Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I welcome the opportunity to speak on the Bill. There are many provisions within it but the primary motive for its introduction was to address an issue that came to prominence at the onset of the pandemic, namely, business interruption insurance in the context of Covid-19. Many businesses, primarily in the hospitality sector, held insurance polices that provided a degree of cover in the event of their premises having to close as a result of a Government or public order decision in the context of an infectious disease. As all present are aware, this led to several small businesses being drawn into a long and costly litigation process with an insurance company that refused to accept liability. I will not comment on the particulars of that case. Much has already been said about it.

What is at stake in the context of sections 2 and 3 is the deduction by insurers of Covid-19-related State supports from final business interruption insurance claim settlements. The Central Bank informed me in written correspondence dated 4 May that at the end of 2021 more than €163 million had been paid to 5,128 policyholders through settled claims and interim payments. This included 4,271 claims that had been settled fully and 857 claims that had received interim payments. It became apparent that insurance companies were deducting the value of State supports provided to firms during the pandemic from the value of the business interruption payouts. There are good reasons these State supports, which included wage subsidy schemes and were ultimately paid for by the taxpayer, should not have been allowed effectively to subsidise the insurance industry with a windfall. That is not the basis on which State supports were introduced or on which the taxpayer tacitly accepted to foot the bill. Many of these insurance companies have thrived during the pandemic, continuing to receive premium payments despite long periods of empty roads or shut businesses.

In March 2020, at the onset of the pandemic, I wrote to the Minister for Finance, Deputy Donohoe, warning that financial assistance and relief provided by the State should be structured and made with strict conditionality and that public money must not be diverted towards shareholders or used to cushion or protect profit margins.

Unfortunately, that is not what happened. We have seen companies that are receiving wage subsidy payments make dividend payments to their shareholders. We have seen insurance companies cynically deducting public moneys from insurance payments they are required to make to their customers. These were not the outcomes of the schemes taxpayers agreed to, but they are the outcomes that have come to pass through a lack of oversight of, and care for, public money.

Specific to the issue of insurers deducting State supports from insurance payments, it should be noted that, last year, the Minister of State, Deputy Fleming, was explicit in warning that insurance companies that did so would not be let off the hook. It is clear that he has since rowed back on his promise. The insurance industry has, in fact, been let off the hook and this legislation puts a nail in that. Through a freedom of information request I made on 18 January, we know he met with representatives of the insurance industry on 22 June last year and warned them that further Government action remained an option. We know that on 24 June, he received a submission regarding the issue of insurers deducting the value of Covid-related State supports from business interruption insurance claims settlements and warned of possible ministerial action in this regard. No such action has happened. It is clear that the only action the Minister of State has chosen to take is through sections 3, 4 and 8 of this legislation. In essence, it amounts to an information-gathering exercise and nothing more - zilch, nada - and the insurers are off the hook.

Sections 3 and 4 of the Bill will require the Central Bank to publish, as part of the national claims information database, data on any deductions from insurance claims settlements by insurance companies that relate to public moneys. Section 8 amends the Consumer Insurance Contracts Act 2019, which will require insurers to notify their customers of any such deductions. What will be done with that information and what will happen next? As has been noted, where public moneys are deducted from personal injury awards by insurers through recovery of benefits and assistance, RBA, schemes, those moneys must be returned to the State. However, this legislation makes no provision for such a scheme in this instance or, indeed, in the future. What action, if any, does the Minister plan to take once this information is disclosed? What possible ministerial action was laid out to him by his officials in a four-page document provided to him on 24 June, which has not been made public? Are these provisions the extent of his response, which is, in effect, to let the industry off the hook?

With reference to the recoupment of State money through RBA schemes, I want to make the House aware of a new method insurance companies are using to avoid and circumvent the legislation passed by this House. It involves settling claims of damages incurred but not for the loss of earnings. Such losses do not go to the individual if they were similar to the payments made by way of social welfare. This is a means of circumventing the return of moneys to the State. There is a major issue in this regard and it is one of the matters I will be examining next.

There are broader questions that need to be addressed as we reflect on business interruption insurance in the context of the Covid-19 pandemic. I recognise that in response to the crisis, the Central Bank set up a business interruption insurance examination and engaged with insurers on the issue. As I have said many times before, this stood in stark contrast to the actions of the Financial Conduct Authority, FCA, in Britain. The latter took a test case on behalf of policyholders and in the interest of the public. It took that case with a sample of 21 different types of policies, thereby providing clarity to as many businesses as possible. The situation here was very different, where the onus was on small businesses with limited financial clout to take test cases themselves, with no guarantee of success. I have engaged with the Central Bank on this issue and it has informed me that the FCA has legal mechanisms at its disposal that the Central Bank does not possess and which would require legislative changes. Has the Minister explored this issue and considered providing the Central Bank with the legal powers to take such test cases in the future?

