Dáil debates

Thursday, 20 September 2018

Central Bank (National Claims Information Database) Bill 2018: Second Stage

 

2:05 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute on Second Stage of this long-awaited Bill. From the outset when the working group reported in January last year, the lack of data generally in insurance was identified as a key issue, in particular the lack of data around claims and the claims process. While we had certain data from the Central Bank's insurance statistics on the overall amounts paid out each year by insurance firms in response to claims, we did not have the level of detail we needed to challenge and counter the assertions of various stakeholders as to who is responsible for the hikes in insurance premiums which we have witnessed in recent years.

I welcome the Bill, albeit it must be acknowledged that it is well behind schedule. When the Oireachtas finance committee decided earlier this year not to engage in pre-legislative scrutiny, it was with a view to being helpful and in the expectation that the Bill would be published swiftly and brought before the House. We are now on Second Stage and I pledge my support and that of Fianna Fáil for the passage of the legislation as quickly as possible. When the working group reported initially, the target was to have this database in place on a statutory footing by the end of quarter 2 of 2018, which is to say by the end of June. Obviously, that did not happen and we are a good way behind schedule as a result. As such, we must put this in place without further delay.

The database will focus on motor insurance claims in the first instance. The ambition should be to extend its scope as quickly as possible to include other areas of insurance. Once we get to assess the data and the trends become clear, I expect we will find that those trends will be equally applicable to claims in other areas, for example, business insurance. The trends will become clear very quickly. We need a handle on data on the settlement channels. We know that perhaps 70% of claims are settled outside of Personal Injuries Assessment Board, PIAB, and outside of court. As such, the vast majority of claims are ultimately resolved through neither the courts system nor through the injuries assessment board. We are in the dark, therefore, about how the process works. Not only are we in the dark but so too are policyholders when claims are made against their policies. We need far greater transparency around the data and that is the key objective of the Bill. Once we publish the data, I am sure we will see the trends become evident very quickly.

We want to see a process where the statutory injuries assessment board is the reference point and the place the majority of claims are settled. There must be greater certainty as an absence of certainty is the reason we have seen such fluctuations in recent times. When they speak to one in private, insurance companies say they do not want to take the risk of taking a claim into court, notwithstanding the view that it might be dubious, because they are afraid of what the outcome will be. As such, we need greater certainty around the cost of settling individual claims. We can get a certain amount of that by reforming the work of the injuries board, but we also need greater consistency from the courts. That issue will have to be addressed as part of the overall mix of solutions to deal with this.

The Minister of State has described the problem and he is right to say it is an enormous one. We have the data around motor insurance premiums and know that very significant spikes took place before there was some reduction in recent times. That said, premiums remain perhaps more than 30% higher than they were before the increases started to apply. That has had a huge impact on younger drivers in particular and on many older drivers or those driving older vehicles. It has impacted on the capacity of some people even to get an insurance quote. The motoring population in general has felt the impact of the trend in a very serious way. We do not have a handle on the position relating to the cost of business insurance, and that is because we do not have any Central Bank data. We have no data whatsoever on employer liability and public liability from the CSO. We know from the feedback we get from individual businesses and the representative bodies that there is a problem with hikes to premiums and changes to the nature of policies.

I refer to levels of excess being increased and more and more exclusions being provided for within policies. This is therefore a matter not only of the price of insurance, but also of a diminishing of the quality and the coverage of insurance policies. This can be an equally important aspect for businesses that might now face costs of in excess of €15,000 for any individual claim. They are questioning the value of paying insurance, and I suspect a growing number of businesses are now effectively self-insuring and taking the risk. They are not paying insurance because they wonder what is the point of doing so. This is not a road we want businesses to go down. It is a legal requirement that motorists have insurance, and businesses, if they have loans and so on, are required to have insurance in place, but many of them are taking the risk of operating without insurance. This is not a trend we want to see develop because they are exposing themselves to enormous risk involving their business, their families and, potentially, their homes. Everything could be on the line if there is no limited liability or an insurance policy in place. We must reiterate this message.

The key section of the Bill is subsection 8(4), which details the specific information that will now be gathered in this database. The Minister of State went through some of this when he referred to the cost, the expenditures, the number of claims, the nature of the claims, and information on the various settlement channels. Are settlements being made outside of court? As we know, they are in many cases. To what extent is the final settlement a result of a court award and to what extent is it a result of a decision by the Injuries Board? What are the costs associated with these claims? We have seen many debates between Insurance Ireland, the legal profession and other stakeholders in which they all blame one another for rising costs. For this reason, we need to have the relevant data to call out some of the assertions that have been made in recent years when we have engaged in this debate on why insurance premiums have been going where they have been going.

