Gerald Nash (Louth, Labour) | Oireachtas source

If the Cathaoirleach Gníomhach will indulge me for a moment, tributes were paid to our usher and good friend, Martin, by the Ceann Comhairle and others during Leaders’ Questions. I wish him well in his retirement after 25 years of outstanding service in the Oireachtas. I thank him for looking after all of us and our interests. It has been a pleasure to work with him. He always showed good humour in his work and that is always welcome, especially during anxious times for some of us in here. We appreciate his service and his work over the years.

This legislation is welcome but it is also late. Once again, the Government has waited until it was threatened with punitive action by the European Commission before acting to protect Irish consumers. Last July, the European Commission took the first step in infringement proceedings against Ireland for failing to implement the directive on motor insurance. In fairness, we are not alone in being tardy in introducing this legislation; that warning from the Commission was sent to 16 member states. It should not have taken the Commission to wave a big stick at us before acting on this one.

The warning bells on this issue were sounded a decade ago when Malta-based Setanta Insurance left its Irish customers out in the cold and out of pocket when the company collapsed. Some 1,750 Irish Setanta customers ended up pursuing their claims with the Motor Insurers Bureau of Ireland. Under this new legislation, those claims would now be met by a compensation fund set up in Malta. In the wake of the Setanta collapse, the MIBI was landed with claims amounting to €90 million and Irish consumers were subjected to premium hikes that followed the crisis. Under the new framework established under this legislation, the MIBI will still be the first port of call for affected Irish consumers but once the MIBI pays out, it will be able to pursue reimbursement from similar funds set up in the EU state where the insolvent insurer is based. This legislation will set out the framework for the presentation and processing of such motor vehicle liability claims to the MIBI, including a provision that claimants should receive payment of compensation within three months of the date their offer of compensation is accepted. This legislation will facilitate a comprehensive streamlining of the existing legal framework relating to the insurance compensation fund for motor insurance insolvency so that claimants will deal efficiently and directly with the motor compensation body, rather than dealing with different liquidators or motor insurance companies. This is sensible legislation which seeks to compensate victims of accidents in cases where, for example, the responsible insurer is insolvent, even if that insurer is based in another EU country. It will help to avoid another Setanta-like mess. When the legislation comes into effect, a Setanta-like crisis can never happen again. This, of course, will be cold comfort to those who suffered after Setanta’s insolvency but it at least ensures there can be no repeat of it.

When this legislation comes into effect, it will be the responsibility of the host country of the insurer to foot the bill through its own compensation fund. It will move us from operating a host-based system to a home-based system. A home-state system applies when the scheme covers policies issued by a domestic insurer that participates in the scheme, including its branches abroad. Of course, that works both ways and our compensation fund will potentially compensate EU customers of Irish-based insurers, should they fall into insolvency.

In the establishment of the new fund that will underpin this legislation, the Government must ensure the insurance industry does not pass the cost on to consumers who are already crippled by huge motor insurance premiums. I welcome the Government’s expectation that a new levy will not be required to establish the fund but the Government and consumer watchdogs must keep their eyes peeled for premium hikes as this new legislation takes effect.

We have seen a welcome fall in some aspects of the insurance sector and some insurance premiums in recent years but all the reporting suggests we will see price rises again this year. Indeed, Mr. Charlie Weston wrote today that we have seen, for the ninth successive month, a continuing rise in motor insurance premiums. To the best of my recollection, compared with this time last year, the price has gone up approximately 7.5% on average. This time, the insurance industry is blaming the increased costs of repairing modern cars for the planned hikes. Whatever the bona fides of that claim are, it is clear the insurance industry does not need much excuse for hiking premiums. In that context, the Government and its consumer watchdogs must be careful to ensure the industry does not use this legislation as leverage or as an excuse for further hikes.

It is sensible that the new compensation fund which will underpin this legislation will fall under the remit of the Motor Insurers Bureau of Ireland, which already compensates people injured in road-traffic accidents involving uninsured drivers or drivers who have fled the scene and cannot be traced. A welcome feature of the Bill is that it provides for the honouring of claims within three months from an offer being accepted by the policyholder. Customers of Setanta Insurance had to go through a long and drawn-out legal process to advance their claims and this legislation should prevent that from happening again.

In essence, this Bill will simplify the process for those who through no fault of their own, find themselves caught up with insolvent insurers based abroad but operating in Ireland. With this legislation in place, such unfortunate consumers will know who to go to pursue their claims and will have an assurance that those claims will be honoured in a timely manner. This sensible consumer-protection measure is long overdue and my Labour Party colleagues and I are happy to support it.

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