Wednesday, 13 March 2019
Business Insurance: Motion [Private Members]
I move amendment No. 1:
To insert the following after “to shop around for employer and public liability insurance”:“—secure a commitment from insurance companies to reduce premiums in conjunction with reforms being introduced.”
I thank Deputy Michael McGrath for putting forward this motion on business insurance. I will be the lead speaker on this motion on behalf of Sinn Féin as my colleague, Deputy Pearse Doherty, is away. My party is happy to lend its support to the motion as we believe much more needs to be done to tackle the major problem of high insurance costs. It is now so bad that it has resulted in business closures and job losses. It is almost a year since we last debated a motion on insurance in this Chamber and, unfortunately, the Government has made little to no progress since then. Sinn Féin has put forward one minor amendment to the motion, calling on the Government to secure a commitment from insurance companies to reduce premiums in conjunction with reforms being introduced. This is an important point, as reforms being sought in this area, including tackling fraud and updating the book of quantum, will benefit insurers. It is imperative that the benefits are also passed on to consumers. I hope the House will support the amendment.
Sinn Féin met the Alliance for Insurance Reform again recently. The organisation is working hard to lobby for action on the insurance premiums that are crippling businesses. It informed us that insurers are refusing to insure entire sectors of industry, such as play centres. This leaves businesses facing a choice between closing their doors or the high-risk option of self-insurance. A direct result of high insurance costs has been the closure of businesses. This is a serious problem, which is spreading like wildfire to other sectors, including charities, sports clubs, festivals, voluntary groups, playgrounds and local authorities. The Government must commit to taking serious action to help businesses that cannot get insurance cover.
The insurance system in Ireland is broken. It is possible to take the mistaken view that insurance companies are struggling to operate in the Irish market due to the much cited excuse of fraud and the high cost of claims but the reality is very different. The laissez-faireapproach of the Government to regulating the insurance market is a jackpot for insurance companies, and it shows. In recent weeks alone, Aviva Ireland posted profits of €113 million, an increase of €14 million on 2017. RSA Insurance announced profits of €35 million last year, while FBD Insurance reported a profit of €50 million.
At the same time, businesses are closing down due to ridiculously high premiums and young people are practically banned from the roads because they cannot pay €4,000 or €5,000 for one year’s car insurance. Insurance companies are posting profits of hundreds of millions of euro. This is a scandalous but not surprising given that Fine Gael is at the helm. Insurance companies play a major role in the economy as they provide services that citizens and businesses are required to purchase, whether that is motor, home or public liability insurance. This prominent and important position ensures that insurance companies are not comparable with other undertakings. They should, therefore, be required to be much more transparent about their premiums and, in particular, their profits. Insurance companies are, however, operating on their own terms and in a cloud of secrecy. They are often charging premiums that make no sense whatsoever and have no correlation with the risk or the claims. It seems the Government is unwilling to challenge this. Big business always comes first where Fine Gael is concerned.
The Government can take a much tougher stance in respect of insurance companies. I raised this issue with the Competition and Consumer Protection Commission, which is engaged in an ongoing investigation into insurance companies. The Government’s approach has been described as "death by a thousand consultations". That is an accurate portrayal of what is happening. It is ridiculous that all the Government can cite when asked about insurance is the cost of insurance working group. We need action and new laws. The industry needs to be challenged on its behaviour. We do not need report after report. We need tangible action.
Sinn Féin has been made aware of another concerning issue, namely, the way in which the Central Statistics Office, CSO, collects data on insurance premiums. The CSO has confirmed that when gathering data on the price of insurance, its staff identify themselves to the companies. This is a completely unsatisfactory way to collect what are supposed to be objective data. The CSO data, which supposedly indicate insurance premiums have been falling in recent years, have been widely disputed by businesses and motorists who argue they show the complete opposite of the reality on the ground. Figures from the CSO from January 2018, for example, showed a drop of 11.7% in year-on-year motor insurance costs and a decline of 6% in January 2019. If motorists were told they had experienced an almost 18% drop in their motor premiums over the past three years, they would laugh because these figures do not reflect the reality on the ground. The CSO data are then cited by Ministers as proof that the Government’s countless reports are impacting on the insurance industry. Our concern is that since staff from the CSO identify themselves, it is possible that some insurance companies would provide lower quotes than they would to ordinary consumers. Unfortunately, this possibility calls into question the accuracy of the data. A better way of collecting data is urgently needed.
The Joint Committee on Business, Enterprise and Innovation, of which I am a member, undertook an extensive examination of the costs of doing business in Ireland last year. A large number of business stakeholders appeared before the committee and almost every single representative of every commercial group cited insurance costs as a threat to the growth and viability of businesses. The Irish Small and Medium Enterprises Association, ISME, noted not only that insurance costs are high but that they are threatening enterprises in areas such as hospitality, distribution and retail.
The association went on to say that the solutions to its members' insurance problems are remarkably simple but politically challenging. They require facing down vested interests that view insurance reforms as costly to their livelihoods. The Small Firms Association stated that small businesses are facing an insurance costs crisis, with 81% of members experiencing a rise in premiums since last year. IBEC's submission stated that the recent upward trend in annual premiums is proving unsustainable for low margin businesses, particularly those impacted by Brexit.
The Government needs to get on top of this and start making tangible changes. Opposition parties, business groups and citizens have been plaguing the Government for years to do something about the rotten insurance system in this State, but very little has changed. The broken insurance system is bleeding ordinary motorists dry with ridiculous motor insurance premiums. The situation has become so bad that businesses are closing down due to rising premiums, with increases of 300% or 400% in some cases. This is pure greed on the part of insurance companies, which make hundreds of millions of euro in profit. They are being allowed to get away with this by the Fine Gael-led Government.
I thank Deputy Michael McGrath for tabling this important motion and I reiterate Sinn Féin's support for it.