Dáil debates

Wednesday, 13 March 2019

Business Insurance: Motion [Private Members]


2:10 pm

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

I wish to put on the record that I accept that the State has a significant role in providing and implementing a roadmap for all stakeholders regarding insurance and the level of awards. However, I also believe that the insurance industry needs to reflect on its current position, which in a period of buoyant profitability - three major firms made combined profits of almost €200 million last year - seems to involve them increasing premiums very significantly in certain sectors of the market, or else withdrawing from these markets altogether. In my view, insurers are being selective about the risks they will cover and are picking, choosing and pricing in such a way as to maximise their profits at the expense of small businesses in particular. I believe, and I think most people in the House will agree, that it is very difficult to justify such behaviour in an environment in which significant profits are being made.

What is most frustrating about the industry position is that its previous loss-making position was caused by its underpricing in order to try to capture market share. While I fully understand that this position became untenable and that pricing had to increase, the extreme ways in which many insurers have responded does not reflect well on them. In my view, we need a much more balanced and measured response from insurers: otherwise, they risk closing down many businesses, with major consequences for much of civil society as we know it.

I also agree that insurers are benefiting from changes in the market brought in by the Government and it is time for policyholders to be given a break. For instance, in putting in place the necessary legislation for the Setanta liquidation, namely the Insurance (Amendment) Act 2018, the Government took on board the views of insurers and the industry overall. Moreover, important changes have just been made to the personal injury litigation framework through amendments to sections 8 and 14 of the Civil Liability and Courts Act 2004, which provides for an earlier notification of claims to defendants. This will result in it being easier to challenge questionable claims. I also believe that the recently agreed protocol between insurers and the Garda, which was facilitated through the Department's fraud round table, is a significant move forward in enabling insurers to adopt a much more robust approach to questionable claims. I acknowledge that more work needs to be done. However, it appears to me that the industry wants to have its cake and eat it at the expense of policyholders, consumers and business people. They have become too risk-averse and seem only to wish to take on risks where there is the absolute minimum likelihood of a claim. While they rightfully argue that they are profit-making businesses and not charities, they also have a fundamental social responsibility to provide the service they have been licensed to operate in as fair and equitable a way as possible while obviously being conscious of the need to make a profit. I do not think they are currently doing this. I will touch upon some other areas. My time is short.

I have stated publicly on a number of occasions that the single biggest issue is the levels of award. In this regard, the Personal Injuries Commission reported, as I said, in September of last year. The outcome of this exercise was to highlight the award levels in Ireland. Payouts on soft tissue injuries are 4.4 times those in England and Wales. The Personal Injuries Commission, PIC, specifically recommended that action be taken to address this disparity through the establishment of the judicial council, and I have addressed that. The Judicial Council Bill, I expect, will be in the Seanad on Committee Stage before the end of this month. While the Bill has not progressed as rapidly as the Government would have liked, it will progress now.

On tackling fraud, I met the Garda Commissioner, Drew Harris, on 9 December following full consideration of a proposal that the insurance industry fund a dedicated insurance fraud unit within An Garda Síochána. The Commissioner concluded he is not in a position to approve such an initiative as he believes An Garda Síochána should only be funded from the Exchequer. I pushed strongly for the establishment of an insurance fraud section within the Garda National Economic Crime Bureau, GNECB. I have requested that this be considered and it is being considered. I have been in contact with the Garda on a number of occasions and even rang the Commissioner's office this morning. I do not have a response yet. I will pursue the matter because it does not really matter if the section is funded from inside or outside of the GNECB, provided we have a Garda insurance fraud section.

On an insurance fraud database, work is ongoing by the relevant subgroup within the Department of Justice and Equality with the aim of establishing an appropriate mechanism whereby insurance companies can detect patterns to assist in the combating of fraud. Data protection related issues, however, have dominated this group’s deliberations and ultimately made it impossible to establish the database by the end of 2018. Work continues in this regard.

I note the motion calls on the Government to facilitate the passage of Deputy Kelleher’s Civil Liability and Courts (Amendment) Bill 2018, which is on Second Stage. The Government stated that the objective of the Bill in seeking to deal with insurance fraud is acknowledged and, on this basis, the Bill was not being opposed. This approach was taken, however, on the basis that substantial amendments to the Bill will be required. These will be proposed by the Government on Committee Stage.

I will conclude as I have only a minute and a half remaining. I accept everybody’s bona fides on this matter and I believe most people accept mine. I am doing everything I can to try to ensure that the provision of insurance for businesses and people is being conducted in a fair and equitable way. I am not satisfied with the conduct of the insurance companies. As I stated earlier, these companies are having their cake and eating it. All of us have put our shoulders to the wheel to pass legislation and try to ensure we are putting a proper sustainable structure in place. We know from data that insurance costs have come down by 23%. The insurance companies, however, are increasing profits by repeatedly loading premiums on companies. That is not playing fair by any manner or means and I am not prepared to stand for it.

We have the opportunity in the Consumer Insurance Contracts Bill 2017, that I am highlighting today, where we can, with the co-operation of the House, put in place a much stronger structure so clients of insurance companies are protected more substantially than they are now. I refer to those companies from which consumers buy their products. It is not good enough and I am not satisfied with the insurance companies, three of which have announced profits of more than €200 million. Between them, eight insurance companies have between 89% and 92% of the market. Those figures are based on a seven-year average of market share of the eight companies in question. They are doing well and do not have to increase premiums on businesses annually in the way they are doing. That is not acceptable. Resolving this issue requires a carrot and a stick approach. I have tried very strongly to use the carrot approach, with the support of this House, for which I thank Deputies. If, however, that approach does not work, I will use the stick.


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