Sections 5 and 6 of Part 3 of the Bill concern the issue of dual pricing, or price walking, in the insurance industry. This practice involves insurance companies using big data and algorithms to identify loyal and vulnerable customers who are less likely to shop around or are less sensitive to price changes and then targeting them with artificially high premiums. In simpler terms, it is a practice of price gouging that is recognised to undermine the consumer interests of loyal customers and to harm vulnerable groups. That is what it does. It also exposes the dangers of big data and machine learning with respect to customer rights. I welcome that the Central Bank is now taking action by banning this price discrimination, with effect from 1 July this year. I have campaigned on this issue for many years, first submitting a complaint to the Central Bank in October 2019. The bank responded and acted on that complaint. It is important that the regulations that come into force are kept under constant review. The Central Bank found that more than 2.5 million customers were paying a combined €187 million more than the actual cost of their policies. I hope these regulations will be successful in putting money back in people's pockets. That is what I set out to do and what I hope to see being done on 1 July.

Of course, this legislation does nothing to end dual pricing or price walking, despite previous claims to the contrary in the media and elsewhere by members of the Government. All it does is ask for a report, within 18 months of this legislation coming into force, on the regulations that will take effect in July. I would have expected such a report to be published in any case and doing so will not reduce insurance prices by a single cent. Nonetheless, we are not opposing this provisions of the Bill, although I question why we need legislation to ask the Central Bank to provide a report. To tell the God's honest truth, I think this is more about party politics than anything else.

I turn to other provisions in the legislation, some of which will amend the Consumer Insurance Contracts Act, as the Minister of State mentioned. I introduced that legislation in January 2017 before it was signed into law in December 2019. Sections 7 and 8 relate to and amend duties of disclosure requirements under the Act. This is a technical amendment to clarify the scope and duty of disclosure requirements after a claim has been made. Section 9 of the legislation amends section 18(4) of the 2019 Act by clarifying that insurers may exclude property loss or damage arising from certain forms of criminality from basic risks insured under a contract. Section 10 provides that the Central Bank will enforce a number of the provisions within the Act. Section 11 makes important provisions that provide for technical changes in regard to the TRR for British- and Gibraltar-authorised insurers in the context of Brexit.

Sinn Féin will not oppose this Bill, which includes several technical but necessary provisions in regard to the Consumer Insurance Contracts Act and the TRR. It should be noted that this legislation was touted as removing dual pricing from the insurance market and confronting the practice of insurers deducting State supports from business interruption insurance payments. It does not do so and we need to be honest and clear about that. Instead, it provides for information-gathering exercises. Price gouging through dual pricing will be banned by the Central Bank independently of the Government on 1 July. Unfortunately, there is no provision in the Bill to stop insurance companies from doing what they have done with Covid payments. While there is no harm in these provisions, they should be recognised for what they are.

There are big problems still to be resolved in the insurance market. Premiums remain too expensive and many businesses and community organisations remain unable to access affordable insurance cover. Despite personal injuries guidelines resulting in personal injuries awards falling by 42% through the Personal Injuries Assessment Board, PIAB, those reduced claims costs have not been passed on to consumers. My Judicial Council (Amendment) Bill 2021, which will be considered by the finance committee in the coming weeks, will require insurers to disclose whether, and how much of, such savings have been passed on to their customers. This would provide transparency and put pressure on companies to reduce premiums in line with reduced personal injury awards. Given that the Minister is so confident of the virtues of the reports he is providing for in this legislation, I cannot understand why he and the Government have opposed my legislation for the past year. In addition, promises to reform and rebalance the duty of care, which is essential, have not been acted upon by the Government despite years of delay. This legislation provides for miscellaneous measures in the insurance sector. We still are waiting for substantive measures to reform the duty of care. Small businesses and community organisations cannot afford to wait any longer.

As I said, Sinn Féin will not oppose this legislation. We recognise the limits of its ambitions, which are disappointing. The Government must act with speed to tackle the big challenges that remain in the insurance market. It must stop blocking the legislation I have introduced, as it has done for more than nine months. Let us get behind that Bill, which is now in committee, and push down insurance premiums for consumers across the board.

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