Thursday, 20 September 2018
Central Bank (National Claims Information Database) Bill 2018: Second Stage
Cuirim fáilte roimh an deis chun labhairt ar an ábhar seo mar is ábhar iontach tábhachtach é gan dabht. Tá na mílte duine thar timpeall na tíre ag fulaingt de bharr na praisí ina bhfuil an córas árachais sa tír seo. Is léir go bhfuil an córas sin iomlán briste mar tá daoine ann nach bhfuil in ann taisteal, tá daoine ann nach bhfuil in ann post a fháil ag an mbomaite, agus tá daoine ann nach bhfuil in ann dul isteach i ngnó ná gnó a chruthú toisc go bhfuil an córas seo lofa. Tá sé lofa le fada an lá. Really tá faic déanta. Maidir leis an méid atá déanta ag an Rialtas go dtí seo, rinneadh é go huafásach mall. Tá go leor daoine thar timpeall nár féidir leo fanacht ar na reforms seo. Caithfidh na reforms seo a bheith curtha i bhfeidhm go tapa.
I appreciate the opportunity to speak about the issue of insurance. Motor and business insurance are two of the major issues that continue to hammer local communities throughout the country. It is a sore that has been left to fester for many years. The result is that many businesses are teetering on the edge of viability. They are experiencing year-on-year increases in their insurance costs. Many drivers are literally being pushed off the road. Those who are being pushed off the road typically are in the sectors that are most vulnerable. They include people living in rural communities who obviously have no access to bus or other public modes of transport, young people, older people and poorer people who just cannot afford the premiums being quoted.
The major problem people have is the glacial speed at which things are changing. We have been talking here about the cost of insurance for a long period. Everybody seems to know the answers and the necessary changes to be made, yet when we actually talk about implementation, people wonder why they are not being implemented. Perhaps they are not being implemented because vested interests in the industry are too powerful or perhaps because the Government is shy in implementing them. We are, however, finally discussing the national claims information database. It is better to discuss it late, rather than never. The Minister of State will not need to be reminded that when the cost of insurance working group published its report, its action plan contained a commitment to have the database set up by the second quarter of 2018, by which it meant it would actually be in place and functioning. We are now looking at that date in hindsight. The action plan stated the legislation would be in place in the winter of 2017. That story sums up the Government inaction in this area. Perhaps it has good intentions, but it is clear that it is failing to get to grips with the crisis.
Obviously, transparency is key. The lack of it only benefits one particular group of people - the insurers. We know that the insurers are under investigation both domestically and by the EU powers with responsibility for dealing with anti-competitive practices. When we asked the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to look at the reasons behind the spiralling cost of motor insurance, it was very clear to us that transparency would be a key part of whatever reforms were necessary. The report made 12 recommendations in respect of data and the need for transparency and among them was the idea of the database.
We are at the point at which we need to make big decisions on how the insurance industry works. One of the questions is whether the Central Bank can play two roles. Can it be the watchdog and the protector of the insurance industry? By making it the guardian of the database, the Bill, once again, pushes more responsibilities onto the Central Bank. We have concerns about whether it is stretched in terms of its resources. Simply turning to it to deal with all of these issues may be unrealistic owing to its capacity limitations. More importantly, there is a major question about whether it is the best body to deal with these duties. Fundamentally, can it be the institution to carry out the mandate to ensure stability in the sector and the institution to ensure the protection of consumers? That is one of the questions before us. ISME and the Alliance for Insurance Reform have both called for the Central Bank not to be put in charge of the database. I understand why that call has been made and that question will be before us for careful consideration.
This is not the first time the issue of whether the Central Bank, or any central bank, can do consumer protection alongside other roles has been raised by my party. There are a range of other bodies, including the Personal Injuries Assessment Board, PIAB; the Competition and Consumer Protection Commission, CCPC; and the Central Statistics Office, CSO, that could hold these data. There may be technical reasons the Central Bank has been given this role, but any technical skill could be transferred to one of the other bodies. Obviously, we are not going to hold up the Bill on Second Stage because of this issue, but I am pretty sure it will be central to the discussion on Committee Stage.
The other question put before us is what should the database actually contain? In the interests of consumers, we should have the greatest level of granularity possible in the database. Even though, obviously, there are data protection issues, in the long run it would be much better for consumers if we had plenty of detail in it. I understand the insurance industry is looking for the lightest possible level of detail, but that is what it would do, is it not? It should drop its very weak objections and accept, whether it likes it, that there is a need for change into the sector. Ironically, it claims that the new system could create barriers to entry to the market. That is bizarre considering the ongoing investigation by the European Union and domestic competition bodies. It also points to the need, as Sinn Féin as has stated before, for legislation to allow for proper sentences, including jail sentences, if necessary, to be imposed on insurers who lie to the Central Bank. It was misleading information from insurers that put the need for this new law into the political sphere. We must follow through and make sure there will be real punishments for bankers and insurers who lie to their regulators. If there are no punishments and consequences for lying to regulators, the influence and power of the regulators are much diluted.
