Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

It is not lost on me or many other people that we are dealing with a Bill that will impose another charge on premiums on the day that David Drumm was given a suspended sentence in court for offering illegal loans to ten wealthy businessmen worth €450 million. Those loans, known as the "maple ten", originated from the fact that Seán Quinn of Quinn Insurance was betting on Anglo Irish Bank and built up a contract for difference of 28%. As he admitted, he was chasing his losses so he took €280 million out of Quinn Insurance to try to cover those losses. Today, everybody who has a non-life insurance policy is picking up his tab and the tab of the bankers who facilitated such schemes, while people walk free from it. For the past number of years we have picked up the tab. The cost of that tab was €1.15 billion. Irish consumers will be picking up that tab for many years to come. That puts the issue in context. We cannot continually revisit the fact that insurance companies are collapsing in this State because of dodgy regulation, criminal practices or alerts that should have been identified but were not acted on.

I welcome the Bill and the fact that we are finally discussing this issue. Three years ago I said from these benches that this is exactly what the Minister had to do. People were at their wits' end with their lives put on hold. They were entitled to major claims but there was a legal argument between the ICF and the MIBI and the State was picking up the legal tab as it went through the High Court and the Supreme Court. In the middle of all of this were the people who were injured in accidents and had legitimate claims, but who were not having those claims paid.

At that time, I made the point that we needed to amend the legislation to allow the ICF to pay out 100% and to remove the €825,000 threshold. Four years later, we are now dealing with that legislation. In April 2014, Setanta Insurance went into liquidation, which is over four years ago. As I established from communications with the Maltese authorities problems at Setanta were well now before then. The company was breaching its regulatory buffer as far back as 2011. In September 2013, the Central Bank was given the information about the company. A material shortfall in the reserves of the company was identified early in January 2014 and it was only ordered to stop selling insurance on 24 January 2014. From 2011 when the buffers were being breached to 24 January the company was on the brink but customers were still in the dark buying its insurance products. Many people were left high and dry in terms of claims. Many others who paid yearly premiums were also left high and dry and those premiums went down the drain. The most serious victims are those who have been waiting for what they are entitled to, namely, 100% of the claim for an accident in respect of which they were not at fault. I support the Bill because those claimants and victims have waited long enough. Some of them have received 65% of their claims but almost half have received nothing. Those who have received the 65% are still wondering when the Government will get its act together and get this legislation enacted so that the remaining 35% can be paid. I ask that in his closing remarks the Minister of State, Deputy D'Arcy, would give us a date for the enactment of this legislation so that the remaining 35% can be paid.

There are wider issues that deserve full debate and scrutiny. It is striking how complex the proposed system is in this legislation in that it is begging from pot A to put into pot B, with pot C being refunded. I cannot help but think there is a more straightforward way of doing this. We know that other countries operate a single fund. This is an idea worthy of consideration but not one I would not want to hold up or stall this legislation. I welcome the transfer of administration of the fund from the Office of the Accountant of the Courts of Justice to the Central Bank such that the ICF will now rest with the Central Bank. This brings an accountability structure as funds that are under the courts are excluded from the scrutiny of the Comptroller and Auditor General and it is only right that such an important fund would come under the scrutiny of the State's financial watchdog. This is a massive fund. As I mentioned, the cost for Quinn Insurance is €1.15 billion and for Setanta Insurance is in excess of €100 million.

I am conscious that asking the Central Bank to look after everything is the default position, in particular when discussing the insurance industry. In giving the Central Bank additional tasks we need to provide it with additional staff and the resources to do the job properly. For this reason, I believe serious consideration needs to be given to finding an alternative body to run the national claims information database when established. A more critical reason is that, unfortunately, the Central Bank's mandate, or at least its interpretation of its mandate, is that stability trumps everything and, therefore, profitability of companies outweighs the rights of consumers. We all agree that transparency is essential if we are to see a real reduction in premiums but I am not convinced that the Central Bank is the body to take up the mantle of driver in this area. Therefore, serious considerations needs to be given to having the national claims information database housed with a different agency. However, we can have that discussion when that legislation becomes before us. The fact that it has not yet come before us tells its own story, and the priorities of the Government.

