insurance - we have commenced work on public liability and employers' insurance - and to recommend short, medium and longer-term measures to address the issue of increasing insurance costs while taking account of the requirement for an economically vibrant and financially stable insurance sector.

I initiated the work of the group by establishing four subgroups to examine particular issues. They were understanding the motor insurance market, improved data availability, the cost of claims and other public policy issues. We then began consulting widely meeting with representatives from AA Ireland, Auto Records Limited, the Consumers Association of Ireland, the Freight Transport Association of Ireland, the Irish Brokers Association, the Car Rental Council of Ireland, the Irish Road Haulage Association, Insurance Ireland, the Law Society of Ireland, the Motor Insurers Bureau of Ireland, 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. The work then began to build consensus around the causes of the problem and to identify appropriate actions to be implemented as soon as possible to restore some stability to pricing in the motor insurance market. Deputy McGuinness spoke about the blame game at committee level. My approach was to look to the future, move beyond that blame game and figure out how we were going to solve this problem. The committee and the working group share that approach.

The deliberations of the group culminated in the publication of the report on the cost of motor insurance on 10 January 2017. The report contains 33 recommendations and 71 actions in an action plan across six main themes. They are protecting the consumer, improving data availability, improving the personal injuries claims environment, reducing the costs in the claims process, reducing insurance fraud and uninsured driving and promoting road safety and reducing collisions. A number of actions are already under way and I am confident that the report's 71 actions will be implemented by the end of 2018 with 45 due to be completed this year.

Some of the key recommendations include actions to address the lack of transparency in the claims environment through the establishment of a national claims information database, which will be located in the Central Bank. I note Deputy McGuinness's comments about the CSO and I will come back to them later in the debate. Others recommendations include addressing the increasing level of uninsured driving through the establishment of a fully functioning database, which will allow An Garda Síochána to check insurance compliance through the use of technology such as automatic number plate recognition, addressing the issue of suspected fraud through the establishment of a database that will be funded by industry but held by an independent body and that will take into account data protection concerns and providing enhanced guidance in how to determine compensation for personal injuries claims through the establishment of a personal injuries commission.

I will now provide some more detail on some of these issues. 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, such data are not collected or produced for the purpose of improving transparency on emerging risks within the market. Pricing of insurance premiums reflects a current view on the likelihood and cost of claims into the future. Transparency of claims data could feed into insurers' current view of future risks and improve their ability to price more accurately and reduce the cyclicality of their pricing. It should be noted that no organisation is currently responsible for the collection of data from insurers for this purpose thus representing a clear information gap. The working group developed a phased approach to tackle this issue. In the short term, it 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.

Work has begun on the implementation of this recommendation and a request for data will issue to insurance undertakings before the end of this quarter for completion. The metrics will then be published for the first time in the second quarter of this year.

This initial metrics publication will act as a stepping stone for the establishment of a national claims information database by the middle of 2018 which will provide more detailed claims information and should facilitate a more in-depth annual claims trends analysis. The Central Bank will hold this database. It is expected that the national claims information database will provide data on what claims are being made against property or for personal injuries, the legal and other costs that are being incurred and the channel of resolution and what impact that has on the final settlement, among other things. It should assist in identifying emerging risks in the market, such as claims trends and costs. The information will be collected and stored at a level of aggregation higher than individual claim level, that is, not on a claim-by-claim information basis.

The working group also considered the concept of a claim-by-claim register, but came to the conclusion that it does not, in the short to medium term, provide a feasible or credible solution. Relevant to this conclusion was the fact it has not been possible to identify an international precedent for such an all-encompassing claims level register and that such a register would carry a significant cost and lead-in time, both in terms of development and establishment. It was agreed, however, that consideration will be given to such a register at a later stage once the national claims information database is close to establishment in the first half of next year.

The second area where a 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 to 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. It pays out approximately €50 million to €60 million annually to meet such claims and this cost is passed directly on to motorists. The insurance industry estimates that this adds about €30 to each motorist’s premium. It is imperative therefore 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 the third quarter of this year for the database to go live for 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 that insurance fraud is a victimless crime. Nothing could be further from the truth and claims, whether of an opportunistic and exaggerated nature or through highly organised crime rings, need to be addressed and made as difficult as possible to get away with. In this regard, the insurance industry has estimated that fraud costs it in the region of €200 million each year, adding approximately €50 to each premium. To deal with this problem, the report recommends the establishment by the end of next year of a fully functioning integrated insurance fraud database for the industry to detect patterns of fraud. It is likely to be modelled on a UK equivalent system, and will be funded by the industry but managed by an independent not-for-profit body. This will be progressed in tandem with actions to ensure any data protection issues are appropriately addressed.

Another core recommendation is the establishment of a 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. The need to begin this work immediately has been recognised by Government and on 10 January, the Minister for Jobs, Enterprise and Innovation, Deputy Mary Mitchell O’Connor, 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 we have seen in the market in recent times. This package of measures also addresses the issue of protecting the consumer, for example, through the extension of the current renewal notification timeframe by five working days. In addition, 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. We touched upon this in detail earlier today at the meeting of the committee. I note the Chairman's commitment and the committee's commitment to addressing this issue.

A portion of the recommendations also centres on reducing costs in the claim 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 personal injuries lump sum awards, and the introduction of periodic payment orders.

The implementation of the review of the motor insurance compensation framework is also ongoing as we speak. The heads of a Bill are 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 a national certificate of roadworthiness, NCT, and to promote compliance with road safety legislation. Insurance Ireland will also present the working group with a report on the use of telematics in Ireland by the end of the year.

I will continue to drive the effective and timely implementation of this action plan over the next two years through the working group. In addition, the House should be aware that the second phase of the working group’s review of insurance costs has commenced, as I stated. 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 appreciate the opportunity we have had today to discuss the important objective of reducing the cost of motor insurance. I welcome the constructive debate we have had at committee and look forward to hearing the comments of others in this engagement. I have said on a number of occasions that there is no silver bullet to stem immediately or reverse premium price rises. The Chairman in his own committee report acknowledged that as well. With the implementation of these reforms, however, as well as co-operation and commitment between all stakeholders - Government, the insurance sector and the wider Oireachtas - we can create a stable and more accessible market which can deliver fairer premiums for consumers without unnecessary delay. We can achieve the above for the consumer while also protecting the stability of the insurance market.

I thank the members of the working group who put in such a great time commitment and dedication that went above and beyond the normal commitments people make to such efforts. Given the importance the Oireachtas has placed on this issue, almost every Member of the House has been in touch with me about it. I know the Oireachtas committee has a commitment to this. I, as chairman of the working group, have a very strong commitment to this. That is why we have an action plan. That is why there are owners for each action who are responsible for making sure that they take place. That is why there is a timeframe in place for all quarters of this year and next. I have made a commitment to produce quarterly reports. In fact, we will be producing an interim report on a quarterly report to the committee following our engagement this morning. I am more than happy to appear again in front of the committee to make sure we get this done. It will take collaboration between the Oireachtas and the Government to drive these reforms of the insurance sector to deliver what people want to see, which is a fair and transparent market in order that the people can get insurance they can afford and go about their daily lives as they need to week in and week out. That is the commitment I have given to the committee and give to the House today.

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