I am convinced that the insurance industry has no interest in this forum and that it is actually stringing the Government along. That is an issue of which the Government needs to be conscious. To take as an example the Garda insurance fraud unit, one would have thought the industry would be delighted with such a move, yet documents released under freedom of information legislation and received by Sinn Féin show that Insurance Ireland has missed a series of deadlines in the development of this idea, the proposal to set up an insurance fraud unit within An Garda Síochána. The freedom of information requests relate to all records on the establishment of the unit. Clearly, Insurance Ireland is dragging its feet. The proposal to create an insurance fraud unit has been on the agenda since 2017 and was identified in the report of the cost of motor insurance working group in January 2017. An Garda Síochána submitted a mechanism for further co-operation to Insurance Ireland in the first quarter of 2017. It was to be discussed first in June 2017 at the meeting of the non-life council in Insurance Ireland, but the discussion was deferred to September that year. The decision was due to be communicated to An Garda Síochána by October 2017. By December Insurance Ireland had come up with a proposal for a full cost-benefit analysis of the subject for approval by the Garda Commissioner and the Minister for Justice and Equality. That analysis, as well as a definitive response to the proposal from An Garda Síochána, was due before the end of the first quarter of 2018, but on 12 April Insurance Ireland stated it expected to be in a position to provide an update on the cost-benefit analysis by the end of June.
It is phenomenal that one would have an organisation literally stringing the Government along quarter by quarter and being inactive with regard to the development of a body that logically one would imagine is in its greatest interests. The briefing note prepared by the Minister for the Oireachtas finance committee meeting on 29 May stated Insurance Ireland expected to be able to provide an update by June 2018. From my understanding, as of 31 May, from correspondence between the Department, newspapers etc the cost-benefit analysis is still awaited. Will the Minister of State confirm this?
I support the creation of an insurance fraud unit. Insurance fraud is theft, robbing money from people's pockets. It is breaking the system, resulting in certain people suffering more. It must be vigorously pursued and prosecuted. Sinn Féin still has concerns, however, about the proposals for a section of An Garda Síochána to be funded by the industry. Again, any such funding should come from the State. The cost, approximately €1 million, is within the capacity of the Government. The Government has left this particular proposal slip off the agenda by abdicating the State's responsibility for tackling insurance fraud and allowing the insurance industry string us along for so long. It is clear Insurance Ireland, despite its protestations that fraud is the cause of increased premiums, has decided tackling fraud is not the most important part of its agenda.
To be fair, the Minister of State is up against it when dealing with this particular industry. Perhaps the industry should be careful for what it wishes. If it keeps delaying and frustrating reform, it will convince more Members and others that this type of piecemeal reform will not deliver a fairer insurance market. As part of the Government's working group study, international examples of how the insurance industry might work were examined. Having examined the work done, we are of the view that it was not a serious exercise in looking for an alternative model but more a box-ticking exercise.
There are real alternatives to pure reliance on the private market. The State makes motor insurance compulsory, meaning it has a role in this from the outset. It then, however, leaves the process to a private market in which there is no real control and which is broken and in crisis. The State is not upholding its side of the bargain. It should be looking for alternatives. In New Zealand, for example, all drivers are covered for the basic legal requirements by paying registration while paying added funds towards the system through the petrol pump. Accordingly, no young person or isolated family would be taken off the road because of the whims of a private insurance industry. That is why we must ensure we provide a system that is not constantly in flux. The EU would have to decide with regard to this but I understand the Central Bank has ruled that such a system would not be illegal. This is the type of thinking of which the Minister of State needs not to be afraid to ensure we fix this.
Sinn Féin supports the Bill, notwithstanding issues regarding who runs the database and what goes on it which can be dealt with on Committee Stage. There is also the issue of who pays for the database. I am open-minded to that but the cynic in me believes policyholders get stuffed no matter what happens and that the insurance industry has a knack of ensuring policyholders pay through their premiums. I am hopeful in the medium term that, once established, this database will result in lower premiums as increased transparency shines some light into the industry. Transparency, along with collating and exposing data around costs and premiums, is in the interests of consumers and the wider economy. We need a functioning insurance system. Accordingly, Sinn Féin will support the Bill.
I hope these solutions could be extended to include the business insurance sector. It is one of the biggest issues coming up in my constituency office these times. I am ringing the large insurance firms on behalf of small businesses, teetering on the edge, to get them lower premiums. The Alliance for Insurance Reform is building a massive head of steam around the country. Through its membership, it has a base of 640,000 employees, a massive chunk of people who are concerned about the feasibility of their sectors due to the dysfunction within the insurance industry. I know a business in County Meath which has had its insurance cover increased by 185% in the past year. From the businesses I am talking to, I have learned insurance costs represent 10% of their turnover, making it hard for them to be viable. A business in County Meath that I know of will pay €139,000 in insurance costs this year. That is a phenomenal figure for a relatively small business.
I am aware of a case of one particular individual who made a soft-tissue injury claim against a premises 12 months ago. However, there was no evidence, either a receipt or CCTV, that this individual had ever been on the premises. The claim was not challenged by the insurance industry. If one is paying top dollar for insurance but the industry is not even challenging fraudulent claims, then there is something wrong. The insurance industry will claim the legal system is stuffed. If it were to start suing every insurance claim, the legal costs would rise so much that it would cost more in the long run to settle. These are the reforms needed to solve these issues.
If the insurance industry does not want these reforms, it will slow down the process radically. It will see out the Government until a new regime comes in. If it picks up the issue, it will spend three years fighting the case for the citizen. In all that time, there will be thousands of businesses and investments going to the wall with thousands of lives ruined. The only antidote to this is for the Government to accelerate the rate of development on this issue to ensure the necessary reforms are put in place before the Government signs off.