Pa Daly (Kerry, Sinn Fein) | Oireachtas source

When I see the Government coming back with new proposals I am reminded of Jack's mother when he came back from the market with three magic beans after selling the family's cow. This is the thing that is going to solve all our problems with the insurance industry. I worked in the courts for a few years. There was a judge from Athlone who used to say, when he thought that somebody was spoofing or not telling the truth: "When you are in a hole, stop digging". However, what happens with the insurance companies is that the Government seems to tell them: "Keep talking, we want to hear it".

For 40 years, since insurance was made mandatory, the insurance industry has made promises. It stated that if senior counsel were removed from cases, premiums would go down; if juries were removed from courts, premiums would go down; if the PIAB was introduced, premiums would go down and if the guidelines were introduced, premiums would go down. It was interesting to hear the Minister of State say, with regard to claims, that the cost of premiums reduced by 10.9%. However, that was after lockdown. As some of my colleagues said, the cost of premiums has gone up over the last decade while the number of claims has reduced by 25%. I do not believe a word the insurance industry says. I would listen more to some of the people I have represented in court than to some of the representatives of the insurance industry.

It is worth going through some of the various initiatives the Government is taking which are supposed to reduce premiums. I do not believe they ever will. Action has long been required but there is little doubt that over the last almost 50 years, particularly since 1976, the Government has failed in its attempts to bring the industry to heel. With regard to personal injury awards, a long and detailed process was undertaken by the Government. An action plan for insurance reform was the result, with 66 actions. They included reform of PIAB and reducing recourse to litigation. When dealing with insurance companies, and I dealt with many of them over the years, they often speak about material damage. Without having consulted with their clients who had taken out the insurance policy, companies decided to settle claims anyway regardless of what one said. It is easier, more efficient and cheaper for them to settle the claim despite what the client says. They do not care about the consumer or about people in general.

The implementation report of the action plan published in March has confirmed that the measures have had their intended effect. It states:

Average awards for motor insurance dropped from €22,158 in 2020 to €12,592 – a drop of 43%. [A drop of nearly half, as the Minister, Deputy McEntee, said.] Public Liability awards fell from €26,000 in 2020 to €14,776 at the end of October – again a drop of 43%. A similar reduction of 43% was experienced in the employer liability category – from €30,576 to €17,441.

However, did we see a similar drop in insurance premiums? No, and we never will. Some lawyers warned that the insurance industry would continue to set premiums as it wished despite the reduction in awards, and they were right. The insurance industry proceeded to do exactly that. It pockets the difference and drives up its profits. The amazing thing during lockdown was that the number of claims collapsed due to lockdown. What has happened since then? There is a paltry 10% reduction. When people pointed to the reduction in the amount of claims, the industry had another excuse. It stated it had to wait for the ones in the system to come through. That is rubbish. It is very telling that the Government proceeded down this path despite the industry and lobbyists offering no guarantee at all that the premiums would be reduced. They came back with other excuses. Saying they may do it over time is as much as the Government is going to get. They were not red-faced, unlike poor old Jack when he came back from the market.

3 o’clock

Civil law reforms are now coming in. I notice that the Government is taking the majority decision regarding litigation costs. The majority of the group that was set up said that it would be more fair and more consumer-friendly than the minority view, but because the insurance companies say it is the fault of the lawyers and everybody else - it is never their fault - that decision has been taken. It will not work.

The action plan will set out other reforms. Perjury is now a statutory offence. Perjury and false and exaggerated claims have all been highlighted over the years, not by consumers but by the insurance industry. The number of fraudulent claims is massively exaggerated. Everybody knows that. We have all heard the scare stories of the shenanigans but it is tiny minority of overall claimants. Insurance companies poured massive resources into catching fraudulent claimants, including the use of private investigators. However, they already use private investigators when there is a genuine claim. Where people were passengers in cars and were very seriously injured, they engage insurance investigators, people who traditionally have great access to information coming from various sources through their contacts, all in an attempt to denigrate the genuine claimants as well as the other ones. There is a specialised Garda unit, and it is my understanding that there is a significant difference between the insurance industry's estimates of the number of uninsured drivers and how many are out there in the Garda's direct experience. I am aware of that from speaking to members of the Garda myself. All that is to say that there is very much the means and will to catch fraudulent claims, but we do not see a decrease in premiums. The industry has to be dragged kicking and screaming time and again into reform.

Particular groups are facing a lack of options within the market and the office to promote competition in the insurance market needs to examine all the options to assist them, including subvention. The ultimate solution may perhaps even be direct State involvement in insurance.

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