Thursday, 20 September 2018
Central Bank (National Claims Information Database) Bill 2018: Second Stage
Will the Minister of State explain how it has taken almost two years to bring forward this legislation to establish the database?There is a huge lack of transparency, which is the key factor, in respect of which we have felt down during the years.
Today, we rightly listened to criticism of the insurance industry and its impact on households, businesses and drivers. The cost of insurance working group was set up in 2016 and has been running throughout this Government's lifetime.
The Minister of State mentioned that there was no silver bullet for this issue, but perhaps we should aim fundamental reforms at two areas. The Bill gives an indication of that in terms of the insurance industry, given the astonishing increase in premiums even during the austerity period. The other area is the legal system and profession. In the discussions around the working group, the Government's legislation and so on, the insurance industry blamed the legal profession - the book of quantum and the cost of barristers and solicitors - and vice versa. In terms of legal costs, we have seen the relentless rise in personal injury awards in the Circuit Court and the High Court since 2009. There is unquestionably an issue in that regard.
One of the key failures of this and the previous Governments in the ten wasted years since 2008 has been the lack of a serious effort, despite the Europe Union. We did so many things that our EU colleagues wanted us to do - crucified mortgage holders, set up NAMA and so on - but we never touched the legal profession. Neither the Bill of the Minister, Deputy Shane Ross, nor any other Bill will give us a legal system that reflects the reality of people's lives, incomes etc. The Law Society of Ireland and King's Inns, the two famous guilds that control education for and entry into the profession, can say what they like, but it is beyond a shadow of a doubt that there is a problem.
The IMF showed us that our insurance premiums on a per capita basis were four times the EU average just a few years ago. We were spending on average $12,000 per year compared with $3,000 in other European countries. We saw increases of 70% in the price of private car insurance between January 2014 and July 2016. All citizens are shocked to see some of the prices being asked for whenever our renewal dates arrive.
Every Deputy has been contacted time and again by all kinds of hard-pressed constituents, including young, careful drivers who follow the rules and are still being crucified by €1,000 plus. We have also been contacted by distressed taxi drivers, who are in the public transport mould. Due to changes in their training and so on, they have had to come up with vast sums of money. We have seen a slight decrease in prices in recent figures, but the working group was established because a problem existed and, like Deputy Mattie McGrath stated, many people would not accept the insurance industry's assertion that claims were accounting for 50% to 65% of premiums. We did not have the data. For that reason, I welcome the Bill in general.
Recommendation No. 12 on the quarterly publication by the working group of key aggregated metrics on claims, costs and trends was supposed to have been implemented by the second quarter of 2017. It was stalled due to the lack of consistent information across the cartel of large companies among insurance providers. A subgroup of the working group produced the first motor insurance key information report in July 2017 and a second report this summer.
I agree with the proposal in recommendation No. 13 to consider the feasibility of a claim-by-claim register. We should have all of the data available if we are to be able to examine the industry and what we can do to make it the kind of industry we want. The working group decided that a claim-by-claim register would not be feasible in the short to medium term, but it is something we should be working towards. Perhaps we should introduce legislation that requires the whole of the insurance industry to capture and anonymise these data so that we can utilise the information gathered. During the public consultation process, the Irish SME Association, ISME, suggested the raw data claims should be gathered and consolidated into aggregate levels.
Reasons were given for not progressing with recommendation No. 13, including the potential cost, a barrier to information gathering and the sensitivity of the data. On that last reason, every Deputy has been wrestling with our new GDPR legislation since 25 May. Throughout our careers in the House, each of us has always tried to protect our constituents' data, but we are now working under very strict guidelines. The Oireachtas staff have kindly set those out for us, provided us with consent forms and so forth. To some extent, the reason of sensitivity of data is understandable.
As the Minister of State knows, I have throughout my Dáil career drawn attention to the disgraceful and appalling level of casualties, both deaths and serious injuries, on our roads. As mentioned during our 24 or 30-hour debate on the Road Traffic (Amendment) Act 2018, many issues are involved, including the question of uninsured drivers, insurance fraud, automatic number plate recognition, stronger co-operation between the insurance industry and the Garda, the use of technology etc. All of these issues must be addressed. The next Bill that the Minister, Deputy Shane Ross, will introduce relates to speed limits, speeding and so on. It will be past timely. All of these are issues that the House has been lethargic in addressing, as we saw in the dreadful dragging of heels on the 2018 Act. We have not been prepared to go for the Vision Zero approach taken by Sweden and a number of other exemplars in Europe. Under such an approach, insurance premiums would by definition be much lower because the appalling casualty rate would be much lower.
