Patrick O'Donovan (Limerick County, Fine Gael) | Oireachtas source

Consequently, I am proposing an amendment to the motion which: clarifies the role of the Minister for Finance in the financial services area; provides a general outline of how insurers price their products; highlights the constraints which apply in buying insurance from insurers in other EU member states; outlines the work of the cost of insurance working group to date; welcomes that the Central Statistics Office, CSO, data for January indicate that private motor insurance premiums have reduced by 17% from their peak in July 2016; commits the Government to maintaining the momentum of the work to date to ensure a more stable motor insurance market; calls on the insurance industry to continue to engage with the working group with regard to the recommendations addressed to it, including the need for the industry to be more proactive in tackling fraud.

I will now set out the reasons for the Government’s amendment in more detail. A key theme running through the motion is the view that the Minister for Finance, in his role, should be able to issue a series of directions to insurers about who they should insure and at what price. This view completely misunderstands his role. As the Minister has outlined previously in response to parliamentary questions, as Minister for Finance he is responsible for the development of the legal framework governing financial regulation. This provides the basis for insurers to operate in the Irish market. In doing this they use relevant risk factors in determining the pricing and availability of motor insurance cover to individual customers. These risk factors include, but are not limited to, the age, claims history, driving experience and the number of penalty points that a driver may have and the age and type of vehicle being insured. As these risk factors are a commercial matter for insurers, neither the Minister nor the Central Bank of Ireland can interfere in this process. For these reasons the Minister is not in a position to make it mandatory for insurers to provide insurance to people with, for example, five or more penalty points. In such a situation a person can refer his or her case to the declined cases agreement process. This agreement requires insurers to provide a quotation where the person has been refused insurance by at least three insurers.

The Government, through the establishment of the cost of insurance working group in July 2016, has given a high priority to examining the factors contributing to the rising cost of motor insurance and addressing those within its control. The working group published its report on the cost of motor insurance in January 2017. It makes 33 recommendations covering the following areas: 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; promoting road safety and reducing collisions. Many of these areas include specific recommendations and actions on issues raised in the Rural Independent Group’s motion, in particular with regard to returning emigrants, increased transparency to insurance customers and measures to tackle fraud.

It is worth taking stock of what has been achieved in the year since its publication. First, more than half of the 71 recommended actions have been implemented to the end of 2017. Full updates on the implementation of these are published on a quarterly basis. The latest of these was published just last week. Recently, the Government approved the general scheme of a Bill to establish a new national claims information database in the Central Bank. It has been referred to the Office of the Parliamentary Counsel for drafting. Additionally, I wish to acknowledge the important work being undertaken by the Personal Injuries Commission, PIC, chaired by former President of the High Court, Mr. Justice Nicholas Kearns. In December, it delivered its first report. Its findings suggest that adopting a standardised and internationally recognised approach to diagnosis, treatment and reporting on soft tissue injuries by practitioners who are appropriately competent and trained will improve the personal injuries environment in Ireland. The Government looks forward to the two further reports to be published by the commission this year which will cover benchmarking of international awards with those in Ireland and will also look at alternative compensation and resolution models.

While it will take time to implement fully the recommendations of the report, we have witnessed some tangible progress in the cost of motor insurance. First, the rates of increases seen prior to its publication have ceased and there appears to be greater stability in the market in the past number of months. In this regard, the most recent CSO data for January indicate that private motor insurance premiums have reduced by 17% from their peak in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, I appreciate that these figures represent a broad average and there are still many people who may still be seeing increases. The Government accepts that and that there is still work to be done. In this regard, the Government remains

committed to the delivery of reform to the insurance sector and will maintain the momentum of the work to date to ensure a more stable motor insurance market generally and to encourage the continuation of the current pattern of decreasing average premiums. The Minister will also ensure that his colleagues in Government responsible for the implementation of specific recommendations addressed to their Departments continue to give them priority in order to meet the deadlines set out in the report’s associated action plan. In addition, Deputies will be aware that the cost of insurance working group recently published its report on the cost of public and employer liability insurance. This report makes a number of further recommendations which, once implemented, will complement the recommendations made in the motor insurance report. It is the Government’s intention that this work is also prioritised.

Finally, it is worth noting that the Government can do only so much with regard to some of the issues raised by the group. It is vital that the industry continues to engage with the cost of insurance working group with regard to the implementation of recommendations addressed to it, which relate to emigrants, increased transparency on premium increases as well as greater engagement with policyholders where a claim has been made against them. In addition, the Government hopes that the level of co-operation relating to the provision of data to the Department of Finance as well as the Personal Injuries Commission can continue. Indeed, the Minister for Finance is encouraged by the sector’s positive engagement to develop the national claims information database.

In conclusion, for the reasons outlined the Government does not accept the assertions made in the motion and must oppose it, as it gives no recognition to the significant level of work done to date by the cost of insurance working group and the progress made in addressing the cost of motor insurance.

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