Wednesday, 13 March 2019
Business Insurance: Motion [Private Members]
I wish to share my time with the Minister of State, Deputy Michael D'Arcy.
I thank the Deputies for their contributions on the motion, which was introduced by Fianna Fáil. I thank Deputy Michael McGrath, in particular. The Government, and the Minister in particular, is aware that the issue of the cost and availability of business insurance, particularly employer and public liability insurance, is an important one for large and small businesses and community organisations in all counties. The contributions made today are acknowledged by the Minister of State, Deputy D'Arcy, who is the chairman of the cost of insurance working group. He is doing everything in his power to try to address the concerns, which I too have raised with him on many occasions. Many of my colleagues, both Ministers and Deputies, have raised these concerns across the board.
A number of questions were asked. Deputies Jan O'Sullivan, Broughan, Lisa Chambers and others asked about policyholders notifying insurance companies. Insurance companies should notify policyholders of claims made before settlement, the amount a claim is settled for and the reason the claim is settled. The Government is fully aware of the negative impact that a lack of appropriate communication in this regard can have on a business. We have heard about this from many Deputies. This exact issue forms the basis of recommendation 10 in the report on the cost of employer and public liability insurance. In addition, a similar recommendation in respect of motor insurance policyholders was included in the motor report. Having been unable to reach agreement with Insurance Ireland on a new set of guidelines based on those drawn up by IBEC and the Irish Insurance Federation in 2012, the Department of Finance is considering the merits of addressing this through primary legislation, specifically by an amendment to a Private Members' Bill on consumer insurance contracts.
A question was asked about the timeline for a recommendation made in the employer public liability report, namely, that the Central Bank conduct an analysis of the feasibility and merit of extending the database to employer and public liability insurance. I am informed that this will most likely be considered in the second half of 2019. That is the most likely time.
Let me touch on the Minister's powers. While the Minister for Finance is not in a position to direct insurers to provide cover or provide it at a particular price, he does have a role in setting out a roadmap for reform of the sector as a whole. That is exactly what he is doing. The recommendations in both the motor report and employer and public liability report are designed to do this. Ultimately, the overarching aim of the working group's reports is to make insurance more affordable and accessible to consumers, businesses and community organisations.
It is clear from the difficulties that small leisure-based businesses face in getting insurance that the Irish employer and public liability insurance market is not considered an attractive one for existing insurers or potential entrants. That is reflected in the very limited selection of insurers available to provide cover to them. In some instances, there is just one company and the companies are often based outside the State. As a consequence of this lack of competition, the price of cover being charged is in some cases exorbitant and it is not possible for businesses to pay. They have no choice but to accept the high costs or, as we have heard in many instances, go out of business. I have met many affected companies in my constituency, Meath East, and elsewhere in Meath, some of whose representatives are in the Visitors Gallery. They include play centres and businesses providing local employment and services for local people. Committees of parades that are to take place across the county this weekend have all faced increases in costs. This is not acceptable. I do not agree with it, nor does the Minister. Many have mentioned the awards and number of claims here by comparison with other jurisdictions. While it is hard to have much sympathy for the insurance companies when they made large profits last year, they feel they have to withdraw from areas they regard as loss-making. As we know, however, this is not the case.
The Minister is trying to create an environment in which the market is considered more attractive to new entrants. If this is accomplished, there will be more capacity in the market, which in turn means the risk will be distributed more widely across a larger number of companies, resulting in more competition and more affordable pricing. The problem is that once companies start to withdraw from a sector, it creates more exposure for those remaining, resulting in higher prices due to the greater concentration of risk on their books. We now see the higher prices and the limited scope in the market for so many who need insurance to provide services. It is important that we address this problem.
To make the Irish market more attractive, we must bring personal injuries awards more into line with awards elsewhere. The Personal Injuries Commission report has been very helpful in pointing out the disparity with England and Wales. If we achieve our objective, insurers will have greater certainty and predictability in regard to reserving. This type of stability should encourage more companies, domestic and from outside the State, back into the market and should be reflected in more competitive pricing. There is an onus on the insurance industry and legal profession to play their parts in changing things for the better.
The insurance industry is now once again highly profitable. While we want new entrants to the market, we need to see the current players displaying greater willingness to re-engage with areas of the economy where it has not been possible to obtain cover at a reasonable cost. The legal profession needs to acknowledge that a small number of solicitor firms seem, as a matter of practice, to advise their clients not to accept PIAB awards and that this type of conduct in many respects exacerbates the problem in an already difficult personal injuries environment.
I acknowledge that we have seen some tangible progress in addressing the cost of motor insurance, in no small part due to the Minister of State and support and collaboration from this Chamber and the Seanad. The increases seen prior to the reports' publications have ceased, and there appears to have been greater stability in that market over recent months. While we do not have similar data with regard to business insurance, including small business insurance, the reforms that are being made with regard to motor insurance, taken together with those contained in the employer and public liability report, complement each other. Their implementation should have a positive impact on the cost of insurance cover in the longer term.
I am concerned about small businesses and those who face a deadline at the moment, who do not have the ability to cover the increasing costs they are facing. That is the reason we must conclude the Judicial Council Bill so that we can recalibrate the book of quantum and address this issue and that the Minister and everybody in this Chamber can ensure the businesses that support local industry and employment can continue to prosper in their respective communities.