Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to address Dáil Éireann today on the Insurance (Miscellaneous Provisions) Bill 2022, which was published on Friday, 1 April. As Minister of State with responsibility for insurance, I move this Bill to address a number of insurance-related matters that have arisen after the publication in December 2020 of the Government's Action Plan for Insurance Reform.

The legislative measures outlined in the Bill will help to increase transparency and bring about clarity in the insurance market, benefiting policyholders and insurers as well as authorities. There has been a critical mass of reforms already achieved in the insurance space in recent years. I believe this has helped to contribute to a significant decline in motor insurance prices.

As we are all aware, the matter of insurance reform resonates strongly with people throughout the country, from individual motorists and consumers to the many SMEs that form the backbone of our economy. I am keenly aware that insurance is also vital to the operation of numerous community and voluntary organisations that make such valuable contributions at all levels of society. Through my regular meetings with people as well as the many useful debates we have had in this House, I understand the availability of affordable cover is critical to groups and individuals throughout the State.

The Government also recognises the importance of a sustainable insurance environment. As set out in the programme for Government, we are continuing to prioritise reform in the insurance sector. The importance we are attaching to this issue is clearly evidenced in the work of the Cabinet committee subgroup on insurance reform. The committee brings together a number of key Ministers and is chaired by the Tánaiste. As acknowledged by all stakeholders, there is no silver bullet to improve the insurance market environment, which is why we have adopted this whole-of-government Action Plan for Insurance Reform.

I am sure we will return to the matter of insurance reform more broadly over the course of this debate. For now, I wish to focus attention on the specifics of the Bill, which is closely related to our ongoing reform work. As mentioned, the aim of the Bill is to address a number of insurance matters that have emerged since the action plan was published. In summary, it will enhance transparency around the practice of insurers deducting State supports from insurance claim settlements; support the Central Bank's new regulations to ban price walking; provide clarity on certain provisions of the Consumer Insurance Contracts Act 2019; and protect existing Irish policyholders following the UK's departure from the EU by supporting the Central Bank's technical changes to the temporary run-off regime, TRR, for UK and Gibraltar-based insurers, thus ensuring such firms can continue running off existing contracts here.

I now propose to give an overview of the Bill and each of its five Parts. Part 1 contains standard legislative provisions that cover the Short Title of the Bill and its commencement, as well as some relevant definitions.

Part 2 provides legal clarity on the Central Bank (National Claims Information Database) Act 2018 on the ability of the Central Bank to collect data on State supports deducted from relevant claim settlements. As Members will appreciate, insurers may be contractually entitled to make such deductions in line with the principle of indemnity. However, this is part of a continuous process of improvement to the national claims information database, NCID, thus enabling deeper insights into this insurance activity. The NCID has already proven to be an innovative and unique data-gathering tool.

It has significantly enhanced the collection of statistics and the operation of the Irish insurance market, thus improving transparency and information. Building on that positive impact, collecting this additional data through the national claims information database will provide further evidence to allow the Government to identify future policy interventions. This, in turn, will ensure that any such measures are targeted and evidence-based.

Part 3 of the Bill is intended to complement the ban on price walking and protect consumers from unfair pricing. From 1 July 2022, a ban on price walking will mean that motor and home insurance consumers can no longer be penalised simply for choosing to stay with the same insurer, thereby ending the unfair practice of a loyalty penalty. This will make Ireland a leader in consumer protection as the first EU country to introduce such a ban. There are 2.2 million car insurance policies and 1.3 million home insurance policies in the Irish market. The Central Bank found that home insurance customers who remain with the same company for over nine years are paying 32% more on average than first-time customers. In the motor insurance sector, the loyalty penalty is 14% for those who remain with the same company for over nine years. The Bill will, therefore, require the Central Bank to report to me on the effectiveness of these measures. As such, prompt passage of the Bill is vital to ensure we get timely oversight of the effectiveness of the price-walking ban and can act swiftly if further measures are needed to tackle unfair pricing practices. This approach would also allow insurance providers to continue to provide discounts for new business customers. It will ensure that consumers retain the opportunity to get a better-priced premium by switching insurance providers. This approach, tailored to Irish market conditions, will facilitate competition, including by potential new entrants.

