Dáil debates

Tuesday, 1 June 2021

Judicial Council (Amendment) Bill 2021: Second Stage [Private Members]

 

7:15 pm

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

The lack of affordability of insurance in this country has been a hot topic for many years and the source of much annoyance and anger for consumers. High insurance premiums add significantly to the cost base of our economy. As premiums go up and up, this plays directly into the increase in the cost of living. Affordable insurance, therefore, is fundamental to the long-term interests of our society and communities, not least in regard to protecting and creating jobs.

One does not have to look far to see how astronomical premiums have impacted on communities and individuals. As premiums increase, small businesses can be pushed out of the market by the crippling overheads they face, including in particular the cost of insurance. Let us not forget the major crisis that befell our childcare sector at the end of 2019, when hundreds of crèches faced closure due to the lack of affordability of insurance.

Before Covid-19 changed the landscape for summer festivals, they were already under threat from rocketing insurance premiums. One such festival that came forward about increasing costs was the Ballina Salmon Festival, whose premium increased from €6,500 in 2016 to €25,000 in 2019. The festival, which had been running for 65 years, finally had to shut because it had become completely unaffordable to take out insurance. When premiums are sky high, local services are forced to close their doors, businesses can fail, jobs can be lost and community groups can no longer afford to put on events. This has a considerable impact, not only on the economy but also on our community, yet despite the often devastating impact of high premiums, costs continue to rise. We know this. It is not news to anyone in the Chamber and it is long past time the Government sorted this out.

Why does Ireland face such high insurance costs? There have been many attempts to explain this away. Today we are debating the claim that awards are too high, which insurance companies maintain leads to spiralling premiums. I am not saying that high awards do not contribute significantly to high premiums - there is a certain logic and evidence behind that - but what we saw over recent years was a very successful portrayal by insurance companies of these high awards being a primary contributor to the cost of premiums. This argument has passed the buck, so to speak, onto judges and their legal system and, in doing so, effectively absolved the industry of responsibility.

The insurance industry heavily lobbied for new personal injury guidelines to replace the book of quantum. Its efforts were successful and these new guidelines took effect on 24 April. In its lobbying efforts, the industry was adamant that these guidelines would lead directly to a fall in insurance costs, and in some cases, a drop of up to 20%. It is worth noting that a number of judges, including the former President of the High Court, Mr. Justice Peter Kelly, have on record expressed scepticism as to whether lower awards would result in lower premiums. Serious doubts have been raised among the Judiciary about any benefit to policyholders, while the Law Society of Ireland has stated that the guidelines "swing the pendulum too far" in favour of insurers. The industry maintained that these new guidelines were necessary. Now that they have come into effect, policyholders need to see a return in the form of lower premiums - end of story.

The Bill aims to hold insurance companies to account for those promises by requiring them to report to the Central Bank in respect of how the guidelines have affected the cost of insurance.

The Social Democrats will be supporting this Bill. It is not a silver bullet for the many issues within the insurance industry, nor does it claim to be. However, it seeks to hold companies to account for their promises to lower premiums, if payouts are reduced. For that, we welcome this Bill. Oversight is desperately needed and this Bill aims to provide that.

Reform of the insurance sector is long overdue. While the Central Bank has begun to produce statistics and investigate the basis on which insurers have been increasing premiums, we cannot be satisfied it is sufficiently consumer-focused in its approach. It does not collect enough basic data, especially on premiums, and is not active enough in terms of vulnerable customers or market concentration and volatility.

How can we pinpoint the root of Ireland's high insurance premiums without sufficient data to understand the entire picture? We have heard a plethora of theories about high awards, fraud and exaggerated claims, but without the data we cannot address the areas which need reform and legislation. Where are the facts? Where is the evidence to support the industry's claim that high awards are principally to blame?

Ireland is often blamed for having a claims culture. This is what the insurance companies have told us to gain support for the personal injuries guidelines. Let us look at the numbers. There was a big rise in personal injuries awards between 2007 and 2016. They nearly tripled. However, since 2016, the number and value of awards processed by PIAB has fallen year on year. There has been a decrease of 11% in the number of awards and of 18% in the value of awards since 2016.

Let us look at one insurance category. In 2019, motor insurance accounted for 70% of personal injury assessments. From 2009 to 2019, motor insurance premiums rose by 35%, according to the Central Bank's annual private motor insurance report. It is a staggering figure. What if we look at liability across categories of insurance? Looking across motor, employer and public liability insurance categories, data from PIAB again show a decrease in each category, in the average value of awards, from 2018 to 2019.

There is little proof that high premiums can be directly attributed to high awards. We need more data to understand what is driving these skyrocketing insurance costs. My party has been asking, for some time, for a new consumer affairs committee to be established within the Oireachtas, with its sole focus to be outcomes for consumers across the board. Regulators should expect to have to answer far more regularly for their actions or, in many cases, their inactions. A committee could play a valuable role in bringing about accountability, as well as highlighting where there are gaps in the legislation or deficiencies in the powers available to regulators.

The bottom line is that insurance premiums are crippling for consumers, small businesses and community groups. The cost of insurance is a huge overhead for businesses and these exorbitant costs are passed on to consumers. Ireland was recently ranked sixth, in terms of the high cost of living, in Europe and 12th in the world this year. Our high cost of insurance directly contributes to the high cost of living for individuals and families. It directly impacts the quality of local communities, shuttering businesses and local services and forcing community groups to cancel events because they cannot pay the spiralling cost of insurance premiums.

Today's Bill will not fix all insurance issues but it makes a serious effort to hold the industry to account for its promises. I warmly welcome it for that reason. I commend Deputy Doherty on bringing this Bill forward and on his tenaciousness in pursuing the significant problems in the insurance industry, which the Government should have solved long ago.

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