Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank the Deputies for their contributions on the Bill and the general conversation about insurance. I have to say the level of ignorance of some Deputies, specifically Deputies Mattie McGrath, Michael Collins and Danny Healy-Rae, about insurance and what has happened, what is happening and what is to happen is astounding and I find it disappointing. I asked Deputy Mattie McGrath to stay so he might listen to what I have to say, but he did not do so and neither did his colleagues. That is disappointing. This is on top of what happened three weeks ago, when I had an information session on insurance in the AV Room and over the two hours four people showed up. If we look around the Chamber there is myself and Deputy Ó Cuív and nobody else. Nobody is really interested in the answers and solutions on insurance at this moment in time. They want to come in and throw boots around the place and say we are doing nothing. Nothing could be further from the truth.

This is a very important issue and it is the appropriate place for me to put on the record of the House what has happened, what is happening and what is yet to happen. The Bill is to amend what happened with regard to Setanta Insurance. The failure of Setanta Insurance in 2014, and the uncertainty that followed over the compensation arrangements with third-party claimants, highlighted weaknesses with the current insurance compensation framework, in particular the fact that a third-party motor insurance claimant under the insurance compensation fund is only entitled to 65% of a claim, or €825,000, whichever is the lesser, while the equivalent third-party claimant under the Motor Insurers Bureau of Ireland for uninsured, unidentified vehicles is generally entitled to full compensation. This is undoubtedly inequitable. Even in overturning the decision that may have been liable for the Setanta Insurance payments, this was recognised by the Supreme Court. The purpose of the Bill, therefore, is to address this unfairness by increasing the level of insurance compensation fund coverage for all future third-party motor claims from 65% to 100% for personal injuries, and to €1.22 million per claim to ensure Setanta Insurance and Enterprise Insurance third-party claimants are compensated in full. The other key element of the Bill is to require that the increased coverage be funded by a contribution to the insurance compensation fund by the motor insurance industry to cover this extra 35% as well as providing for enhanced governance and administrative arrangements.

It is important that we prioritise the passing of this legislation on our return in September, in particular to enable those who have settled their claims and have already received compensation from the insurance compensation fund to receive the balance of 35% owing to them. To Deputy Ó Cuív and anybody else who is listening, I am quite happy to pass this before the recess. If Members of other groups and the Business Committee want to conclude this I will do so with them, but I cannot do it on my own.

It should be remembered that only claims that have been settled can be included in any future applications to the High Court for payment from the insurance compensation fund, ICF. The settlement of claims is very much a matter between claimant and liquidator or for the courts, and it is something over which the Government has no control. In many cases I understand the process of settling claims is ongoing and subject in some cases to complex negotiation between all relevant parties. It is hoped, therefore, that by the State taking steps to ensure that third-party claimants are compensated in full, this will lead to an acceleration of the settlement of all outstanding claims.

I will speak to insurance in general and some of the areas touched on by the debate. Nobody used the most important word applying to insurance in Ireland today, which is "awards". We had some conversation about claims but nobody mentioned awards. The Department of Finance has done work on awards and we are referencing them to our closest neighbours, the UK. The indications are that an award in Ireland, when compared with an equivalent award in the UK, is between three and six times as much. One does not need to know much about insurance to understand that if there is a high awards system, there will be a high premium system. It is as black and white as that.

The cost of insurance working group report was published in January 2017. Flowing from that was the Personal Injuries Commission report from Mr. Justice Nicholas Kearns and the report from the working group on the cost of employer and public liability. By the end of this year, we will have 26 from 29 recommended actions concluded from those reports. There will be approximately six actions not concluded that relate to the motor insurance report.

Mr. Justice Kearns in his report highlighted many important areas, including the progression of the updated book of quantum. The book of quantum is not what anybody might think an award should be for an injury but rather it considers the previous three years, averaging those awards. The reduction of the book of quantum is a matter for the courts, and if the awards are reduced, the book of quantum can be reduced. There was criticism to the effect that this Chamber does not set the awards but it does not have the authority to do that. Awards are civil matters between an individual and, most likely, an insurance company. If somebody is not insured, the process involves another individual or party. These are civil matters in the civil courts of this jurisdictions. These are the limitations. We made requests of the Attorney General and it in turn asked the Law Reform Commission to make an examination. We hope the Law Reform Commission will take this on and produce a large body of work.

I will turn to the comments of Deputies. A Deputy raised the matter of levies and we expect the 2% levy to be in place for four or perhaps five years. That will bring the total to €150 million. Subsequent to this, the opportunity exists to reduce the levy to 1% and take the amount up by €50 million to €200 million. At that stage we will have the opportunity to bring the amount to nil. We hope to do that in four to five years. A Deputy mentioned the PMPA levy but this was discontinued in 1991. A levy was subsequently reintroduced because of the Quinn Insurance liquidation and it has been in place since. The 2% levy is a matter for insurance companies, which can absorb it into costs or pass it on. It is not for us to tell them what to do, although I know what I would like them to do. It is a commercial decision for each insurance company.

I was asked if there is a long-term plan, and there is such a plan. This Bill is before the House and legislation relating to a national claims information database is to be published next week, to be taken by the Minister for Business, Enterprise and Innovation. We will have amending legislation for the Personal Injuries Assessment Board, PIAB, which will strengthen the powers of PIAB with respect to non-attendance at medicals and matters of that nature. We hope that will go to the Government next week for approval to be published. The Minister for Justice and Equality will bring forward the Judicial Council Bill 2017, with the Department considering the insertion of a provision for the training on assessment of personal injury damages. The Bill has been published but we are awaiting Committee Stage amendments and a date for that debate.