Part 4 of the Bill contains a number of technical amendments to the Consumer Insurance Contracts Act 2019 and aims to level the playing field for consumers and strengthen their hand in their dealings with insurers. First, there is an amendment to clarify that legal privilege is protected in the disclosure of information requirements. Second, the Bill clarifies that innocent co-insureds should be able to claim under a contract of insurance. Third, we are introducing a new and transparency-driven section 16B into the Act which will require insurers to notify consumers of any deductions made from insurance claim settlements, including deductions made in line with State supports received by the claimant. Insurers must also inform policyholders of the amount deducted and the reason for the deduction. Finally, section 10 provides for a consequential amendment to the Central Bank Act 1942 in respect of the powers of the Central Bank to enforce certain sections of the Consumer Insurance Contracts Act 2019. I acknowledge the work of Deputy Doherty in respect of that Act. Technical amendments have emerged since the Act was passed and I am sure Members will support them here today.

Finally, Part 5 of the Bill amends the European Union (Insurance and Reinsurance) Regulations 2015, which underpin the insurance temporary run-off regime, TRR. The TRR was set up to facilitate the orderly withdrawal of UK- and Gibraltar-authorised insurers from the Irish market following the departure of the UK from the EU. This was done to protect almost 35,000 Irish policyholders and to ensure service continuity of their existing contracts. The Bill will amend the 2015 regulations to address two technical issues identified by the Central Bank in respect of the temporary run-off regime whereby certain firms that also provide reinsurance, and those in liquidation, can use the TRR to run off their existing Irish insurance portfolio. It should be noted that other EU member states have introduced similar provisions.

The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach undertook pre-legislative scrutiny of the general scheme of the Bill and published its report in February. I thank the committee for its work and for facilitating timely consideration of the provisions within the Bill. I welcome the report, which sets out the committee's overall support for the general scheme. My officials have examined its recommendations.

On the recommendation to consider measures that would have a more immediate effect in deterring insurers from deducting State supports from claim settlements, I point out that in drafting the general scheme, the Department closely considered how best to address this issue. This included examining the possibility of legislating to recoup retrospectively the value of deducted State supports from insurers, a matter on which the Department sought legal advice. In light of legal challenges that could arise and the contractual nature of insurance contracts, the measures in the Bill are deemed an appropriate and proportionate approach to avoid unintended consequences. Importantly, they have been designed to ensure the Government does not pre-empt any legal ruling. The issue of State supports may be addressed in the ongoing business interruption test cases which remain before the courts.

The other recommendation of the committee was that the Oireachtas would receive details of the Central Bank's report on price walking on or before the second anniversary of the commencement of the Act. I concur with the spirit of this recommendation as I believe it provides an important layer of transparency and supports the democratic process. In this regard, I point out that the Bill already provides for a report to be provided six months after the first anniversary of its commencement. This will be laid before the Dáil in a timely manner and earlier than the 24 months suggested by the committee.

I welcome the constructive engagement from stakeholders throughout the consideration and drafting of the Bill to date. Officials have engaged regularly with the Central Bank of Ireland and views of industry have been invited and received. Officials have also consulted the European Central Bank, ECB. The Treaty on the Functioning of the European Union requires member states to seek the advice of the ECB on draft legislative provisions. We are awaiting a response on this consultation in due course and will continue to engage with stakeholders as we progress the Bill through the Oireachtas.

In conclusion, I reiterate the importance of the swift passage of the Bill. In particular, ensuring swift consideration of the legislation is important in order to get proper oversight of the price-walking ban, as well as the practice of insurers deducting State supports from claim settlements, as soon as possible.

The Bill is being advanced against the backdrop of the Government's ambitious policy agenda as set out in the action plan for insurance reform. I believe that through the Bill we will achieve further improvements in the insurance environment to the benefit of both policyholders and industry. We will continue our work to reform the insurance sector in order to improve transparency and increase competition.

Finally, I thank colleagues for their support for the Bill to date and I look forward to working with them to bring it through the Oireachtas as quickly as possible. I commend the Bill to the House.

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