Recommendation No. 30 was to expedite the development of the master licence record, about which I have asked the Taoiseach and Minister many times. The master licence record would enable us to collate all data on drivers across various databases. Outstanding road safety activists like Ms Susan Gray of Promoting Awareness, Responsibility and Care on our roads, PARC, have been calling for the master licence record for many years. Many other countries have one but we do not. It would provide easy access to see whether someone has broken a traffic or parking law.
In the past decade or so since its formation, the PSNI seems to have taken a more cutting edge approach in its application of legislation from Stormont and Westminster than we have in respect of our legislation. I hope that our new Garda Commissioner, Mr. Harris, will make this a clear priority in order that we can see a fundamental reduction in the number of deaths on the roads and a decline in insurance premia.
We have been calling for the roll-out of hand-held roadside devices to allow every garda to access all necessary driver information during road checks. Our Northern Ireland policing colleagues have access to such information, yet gardaí do not.
Recommendation No. 32 is to require the insurance industry to promote compliance with road safety legislation. It is incredible that such a recommendation is necessary. The insurance industry should be leading on this and demanding tighter and transparent road safety law.
The Bill will amend the Second Schedule of the Central Bank Act 1942 and section 22 of the Central Bank (Supervision and Enforcement) Act 2013. It is hoped we will have the database. The Minister of State might explain whether it will be operational in 2019. Clearly, we need it.
The subgroup, which was set up following the working group's report, included representatives from the Society of Actuaries in Ireland, the Central Statistics Office, the Personal Injuries Assessment Board, PIAB, the Central Bank and the State Claims Agency and was chaired by the Department of Finance. The six groups that made submissions during the public consultation process welcomed the genesis of the Bill, but an issue arose for some. The Minister of State might address it in his response. Why will it be the Central Bank where all of these data are located? Was a strong case not put for the PIAB?
Deputy Peadar Tóibín referred to the system in place in New Zealand, with which we have been familiar for a number of years. It led the way in dealing with personal injuries and trying to have a more transparent system. One wonders if it is something at which we should look again. In many ways, New Zealand has been the exemplar. It is an area to which we could look to dramatically improve our insurance and legal systems.
Section 3 has been worded in such a way as to allow the database to be extended to include other non-life insurance products. That is very welcome.
Sections 5 and 11 provide for expenses to be paid from moneys from the Oireachtas, not from the Central Bank's own funds. It is expected that these moneys will be recouped through levies imposed on the industry.
Subsections (6) and (7) of section 8 provide for the publication of a report at least once a year to include information on the relationship between premiums and costs. I welcome this provision.
I mentioned the publication of the second and final report of the Personal Injuries Commission. It found that the awards for whiplash were almost four and a half times higher than those in the United Kingdom. The Law Society of Ireland maintains that lower compensation payouts would not necessarily lead to lower premiums. The reality is that the insurance and legal industries have been gouging us during the years. I know that the Minister of State appeared recently on "Prime Time" in that regard. He seems to be suggesting that in the area of fraud, for example, it is primarily the responsibility of law enforcement agencies. We have overall responsibility to ensure, first and foremost, that they have the tools at their disposal. I know that the Minister of State is trying to put one tool in place today. We have the facts. I know that Mr. Justice Nicholas Kearns, in presenting the findings of the Personal Injuries Commission, stated he estimated that the cost of fraudulent claims could be between €50 million and €200 million per year, which is an unbelievable figure.
There is a sense of urgency about this legislation. The extraordinary role of the legal profession in setting its own fees and the influence it has on the book of quantum, also referred to in the programme, show that it escaped the rigours faced by every single profession and trade in the economy from 2008. It is the one profession which was not addressed. The book of quantum system seems to be badly outdated. It was an issue when I first entered this House. It enconpasses legal costs, legal fees, the basis of awards and how they are made. I remember asking the Comptroller and Auditor General to look at those issues. Clearly, we have not looked at introducing the necessary reforms. We need to deal with that issue, as well as addressing the issue of transparency in the insurance industry. It seems already inflated awards will continue and ultimately be paid for by the whole community through taxation. That is a key element of what the Government should have been doing in the past eight years following the verdict given by the people. In the coming months or next year, when a verdict has to be given, how the Government has managed the legal profession will be taken into consideration. I hope we will take action in that regard in the future, as well as driving the insurance industry towards becoming fully transparent and being able to give us the reasonable service we need.
With those caveats, I broadly welcome the Bill.