Tommy Broughan (Dublin Bay North, Independent) | Oireachtas source

The motion is timely following the report in January of the cost of insurance working group on the cost of employers' and public liability nsurance. The report is the second piece of work from the working group, the first being the work it carried out on the issue of motor insurance. While there have been some small and welcome reductions in the cost of motor premiums, the motor insurance sector remains problematic and continues to impact on the cost of doing business and costs for ordinary citizens and households. The motion is comprehensive. I agree that there is an urgent need to implement the 15 action points referenced in the report of the cost of insurance working group. Of particular importance are the requests for legislation and Government action to legally require insurers to provide a breakdown of premium costs for a business and explain the basis on which premiums are calculated; that the Personal Injuries Assessment Board's book of quantum be updated regularly - I believe it is proposed that it be done every three years - and that it be based on medical evidence and costs, not solely historic claims; and that the deadline for the Central Bank of Ireland’s feasibility study be brought forward to provide for the inclusion of employers' liability and public liability insurance data in the national claims information database. The motion also rightly asks the Government to move towards the creation of a single European insurance market to increase competitiveness. In some of the discussion we looked at the impact of Brexit and so on on the entire market. The Central Bank has a particular role in that regard because one of the unique aspects of the insurance business is that quite a few of the big players, the names of which, as my colleague, Deputy Sean Sherlock, said start with the letter "A", are not regulated by the Central Bank. I believe the regulator is the Bank of England. That is another bizarre aspect in trying to regulate the insurance industry in this country.

Soaring insurance and legal costs are putting a strain on businesses across the country and the position is particularly tough for small and medium enterprises, SMEs. The Chambers Ireland cost of insurance survey in August-September 2017 reported that 43% of respondents had seen an increase of between 5% and 20% in their premiums. Worryingly, a small percentage had reported increases of between 50% and 100%. In some cases there was more than a 100% increase. The justification given in 64% of cases by the brokers for the increases included "market conditions", whatever they are, and in 10% of cases "overall increases in claims", which one would imagine is much more important. Businesses, first and foremost, have legal responsibilities to their workforces, customers and the general public.

National Competitiveness Council Ireland's Competitiveness Challenge 2017 report, published last December, also highlighted increased insurance costs as having a serious impact on our competitiveness.

It also mentioned the lack of transparent data available in this sector and the problems with international comparisons owing to the nature of insurance and its role in business, including the fact that "the final price charged is generally not publicised." This comment understates the position in the insurance market. The National Competitiveness Council's report made some of the same recommendations that are included in this valuable motion. I welcome the action plan in the report which outlines the deadlines, relevant bodies responsible and lead or owner of each action. This is the approach that must be adopted.

Anyone who had been involved in the running of a small business, including many Deputies, or has served or serves as a company director will know the impact of employer and public liability insurance costs on a company's annual expenditure, especially over the past decade. While directors at meetings often urge managers and chief executive officers to shop around, the Irish market is characterised by limited competition despite the operation here of a number of large multinational insurers.

A feature of the business insurance market and other insurance markets in Ireland is the dearth of data available from the insurance industry and Courts Service, to which the motion correctly alludes. Astonishingly, there are also few data available from the Central Statistics Office and Personal Injuries Assessment Board. This public data vacuum damages the ability of the Oireachtas to legislate and conduct its business. The relevant organisations must produce the data we need to be able to track the insurance industry. There is good evidence that in the five and a half year period from January 2011 until July 2016 insurance costs in general increased by 57%. During the same period, approximately 42% of non-motor related PIAB applications were related to employer liability insurance and public liability insurance, with the figures for each being 15% and 27%, respectively.

Insurance Ireland's fact file 2016, the most recent fact file available, reports that Insurance Ireland's 18 domestic non-life members wrote gross premium of €3.253 billion in 2016, which was 13.7% higher than in 2015, whereas gross incurred claims were €2.09 billion or 0.5% lower than in 2015. The fact file shows a relentless rise in Insurance Ireland's members' gross non-life premium income between 2012 when it stood at €2.43 billion and 2016 when it stood at €3.25 billion. The significant portion of GDP represented by the insurance business, which has a workforce of more than 15,000 people, shows the significant impact insurance has on all aspects of the economy and society. I understand the sector accounts for approximately 6.5% of total GDP. It is striking that the most recent fact file from Insurance Ireland shows that in terms of insurance density and the premiums per capita in 2016, Ireland is ranked alongside countries such as Switzerland, Hong Kong, the Netherlands, the Cayman Islands and Luxembourg. Measured in US dollars, the total insurance cost per capitain Ireland stood at $4,408 in 2016, which was higher than the figure for the United Kingdom, Norway and Australia and much higher than the equivalent figures in European Union partners such as France. There is clearly a problem in this area and the Minister must urgently pursue the remedies outlined in the motion.

We cannot discuss insurance premiums without mentioning the legal costs associated with the sector. In the Department of Finance's work on motor insurance it was found that such costs account for 42% of the compensation amount paid to claimants. For example, a €100,000 compensation payment will also incur an average further payment of €24,900 for legal and other costs and a further €17,200 for insurer legal and other costs, giving a total payment by the insurer of €142,400.

Towards the end of 2016, reports indicated that insurance fraudsters from the United Kingdom were coming to Ireland to cheat the system and obtain much higher claim payouts than in the UK. In one case, the book of quantum payment in Ireland for a broken femur was 318% higher than the equivalent figure in the UK. The book of quantum shows vast differences in awards in Ireland compared with the United Kingdom, the market with which we are most heavily involved, notwithstanding Brexit.

As previous speakers noted, one of the key aspects of the report is the lack of transparency across the insurance sector. The importance of improving transparency in the sector is mentioned a number of times in the working group's report. This relates in particular to the Courts Service where the dearth of information is very concerning. Most citizens will ask why there is no easily available register of awards by the courts. As has been observed in traffic law and other important areas of law, it is astonishing and unacceptable in the digital age that we do not have transparent and reliable data to help Ministers to plan policy.

The insurance industry must take some responsibility for the terrible strain it is placing on small and medium enterprises. Last July saw dawn raids by the European Commission on Insurance Ireland, brokers and insurers. The European Union's Directorate-General for Competition has investigations ongoing into whether there has been a cartel operating in our motor industry. It is important that these European initiatives continue and the other important actions called for in the motion are supported.

I support the motion and urge the Government to speedily implement the 15 recommendations in the working group's report in order that we may begin to see some reduction in the horrendous business insurance costs.

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