Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank all the Deputies for their contributions to this extremely important and worthwhile debate. I will address all the points and the questions raised, but there are a few things I would like to add in response as well. I do not think I will take the full 30 minutes. I will try my best to get in and get us on the road. I look forward to engaging further on Committee and Report Stages in respect of the issues which have been raised today and on which we can provide additional clarity.

I reiterate that the Motor Insurance Insolvency Compensation Bill 2024 represents an important enhancement of the protection of motor insurance policyholders in line with the EU’s sixth motor insurance directive. Indeed, this goes way beyond what is simply required under the directive so it is simply false to say that this is just something coming from Brussels. We have complemented and enhanced this but I do not know if that is something Deputy Shortall wants to hear. Ultimately, this Bill is a vital because it will further protect customers and injured parties when an insurer becomes insolvent. It also very much complements and is a central part of the Government’s ambitious insurance reform agenda. I will touch on the latter a bit more in a moment. A few people raised it, and it is important to bring a little clarity to the debate by highlighting the statistics.

The Bill builds upon the existing insurance compensation framework currently in place within the State through the establishment of a compensation body with a centralised function to compensate policyholders and injured parties. This is a positive development for consumers, making it easier for claimants to seek compensation following a motor insurance failure. The Bill formally appoints the Motor Insurers Bureau of Ireland to this role. Ultimately, this legislation, when enacted, means that if a person has an accident and the insurer involved is insolvent, the Motor Insurers Bureau of Ireland will ensure that the claim for compensation is dealt with efficiently. The Bill sets out the framework for the presentation and processing of such motor vehicle liability claims to the motor compensation body, including that claimants should receive payment of compensation within three months from the date their offer of compensation is accepted.

Other provisions within this Bill will facilitate a comprehensive streamlining and enhancement of the existing legal framework relating to the insurance compensation fund for motor insurance insolvency such that claimants will deal efficiently and directly with the motor compensation body. Importantly, customers will go directly to the Motor Insurers Bureau of Ireland who will handle these claims, and will ensure that customers receive their compensation within three months of the offer rather than dealing with liquidators. Significantly, the Bill preserves the existing broad spectrum of compensation that is available domestically under the 1964 Act for claims relating to motor vehicle liability by allowing the compensation body to also handle, for example, claims on comprehensive motor policies, which predominate the Irish market, rather than the minimum bar of third-party cover as is the requirement under the directive. As such, we have tailored our approach under this Bill to meet the specificities of the Irish motor insurance market so that coverage afforded to individuals under the 1964 Act whose insurer goes into liquidation will be continued under the Bill.

As I mentioned earlier, a crucial component of this Bill and the EU directive is the move away from what is known as the host-based system to the home-based system for insurers. This means that if an insurance company is based in another EU member state and is selling into the Irish market, it will ultimately fall on that member state to pay if the insurer becomes insolvent. Irish policyholders will not have to foot the bill in such instances. Crucially, the cost of these claims will be met by the home country of the insurer, meaning that Irish insurance customers will not be footing the bill for insolvencies outside of Ireland. This change was partially addressed through SI 658/2023. This is also to be achieved under the Bill by establishing the home-based regime in legislation, and authorising the Minister to introduce regulations to establish a funding mechanism to require Irish-authorised insurers exporting motor policies across the EU to contribute towards the cost of insolvency compensation as they are now within scope under the home basis.

In terms of funding, the compensation body will have recourse to the insurance compensation fund to cover the costs and expenses of the compensation body while performing its duties under the Bill and to provide it with the funds it needs to compensate injured parties when such payments are due. In light of the change from a host-based system to a home-based system, sufficient flexibility should be retained in the Bill to allow the Minister introduce regulations requiring insurers writing risks outside the State to contribute to the financing arrangements. Accordingly, Part 5 authorises the Minister for Finance to introduce regulations to establish a funding mechanism to require such Irish authorised insurers to contribute towards the cost of insolvency compensation in respect of their cross-border business. Such regulations may empower the Central Bank of Ireland to establish a sub-fund of the insurance compensation fund into which contributions collected under this regulation should be paid. Any such financial contributions will relate to motor third party liability insurance carried on by Irish authorised insurers in other member states and, as such, should not impact Irish motorists. It is planned that these regulations will be developed in due course following the necessary consultation and consideration of the relevant issues, including, for example, the total gross written premium collected by Irish authorised insurers from cross-border risk, that is, adding up premium received in all foreign jurisdictions, and the specific nature of such cross-border business.

With respect to the costs and expenses incurred by the compensation body and the payment of claims by the compensation body, the Bill provides for a comprehensive and robust oversight framework of these expenses and claims payments. In addition to the necessary internal governance processes of the compensation body, and the internal and external audit processes for the compensation body itself, Part 3 provides for a robust review and auditing process, including that: an audit will be carried out by the State Claims Agency on a sample of claims on an annual basis; and a further ex ante check will be carried out by the State Claims Agency on certain claims above a material threshold before such a payment is made. Provision around this may be further clarified by way of an order issued by the Minister for Finance.

In response to Deputy Doherty's point, it is worth noting that a statement of the amount of compensation paid will be included in a report to be submitted to the Minister and laid before the Oireachtas and will be included in the report submitted by the Central Bank to the Comptroller and Auditor General for possible audit. Also, regarding the other point raised by the Deputy, pursuant to section 17, the Minister for Finance is required to specify an amount that is considered appropriate for the purposes of triggering a further ex ante review by the State Claims Agency of claims above that relevant amount.

