Dáil debates

Thursday, 25 March 2021

Civil Liability and Courts (Amendment) Bill 2021: Second Stage [Private Members]


6:05 pm

Photo of Gerald NashGerald Nash (Louth, Labour) | Oireachtas source

I welcome the opportunity to speak on this Bill proposed by Deputy Naughten. The Labour Party is happy to provide its support to enable the Bill to get to Committee Stage at least, where we can complete a more detailed analysis which is required.

The explanatory memorandum of the Bill makes some very interesting points in respect of the purpose of the Bill. I note that refers to "a perception that fraud and exaggerated claims have been increasing in recent years". I note the careful language used. The jury, as it were, is out on that particular claim. The figures the industry has published on its view of fraudulent or exaggerated claims are very much open to question.

The memorandum also states, "Businesses have faced soaring insurance premium costs as a result of the actions of fraudsters." It is at pains to point out that only a minority of claimants bring forward fraudulent claims to courts.

The Bill seeks to ensure that an automatic referral of a claim that has been found to be fraudulent would be made to the DPP, which could act as a deterrent to would-be fraudsters. This is a function that our courts already enjoy and an option that is available to judges sitting in adjudication on cases. By all means, judges and the court system should avail of the opportunities provided to them to make sure that fraudulent or exaggerated claims are moved on to be investigated by the relevant agencies and that justice is done in this regard. As other Deputies noted, fraud is not a victimless crime. We all pay for it through higher premiums and the increase in the cost of doing business that arises when there are fraudulent claims. Where fraud occurs, it should absolutely be rooted out and dealt with in a very severe and serious manner.

There is much that is wrong with the insurance industry. In an effort to fix those wrongs, I am not sure that I would necessarily start from this juncture. Experience and history show us that we must take everything the industry tells us with a liberal pinch of salt and not buy the line it is selling. Claims made by representatives of the industry a couple of years ago at the finance committee that up to 20% of claims are false, fraudulent or exaggerated have not been substantiated to anyone's satisfaction. A fact-checking exercise by thejournal.ienoted: "There is a large discrepancy between the low number of reported cases of fraud and exaggeration to gardaí and the estimated 20% figure stated [by the industry] in the instance of personal injury cases." The movers of the Bill are in danger of producing legislation that is in search of a problem. It would be letting the exceptionally profitable Irish insurance industry off the hook if we were to exaggerate the impact on premiums of what is, in the scheme of things, a small number of fraudulent claims.

Let us look at the facts around the cost of insurance in this country. There is a massive problem with profiteering and cartel-like behaviour in the sector. The accusation of anti-competitive practices and cartel-like behaviour is not my charge alone but what the Competition and Consumer Protection Commission, CCPC, described in its interim report, published last September, on its investigation into so-called price signalling in the motor insurance industry. Over a 21-month period in 2015 and 2016, the commission suspects that some motor insurers were systematically ripping off punters by co-ordinating market activity. That is code for operating a cartel-like system to stiff car owners. It is important to look at the facts in this regard. Between 2013 and 2018, motor insurance premiums rose by a massive 62%, on average, from €435 to €706. At that time, the industry persistently cried foul and put the increase in premiums down to rising claims costs. That is manifestly not true. In fact, claims costs rose by a mere 14% in that period. This issue needs to be addressed swiftly.

The Government and its predecessor have very dutifully done everything the industry has asked of them, but the industry has not reciprocated. We now know a lot more than we did before about the dynamics going on under the bonnet of this industry. The national claims information database, NCID, is operational. It has reported on motor insurance and the industry has been caught with its hands in our pockets. As far as I know, it has not yet reported on public liability and employers' liability insurance. Legal fees are one of the major contributors to eye-watering legal costs in this country. That needs attention. The work of the Judicial Council and the revised personal injury awards regime should see movement in this regard and a reduction in costs for business and ordinary consumers as a result.

As I said, successive Governments have been very malleable in meeting the demands of the insurance industry. It is right that awards for minor damages from which personal injury claimants almost always recover well should be drastically reduced. We all want to see that. We know that the small businesses that are in the firing line in this regard, including retailers, restaurants and cafés, are getting absolutely hammered on the cost of claims in respect of soft tissue damage and so on. That is a risk to businesses and jobs. However, even after the Government and the Judicial Council attended to this matter, we are still waiting for the industry to drop its premiums. The new regime can and will see claims costs go down at some point in time but it has not happened overnight. I am interested to know the Government's perspective on when that might happen. Insurance companies have yet to factor in the new regime and provide the reductions for consumers that the logic of the new system was supposed to deliver. The industry is coming up with excuse after excuse not to refund a few euro to car owners whose vehicles have been parked in their driveways for most of the period since Christmas. In a reply to me yesterday, the Minister for Finance, Deputy Donohoe, and the Minister of State, Deputy Fleming, stated that they plan to raise this issue with the insurance industry.

I have noted that there are a lot of things wrong with the way in which the insurance industry works in this country. Fraud is a problem and I am at one with the movers of the Bill that it absolutely should be rooted out in a deadly serious fashion. In doing so, however, we must not lose sight of the impact the actions of the industry itself is having on business and regular customers. We need to have a sense of proportion when addressing this issue. Our focus should be on the industry's cartel-like behaviour, price signalling, dual pricing, penalising of loyal customers on renewal, failure to refund hard-pressed customers at this unprecedented time and refusal to reduce premiums immediately in response to the new personal injuries regime. We know why premiums are out of kilter with analogous markets. It is not all down to the level of fraud that some claim goes on but which is unsubstantiated at this point in time. There is a larger question that we, as a Legislature, need to address. We know how it can be addressed but the insurance industry has been dragging its feet in this regard for far too long. This Government and the previous one has done everything the industry has asked of them. It is now time for the industry to act.


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