Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

Yes, I know, and still some people want to charge for it. It is extraordinary, is it not?

I support the proposals in the Fianna Fáil motion relating to the collapse of Setanta Enterprise Insurance and generally unregulated motor insurance firms and the measures needed to deal with the consequences. In particular, I support the importance of compensating those who have been affected. It is reasonable to pursue the authorities of the jurisdictions that did not seem to regulate properly to try to recoup some of the money it will cost us to ensure, as we should, that those who have been affected by this are compensated. They are victims of a failure of the authorities in Europe and here to have a properly regulated insurance industry. That is what it comes down to.

I support the proposed measures but we would go a lot further. This all relates to a race to the bottom that one gets in just about every area, including insurance, as a result of unregulated, free-market globalisation. We got it with banking, multinational corporate tax evasion and insurance. There is always somebody who is trying to get around the regulations for profit by under-provisioning. They have an unsustainable business model which means that when they get into trouble and are not making enough profit, they decide to go out of business. The poor customers, or more widely the general public, pick up the bill when the profit-seeking entity goes bust.

Failures of regulation and the inadequacy of pre-established compensation structures mean that we must deal with the consequences. The problem is that we then move to close the door after the horse has bolted. We keep doing this in the case of insurance. In so far as we must compensate the innocent victims, we create another problem because we must load levies on everybody else's insurance. Insurance thus becomes unaffordable and people get screwed on premiums or are not getting insured at all, as is increasingly the case.

Last week we talked about cohorts of people seeking insurance. Some taxi drivers, who require insurance cover to make a living, cannot get it because costs have risen so much. We cannot get credible information, or in some cases any information at all, from these insurance companies to justify their premium increases. One aspect is the cost of the collapse of other private entities, but they also throw out all sorts of other excuses, including legal costs and, as they see it, the unnecessarily high level of awards. They blame juries or fraud, but we do not really know the truth of the matter because we cannot get the actual information from insurance companies.

How therefore do we resolve this matter in such a way that the situation does not continue to get worse? While the proposed measures before us are some response to the immediate situation, are we going to be back here again fairly soon? Following a particular crisis, like the collapse of a few insurance companies or the collapse of the banking sector due to light touch regulation, we say we are going to regulate, let us have more regulation and it will never happen again because we are going to regulate. Shortly after the commitments to regulate, however, we have bleating by the for-profit institutions, be they insurance companies, banks or multinationals, saying we are going to have to lighten up this regulation because it is not viable for them with that level of regulation, or else they will have to jack up premiums. We are in this vicious cycle where we end up toing and froing between picking up the cost of not having enough regulation or the adverse consequences of compensation packages, and trying to regulate these guys. And so it goes on.

Our answer to this conundrum is a State insurance company. That is what is needed. What is the advantage of that? First, we would not need to have committees sitting for weeks on end trying to find out the truth of what is going on in the insurance company. We could actually access the information because we would have it. I am not saying that all State bureaucracies are perfectly transparent in terms of the availability of information, but at least notionally we are entitled to the information.

It would work as long as we did not have this arm's length nonsense whereby we own a bank but have no responsibility for what it does and cannot in any way influence its decisions. That is what we do when we have banks, insurance companies or any other public enterprises, including semi-State companies. We are told that is because we have to maintain the commercial independence of these entities, but that is not what we should be doing, particularly when the public always pay. The public pay higher premiums, general taxation and compensation claims when these institutions collapse. It seems to me that if the public pay every single time when anything goes wrong, maybe the public should run them. Then, at least, they would get the benefit of any profits they generate, as well as having some influence over the policies they set for premiums, business models and necessary provisioning.

I am absolutely convinced that would be better, more efficient and cheaper. I recently brought to the attention of the Minister of State, Deputy Dara Murphy, the example of a Manitoba insurance company which was established directly after a series of hearings, just like the ones we had on motor insurance. Unlike our ones, where we have 77 recommendations that basically do nothing except try to perfect a market which is not perfectible, the Manitoba authorities set up their own not-for-profit insurance company to provide affordable, basic third-party insurance for everybody.

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It will eliminate discrimination against particular cohorts of drivers. It will base risk on individual assessments of those drivers and penalise them if they turn out to have a bad record but not penalise whole cohorts, as these insurance companies do on spurious reasons in order to make money. That is what I think we should do. Otherwise we will be here again. We will not resolve the dilemma and it will just keep going around. In a year or two we will be debating the collapse of some other unregulated entity, or for that matter, even a regulated one.

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