The Department of Justice and Equality is also considering the amendment of sections 8 and 14 of the Civil Liability and Courts Act 2004. The initial draft heads have been prepared to amend these very important sections and how they would interact with new data protection rules. If somebody has imagery, they are obliged to delete the footage within one month, but we are reconciling the time somebody has to retain the imagery. This relates to the time in which a party must be informed of a potential incident and be afforded the opportunity to save footage to aid defence in the future. Section 14 of the amended Act would allow a court to draw an inference from failure to produce a verifying affidavit within 21 days. If somebody does not do what is required, such as saving video imagery, inference can be taken against that party in court, which is very important.

A Deputy spoke about the implementation of a new section being required for revised matters relating to the criminal act of insurance fraud. We are satisfied the Act, particularly sections 25 and 26, is strong enough in this regard. The penalties are a €100,000 fine or prison or both. That is strong enough. If somebody wants to take a chance on insurance fraud or exaggeration, the sanction is sufficiently strong to deal with the matter. It has fallen down between a justice suspecting an element of insurance fraud or exaggeration and the correct pathway between the court, the Garda, the Director of Public Prosecutions and insurance companies. There is no correct place for the judge to air an opinion of fraud and call in gardaí to take a statement from the person sitting in court who is taking a chance on a one-way bet of insurance fraud for tens of thousands of euro. I am not saying that will happen but it is something that could happen if we get the pathway correct.

There are some other issues and I appreciate the indulgence of the Chair. There was mention of the Garda fraud unit being funded by the insurance industry. Deputy Doherty is opposed to this and in newspaper reports I note Deputy O'Callaghan, the Fianna Fáil justice spokesperson, has raised concerns about it. I have concerns about this personally. I came into this job 12 months ago and this was a recommendation.

I outlined in the finance committee my concerns about it and how it was a matter to be discussed between the Minister for Justice and Equality and the incoming Garda Commissioner. Some people took complete offence at that.

I do not support the idea that an industry should pay a portion of the wages of gardaí. That is a personal view. I will try to implement the recommendation because it was concluded before I came into the job. I have an obligation to do that. However, at a personal level I have major qualms about any individual private sector funding any section of An Garda Síochána. The same view has been outlined by several other people.

There are other ways of doing exactly that. If there are other ways of doing exactly that, then we want to ensure we explore the opportunities and how we may put in place a correctly-funded Garda insurance fraud unit with a budget of €1 million – that is what Insurance Ireland has said it will do. It has said it will provide €1 million towards the section. I believe there are more appropriate ways of doing that. Having said that, I will try to progress it with the Minister for Justice and Equality, An Garda Síochána and the new Commissioner, when he takes up the position. We will take it from there.

As I have said, I am perfectly happy for the legislation to come through before the end of this term, if that is possible but I am unsure whether it is possible. If it is possible, then I am up for it and I would like everyone else to be as well.

The reality is that we have awards that are, on average, between three and five and a half times more than the sums awarded in the UK. We also have other awards that are even higher - these are outlier awards. Under the new Solvency II rules on capitalisation insurance companies are obliged to fund accordingly. If a person has a broken arm and there is an outlier award, the company has to capitalise on that basis of that amount. This is what is really doing the damage. We have awards that are too high. We have exaggeration and fraud. That is a perfect storm for insurance and that is why the awards in Ireland are some of the highest in the world.

I wish to touch on the insurance companies quickly. The insurance companies tell us that it is all the fault of exaggeration and all the fault of fraud. As a result of these factors and the storms, including Storm Ophelia and Storm Emma, I decided to look into exactly how insurance companies deal with their clients or customers. Their customers buy their products and insure themselves with a given company. That examination is ongoing. I have met all the insurance companies in recent months. I am meeting the loss-adjusters and the brokers to try to learn more about the interaction between the individuals and the companies.

I believe this is a significant consumer protection issue. I have spoken with the Central Bank of Ireland and I have requested the views of the bank on the consumer protection side. The Central Bank is the regulator and it is the job of the bank to ensure that consumer protection is appropriate. I have asked for the views of the Central Bank on the matter. I have no wish to predict the outcome of the report before it is concluded.

There are other relevant areas and I have touched upon most of them. Deputy Scanlon said nothing was done for the hauliers. Three years ago there was a significant reduction by the Government at budget time on the haulier tax or tax on vehicles. That was very much welcomed so I do not accept the contention.

As I have said previously, I will look into company cars.

Deputy Ó Cuív mentioned that individuals who took out Setanta insurance were let down by the State. They were not let down by the State. The State is intervening to ensure that the amount of redress, which was to be 65%, would be 100%. We did not have to do that but we took the view it was appropriate and the correct thing to do. People bought insurance and adhered to the law of the land on insurance. The decision of the courts held that some people potentially would only be paid 65%. We took the view that decision was wrong and not appropriate. This legislation is dealing with the issue.

I wish to put on record the reason there was a delay. Some Deputies may know already. Until 27 May, when the Supreme Court overturned the decision on the Motor Insurers Bureau of Ireland, the Minister for Finance was not in a position to intervene as the insurance industry, through MIBI, was responsible for compensation for third-party claimants in full. That was subsequently over-ruled by the Supreme Court. Once that was done, it was necessary to take legal advice and carry out an actuarial assessment on the matter. I understand that was not concluded until December of 2017. The following January it was concluded. In only a short number of weeks we made a determination that the right thing to do for those people who adhered to the law of the land was to ensure that they were fully compensated 100% and not only to the extent of 65%. That is what we are dealing with under this Bill. We are putting that into effect.

I appreciate your indulgence, a Cheann Comhairle. I imagine I have left out many aspects of this. If people want this to be done before the end of the session, the Business Committee can help me out. I imagine the finance spokespersons would facilitate that, as would I.

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