What we really must get a handle on is information on pricing. How do insurance companies arrive at a certain price, a certain premium, which they quote to the motorist, principally? If we can get a handle on the issue of the claims, we will go a long way. It is not the only issue; there are many other issues involved. Insurance companies have suffered from very poor investment returns in recent years, as a result of which they have placed a large burden on claims and premiums to get the return they need to generate a profit. This must be acknowledged as well, and they need to get their house in order in dealing with this problem.

Section 11 concerns the expenses and costs involved in establishing and administering the database. Reference is made to a levy on the industry in order that the Central Bank recoups the costs it is incurring. The Minister of State made reference to ECB monetary financing, which he said he cannot contravene. However, he needs to hear the message loud and clear that consumers have had enough insurance levies. He might say this is a levy on the industry, but we all know that when the industry is levied, the cost of the levy is automatically added to policies and premiums. I ask the Minister of State to clarify what are the expected costs involved in establishing and administering this database. Will all those costs have to be recouped from the industry? If so, how and when will they be recouped? Will this be done in the form of a levy? The Minister of State cannot give any assurance whatever that these costs will not be passed on directly to the policyholders. The whole objective here is to apply downward pressure on premiums by getting more transparency, more data and more information on the claims environment. We do not want this to have the opposite effect indirectly in any way. I know that is not the intention, but it is an important issue that the Minister of State should address.

I welcome the Minister of State's comments on the Civil Liability and Courts Act 2004 and the amendments he intends to table. We have not seen those amendments yet, but I understand that the issue he seeks to tackle here is the discrepancy between the length of time a business can retain CCTV footage, which, I think, is typically a month, and the period within which a person can lodge a personal injury claim and notify the business that he or she is making a claim. We have heard story after story of businesses that have wiped CCTV footage, as they are required to do in accordance with the law, and some months later, perhaps on the eve of the deadline, they are informed of a personal injury claim and the evidence is gone. The evidence may well have been such that it would have proved that a claim was without foundation, whether completely bogus, exaggerated or downright fraudulent. We will have to find some way of aligning these issues because it is completely unreasonable that businesses are not allowed to retain CCTV footage beyond a certain period, after which there is a further period within which people can make claims and the businesses cannot defend themselves. The Minister of State needs to align these issues in the best way he can and, of course, in a manner that is constitutional and protects the independence of the courts. We all understand that, but this issue is key and must be dealt with.

As for the passage of this legislation, Fianna Fáil will not be found wanting and will support it. We will consider tabling certain amendments, but now that the Bill is before us, we need to move swiftly to enact it and get the operational provisions in place in order that this database can be established and up and running and can start making data available within a short period. There are many other strands to the insurance debate, including the various other recommendations of the working group on motor insurance and the report on employer and public liability insurance. There is also the issue of tackling insurance fraud and many people will have seen the recent "Prime Time" investigation. There are so many issues there that need to be dealt with. We need to get to a point at which people will not take the risk of lodging bogus or exaggerated claims because there will be consequences for doing so. We are too soft in this country in the way in which we deal with such issues. There should be a very serious penalty and we need to see cases brought to court where there is clear evidence that claims are fraudulent, without foundation or exaggerated. People need to be held to account for that and penalties imposed. I know not all of this is directly within the Minister of State's control, but there is no doubt but that it is a key factor. It does not fully explain the increases in insurance premiums in recent times, and I would never suggest as much, but it is certainly a factor.

The overall message on claims and the claims environment is that we need greater certainty about outcomes. If there is less fluctuation and the outcome of the claim can be predicted with reasonable certainty, there will be less of an incentive to delay, go to court, engage in adversarial proceedings and incur substantial legal costs. That is the ultimate destination. The national claims information database is a vehicle to help us to get to that point. Once we have the data, we can assess many of the assertions that have been made in recent years.

I pledge the support of the Fianna Fáil Party in dealing with this issue. We will seek to improve the Bill as necessary in the period ahead. I want the Minister of State to use the mandate from this House, once the Bill is enacted, to get the national claims information database up and running without further delay. There is support across the House for tackling the issue of insurance costs, which is affecting many motorists, businesses and community, voluntary and sporting bodies. There is now hardly an event where the question of insurance is not centre-stage, and this is because of the claims environment that has been created.

It needs to be dealt with and this database is a vital step in tackling the issue through the provision of accurate and reliable information which will come from the industry but which will ultimately be validated on a statutory basis.

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