The Minister will take into account factors that might impact the operational efficiency of the compensation by the including a requirement to make an offer and-or payment within the three-month deadline. Officials in Department of Finance have engaged extensively with relevant stakeholders including the Central Bank of Ireland, the State Claims Agency and the Motor Insurers Bureau of Ireland to determine an appropriate threshold in this context. The governance and oversight framework under the Bill needs to be balanced by ensuring that claims can be processed in accordance with the prescribed three-month timeframe under the sixth motor insurance directive in particular. This create challenges in terms of capacity and timing for excluding an ex antereview which have been extensively explored with relevant stakeholders. Our current understanding is that relevant stakeholders will be required to work within a timeframe of approximately five to ten days for the purpose of carrying out an ex antereview.

A number of Deputies raised the issue of delays and infringement. It is important for the information of the House to lay out the timeline. The Department received a letter of formal notice from the European Commission on 23 May of this year regarding Ireland's failure to completely transpose Articles 10a and 25a of the motor insurance directive before the 23 December 2023 deadline. The Department is now required to provide a written response to the Commission's letter before 23 July next and to submit its observations on the infringement processes and an update on the transposition process. Ireland remains absolutely committed to transposing the remaining provisions of Articles 10a and 25a by means of the Bill before the House as soon as is practicable.

Throughout the transition process, the Department fully engaged with the Commission authorities and provided regular updates on the status of our work and the complexity of our arrangements. This open and positive communication continues, including notification of the waiver of pre-legislative scrutiny and the Bill's status on the priority list for publication on the Government's spring legislative agenda. Following approval of the Bill by Cabinet on 28 May, a further update was provided to the relevant officials in the Commission. Engagement is ongoing and it is something that we are completely open to with the Commission.

It is important to look at the complexity of this Bill given that it is overlaid on existing domestic arrangements. In fact, live insolvencies are currently being worked through for both Quinn and Setanta. We also had and a shorter transportation period on this directive of 18 months compared with the regular 24 months which is the standard period. We were quite right to have a really large-scale stakeholder engagement. That will be crucial to ensuring this legislation works and also the fact that ultimately, as I stated earlier, we require primary legislation as opposed to simply using statutory instruments. As I stated we went way above and beyond what was required under the directive from the Commission. That is why we are absolutely committed to continue to push on.

Four or perhaps five Deputies referred to insurance costs in various sectors. It is a regular debate that has been happening in this House for a considerable time and will and should continue to happen. I will pull out one statistic from the CSO data. We can take snapshots at time but it is important look at this over a duration. Deputy Ó Murchú compared what is happening in certain sectors with it what is going on in the United Kingdom. Of course, we can easily compare insurance costs and in this jurisdiction with the North or indeed the United Kingdom and we can see where the favourable comparisons lie. The most recent CSO consumer price index for April shows that the price of motor insurance just increased by 1% month on month. However, altogether it was 40.2% lower than it was in 2016. That is a point to remember when we get caught up comparing one month with another. When we look back to what was happening eight years ago, the average rate is down by 40% which is considerable. I absolutely accept there are still challenges in not just that sector but more widely. We do not shirk away from those challenges as Deputy Flaherty laid out with the impact that the overall Government reforms have had and will continue to have.

Deputy Ó Murchú raised the issue of community festivals. I remember his colleague Deputy Paul Murphy talking about bouncy castles for the spring fair in Killinarden a couple of years ago and also provision in childcare centres. As he said, there have been some entrants into the market. Three weeks ago, I was privileged to welcome OUTsurance into Cherrywood adjacent to my constituency, bringing 300 new jobs. It is the largest company from outside this jurisdiction to come here for over ten years and will have a real impact on the market.

As Deputy Ó Murchú knows, my wife is a Montessori teacher. A couple of years ago she set out to establish a Montessori school. There was not a single provider in the market at the time. It was post Brexit. They had all left. There was one person who was providing for existing schools. We now have at least three providers in the market offering cover for crèches and Montessori schools. It is incremental process but it is real progress and the environment has changed. Do I hope and expect it to change quicker and more impactfully in relative terms? Absolutely, but it is important to highlight all those things.

Two weeks ago, I had an engagement with representatives of the Restaurants Association of Ireland. They laid out their ten biggest concerns and insurance has gone from second to eighth. The fact that they can work with brokers but also directly at source with companies has shown that there are now far more opportunities for restaurants, cafés and bars around the country than previously. The the reforms put in place by my predecessors - it was not me and so I am not exactly claiming this as my own work - have had a tangible impact despite the fact that there are always issues.

One of the big things that has happened in the past four or five weeks is of course the Supreme Court ruling in the Delaney case, ensuring that the injury resolution board and its awards will have a real meaningful impact. That will limit many of the vexatious claims and many of the extension of claims going through the courts and driving up costs. That only happened a few weeks ago. It literally happened the day I was appointed to this portfolio by the Taoiseach and I look forward to seeing it in real time.

I want to get back to the specifics of this important legislation. Deputy Doherty and others will engage further on Committee Stage imminently. It is really important that we continue that level of debate and focus on the specific questions that he raised that I have provides partial to full answers on now and we will get into the weeds of it on Committee Stage and no doubt on Report Stage. That will give us the opportunity to pass this legislation as expeditiously as possible in order to make sure that we can bring in this cover for consumers across Ireland as quickly as possible.

I thank all the Deputies and members of the Oireachtas committee for their contributions to the development of this legislation. The decision to waive pre-legislative scrutiny was extremely welcome. We have had a good wide debate here, albeit with a limited number of speakers which is understandable given the week that is in it. There is much more to discuss on the specifics of this issue. This important legislation will ensure injured parties will get their just compensation in a timely manner. I look forward to bringing it through the Oireachtas in the weeks ahead.

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