Following much public anger and good work by the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, the Government produced a report on the cost of rising motor insurance. Major elements of that report, like the national claims information database, remain unimplemented. The Government has taken its foot off the pedal on these issues, which is evident from the level of insurance premiums right across the business community and, in some cases, motor insurance also. During the pre-legislative scrutiny of this Bill one of the issues raised was the fact that as MIBI will hold this fund it can be tapped into for public use. In other words, the public can call on this fund and the Minister of the day can direct the level of money that will go into the fund. This raises the question of whether MIBI too should now come under the lens of the Comptroller and Auditor General. I believe this is worthy of consideration.

When it comes to the industry and my experience of it, the maximum level of accountability and transparency is required. It has been placed in the position where reform is necessary but despite the rhetoric there is no reason to believe it has any interest in real reform. The insurers thrive in the world of spin, vagueness, legal costs and fraud, exaggerated claims and so on. All these are real issues. I acknowledge the sterling work done by some journalists, in particular Charlie Weston who has been running a series of articles on fraudulent claims and questionable claims. The front page of The Irish Sun reports that one of the Minister of State's colleagues is involved in what the courts called a questionable claim. There is a need for scrutiny of insurance fraud. Fraudulent insurance is theft and it needs to be dealt with as such. There is no doubt insurance fraud adds to insurance premiums. We know from former Governor Honohan's private correspondence to the previous Minister for Finance that the industry was lying to the Central Bank. This is the reason he called for reform of the law in this area. We know also that the industry gambled in the purchase of Government bonds and that when through quantitative easing those Government bonds reduced in terms of value to the insurance industry it left a major gap in terms of its funding.

I am opposed to allowing Insurance Ireland to fund our police service. It is terrible idea. I understand that at a time when there is huge pressures on premiums it is easy to go for the easy fix but An Garda Síochána needs to be independent and above reproach. The idea that private business would fund a section of the Garda Síochána is not a good one. It is a slippery slope. It must be remembered that the insurance industry in this city was subject to dawn raids not too long ago. It is under investigation by national authorities and by European authorities and yet we somehow think it is a good idea that it would fund a part of An Garda Síochána. This is not the way to go. If it needs to be taxed and brought into the general taxation system then we should do that and use that money to fund the services. It is more than 12 months since those raids took place. As I said, they are subject to anti-competitive practices in terms of the investigations that are ongoing.

Insurance fraud is theft and it must be pursued rigorously and prosecuted. More action needs to be taken to stamp out insurance fraud, including by way of establishment of a specialised Garda insurance fraud unit and the introduction of a new offence of insurance fraud but this must be paid for by the central Exchequer and not private business interests. Just as important is challenging the insurance industry to stop settling suspicious claims. It is important that claims deemed to be suspicious or fraudulent are reported and acted upon. My legislation, which I touched on earlier, provided that those in the industry would be subject to imprisonment if found to be lying to the Central Bank. As we know, the industry has done so in the past, as reported by the former Governor to the previous Minister for Finance. This is the type of action we need, and more of it, to keep this industry on the straight and to ensure that it reduces premiums.

Returning to one of the core areas of this Bill to help reduce premiums, for years we have been told that one of the reasons for the 70% increase that occurred over a three year period was the uncertainty around what would happen in another Setanta-type collapse. This is what the industry told us was the reason for it increasing premiums to the level it did. Through this legislation, we now have a roadmap for reducing premiums but are not hearing the insurers commit to reducing premiums to previous levels or anywhere near those levels.

The excuse has been removed and the solution has been given but there is no commitment from the industry.

One issue not addressed in the Bill which needs to be considered on Committee Stage relates to the changes to the waterfall of preferences in the liquidation processes. The ideal in cases such as Setanta would be that claimants get priority in the liquidation process and that, to the maximum degree possible, the process meets the majority of claims. The ICF or MIBI could pay upfront and then recoup the moneys during the liquidation process. That would be preferable to having to wait for a long period to deal with this.

I see no reason for applying an extra 2% levy to premiums. This move provides the certainty the industry claimed it needed and it sets an insurance policy for itself. Over the longer term this new fund is supposed to save money for the industry and therefore this levy should not be placed on customers' insurance premiums.

I would like to go through much more on this legislation, but we will have time to do that on Committee Stage. I urge the Minister of State to ensure the Bill gets through these Houses with the appropriate scrutiny as quickly as possible.

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