Dáil debates

Wednesday, 17 February 2021

Insurance (Restriction on Differential Pricing and Profiling) Bill 2021: Second Stage [Private Members]

 

11:15 am

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I welcome this Bill. The Social Democrats are happy to support it. It is timely that it has come before us. I commend Deputy Pearse Doherty on producing the Bill, which deals with one of the very important aspects of the scandal that is our insurance industry. While it is just one aspect, it is a very important one. It underlines that there has been a huge amount of foot-dragging in regard to the glaring need for reform in the insurance industry, one that has been long-identified, with many promises made to do something about it. A Minister of State was appointed supposedly to deal with this issue but little or no progress was made in that regard. I welcome this Bill as this is an important aspect that needs to be dealt with. I hope the Government will not oppose it, but will actively support and facilitate its early passage.

The legislation being debated today is a no-brainer. The issue of dual pricing is well known and widespread. The Central Bank report published at the end of last year served to confirm what we all already knew, namely, that new customers are incentivised to switch providers with attractive entry deals while loyal customers are served price hikes each year.

Dual pricing amounts to discrimination, particularly against older people and more vulnerable people, who are less likely to shop around and switch providers. The so-called loyalty premium is, on average, costing customers who stay with their insurance providers approximately €160 per year. That is a significant amount of money in anybody's book. The UK has already moved to introduce an outright ban on this practice.

One has to wonder why the Government's insurance reform programme has been so slow and ineffective. Despite knowing that dual pricing is a major issue, and having a report now that confirms this, the Government has already said it will not tackle this issue until after the Central Bank issues a final report this coming September. One must ask why that is the case and what the justification is for such a delay. The legislation on dual pricing is before us and is ready for the Minister. I urge him strongly to take it on board and to deal, at least, with the particular aspect of very problematic industry behaviour that is provided for in the Bill.

We in the Social Democrats have been very vocal in calling for reform of the insurance sector. High insurance premiums add significantly to the cost base of our economy and that, in turn, makes affordable insurance fundamental to the long-term interests of the country. It is a huge issue for both consumers and business. The higher premiums go, the more they push up the cost of living. Let us not forget the detrimental impact that astronomically high insurance costs had on the childcare sector at the end of 2019, when many crèches were facing permanent closure because one of their insurers dropped out of the market.

The report upon which this Bill is based is part of a scope of work by the Central Bank to produce statistics and investigate the basis on which insurers have been increasing premiums. However, the Social Democrats are not satisfied that the Central Bank is sufficiently consumer focused in its approach. This is a problem that has been of concern for some time and it needs to be addressed. The bank does not collect enough basic data, particularly in regard to premiums, and it is not active enough on issues concerning vulnerable customers, market concentration and market volatility. We have been calling for some time for a new consumer affairs committee to be established, the sole focus of which would be outcomes for consumers. Regulators should expect to have to answer far more regularly for their actions or, indeed, in many cases, their inaction. Such a committee could play a valuable role in bringing about accountability as well as highlighting where there are gaps in legislation or deficiencies in powers that are available to regulators.

Today's Bill deals specifically with dual pricing in the motor and home insurance sectors. It is welcome in its own right. However, everybody in the House is well aware that our insurance sector needs a much deeper reform programme to address problems right across the board, including health insurance, childcare insurance, public liability insurance and added issues in home and motor insurance beyond dual pricing. I want to focus on health insurance in particular. Approximately 45% of Irish people have private health insurance. According to a consumer survey a few years ago by the Health Insurance Authority, 51% of customers pay more than €1,500 per year for their health insurance, 73% of them have never switched provider and two thirds of those who have switched have done so only once.

The Social Democrats are fully committed to the Sláintecare plan for our health service. We know, as everybody knows, that we are in desperate need of a universal single-tier healthcare system comparable to that of every other country in Europe.

That means ultimately eradicating the need that people feel currently to take out expensive private health insurance.

Every day that goes by with the Government continuing to drag its heels in implementing Sláintecare is another day with discrimination in our health service based on ability to pay. We must eliminate cost at the point of access if we are to address inequality in healthcare in this country. Everyone is signed up to that approach and what we need is action on that. In the meantime, though, there is need for reform in respect of dual pricing within the healthcare area.

I have mentioned the crisis that befell the childcare sector approximately one year ago. It is a perfect example of how high insurance premiums can drive up our cost of living and force businesses to close as well. Families with young children in this country face crippling fees for crèches and Montessori schools. This is due in large part to the cost of high premiums being passed on to them. The problem may have temporarily quietened down as a result of Covid-19 shutting down crèches for much of last year, but it has certainly not disappeared permanently. The Government needs to act to reduce the heavy burden of childcare costs on families. One way of doing that is to tackle the issue of the cost of insurance premiums, ensure they are reduced and that the resulting benefit is passed on.

We know that in the area of disability there is discrimination as well. There is an issue in respect of insurance. Another point I want to make pertains to discrimination, in effect, in the insurance sector. Under the Equal Status Act insurance companies have an exemption whereby they can charge higher fees in respect of people with disabilities. The Disability Federation of Ireland has flagged this as particularly concerning when it comes to employment. The federation has seen several cases where people with disabilities had job offers rescinded when employers found out that hiring them would lead to an increased insurance premium. This area needs to be addressed.

Fundamentally, I warmly welcome this legislation. It is an important part of the insurance scandal that has to be addressed and the Social Democrats wholeheartedly support it.

In my remaining time I wish to make a comment on other aspects of insurance that are being addressed at the moment, including awards made and the book of quantum. What is envisaged at the moment and what is being proposed by the Judiciary are wholly inadequate and will not address the fundamental issues relating to the level of awards that have been granted and the resulting impact on astronomically high insurance premiums for businesses and the public generally. That is probably the most glaring aspect of insurance that needs addressing.

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