Thursday, 16 February 2017
Motor Insurance Costs: Motion
That Dáil Éireann shall consider the Report of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach entitled, "Report on the Rising Costs of Motor Insurance", copies of which were laid before Dáil Éireann on 24th November 2016.
I welcome the report and thank committee members who put significant amounts of time into drafting it and our public hearings in the course of our examination of the issue. While many are mentioned in the report, the committee secretariat needs a special mention because of the long hours its staff put into the research and presentation of the report. They were professional in their approach.
Arising from the 2016 general election and the general knowledge of insurance prior to that, committee members believed this topic was an important one that affected the economic growth and prosperity of the country. It affects every citizen and business. We need to do something about the rising cost of premiums for motor insurance and, as we found during our hearings, public liability, employers' liability insurance and so on.
We did go beyond the groups affected by motor insurance and we invited the Licensed Vintners Association and the Dublin publicans to give us their perspective on what they see as a huge threat to their business. Therefore, while we are talking about the motor insurance business it is the claims and the process leading to those claims for both motor insurance and other insurance that are driving up insurance premia. Over a three year period it was found by the Central Statistics Office, CSO, that insurance costs increased by 70%.
Speaking to the report and knowing the content of the Minister of State's report and following our recent exchanges with him our efforts in this area will be judged on the outcomes by those who are paying the premia. Those who are being ripped off by insurance companies and have to pay the premia will not thank us if we do not immediately implement the recommendations put before us today in the committee's report, and over a shorter period than envisaged by the Minister of State. There are 71 recommendations. I thank the Minister of State and his officials for the good exchange we had and the information they supplied us with that fed into the outcomes in the report.
It was clear during the course of those hearings that Insurance Ireland was not giving the full range of information it collects. Insurance Ireland makes available information to the Central Bank on the basis of the requests from the bank about the information required rather than the full extent of the information it holds. In the course of the hearings, the one issue that arose was the conflict between every single stakeholder and the lack of information. It is that lack of information that is causing a narrowing of the market to the few players we now have because when those who are outside the country seek to determine whether they will participate the only information they can get is through Insurance Ireland, and they pay dearly for it through an agent. That is what came out in the hearings.
The book of quantum, which is now updated but was not updated for some time, is a key factor in the debate because it informs the market and those outside of this country looking at the market as to what the potential claims might be. What we discovered was, for example, the significant difference between what is paid for whiplash in Ireland compared to the UK. As we said to the Minister of State this morning, there is a need to analyse the full extent of the awards made by the Court of Appeal and the other courts feeding into that so that the book of quantum can be an extensive analysis of the awards that are being paid out. Let us compare that then to the UK, Northern Ireland and other European Union jurisdictions so the judicial system can be informed of the amounts of money we are talking about. One of the main players is the judicial system and the awards process. While we recognise the separation of powers between this House and the judicial system it is only fair that we would say to judges that they should analyse the information that will be given to them in the context of the book of quantum. That would help them to be roundly informed of the issue. Following this debate I hope they will hear the concern Members have about the threat to the economy by way of the increases in insurance premia.
The examples we have relate to the various components of the SME sector which told us that insurance has increased beyond affordability for some businesses which could not get their insurance renewed because it was impossible for them. The extra cost they must pay is borne by the business and puts the sustainability of a business on the line, which mean it is a threat to business.
In addition, older people can no longer get cover. It just comes to an end. There is no regard for their accident-free record or the fact that their car has passed its NCT and everything is okay. It is just a decision by the insurance company not to provide cover. When pressed, companies give a quote that is so excessive as to be unaffordable. That is not fair to an age group that has worked hard to create the country in which we live. They have made their contribution and they should not be hindered in their efforts to get insurance.
Another cohort of people that wrote to the committee in considerable numbers was individuals returning from abroad and trying to get work. They found they were unable to renew their insurance easily on returning to this country. Likewise, young people living here who were new to the employment market who wanted to get insurance or those who had a car of a certain age could not get insurance. In some cases new drivers were not even quoted for insurance. There have also been ridiculously high increases in premia which is not explained in the documentation they receive from insurance companies. That is another gap in the information that should be available. People want to know why their premium has increased and what is going on.
It is clear that as insurance companies prepare for the next tranche of regulation they are covering their losses and potential losses to such an extent that it is not bearable in the market. It is also clear in the report that far from losing money insurance companies were making considerable amounts of money over many years. I accept they experienced a blip following the crash, as did most businesses, but that changed significantly subsequently. There is no real explanation for the increase in premia. That brings me back to our 71 recommendations and the report of the Minister of State.
I referred previously to the book of quantum. The other area, which I firmly believe is important is one I raised this morning with the Chief Whip and Minister of State, Deputy Regina Doherty, because she is responsible for the CSO Vote. The CSO should be involved in the collection of data on insurance because it is an independent and respected organisation with the capability to collect the data necessary and to make it available to the Irish market and also to those who might seek to come into the market. The office has a staff of 750 and it has the capability to do the work required. The office is professional and is recognised as such, which is hugely important. We should involve the CSO in what we are doing. I say that to counter the argument that it should be the job of the Central Bank. The Central Bank has abandoned the consumer. Having read all the complaints, I have come to the conclusion that it is not interested in consumer protection. I accept the office has an individual who has responsibility for consumer protection but I do not know anyone who has received protection. I do not know anyone who has got answers. Neither do I know any insurance company that has been hauled over the coals for its attitude to individuals in the marketplace. The individual person or small business seeking a quote does not matter to the Central Bank.
They are not significant enough in the big picture plan it has but they are significant to me and the Members of this House who represent them and who see at first hand every single day big insurance companies taking huge premiums from individuals who cannot afford to pay them. Yes, they must pay for insurance but not at the price currently being asked.
I believe the Central Bank's regulation of insurance companies needs to be far more heavy-handed in the context of making them comply. One factor that feeds into the increase in premiums is the fact that Irish companies are asked to pick up the tab for a failed insurance company. So many Irish people have been caught by a failed company with headquarters outside Ireland. We must find a method of ensuring they are regulated and that some fund is in place that can be relied on should one of those companies go bust in the future. To request businesses to pay for a business that has gone bust seems to be a perverse notion. If one of my competitors went bust, I certainly would not be looking to assist or bail them out. The Government needs to produce some strategy relating to how it deals with this.
The Personal Injuries Assessment Board has functioned extremely well but it needs to be modernised and its powers expanded. I know the Minister of State, Deputy Eoghan Murphy, disagrees with this and I understand his argument but I still suggest that if certain legal fees could be paid at that level, it might discourage those who are simply trying to cover their costs and get their affairs sorted from going to a higher court. The court would not be clogged up, more expensive lawyers at that level would not be required and the costs would be sorted out at that level. There are simple measures to implement legislation that has not been commenced that we need to consider.
The Minister of State needs to look at the legislation introduced by the former Minister for Justice and Equality, Alan Shatter, in respect of jurisdiction. This needs to be reversed. I refer to sending definite signals to the industry that the Minister of State means business. I admire the work he has done and his grasp of the brief but sending positive signals in a shorter period of time would tell the market the Government means business, is not rolling over any more, is acting in the interests of the consumer and will make sure that the Central Bank, the CSO and others will get into the act and ensure that premiums in the future are reduced significantly because people cannot afford them now.
I welcome the opportunity to address Dáil Éireann this evening on the report on the cost of motor insurance produced by the working group I chair and the report of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. A significant amount of work has been done by both groups and we have had a number of engagements, including one this morning. I will put some of the details of the working group report we have produced on the record of the House.
I am very aware of the importance of these reports and of the higher premiums people throughout the country are paying and the impact on their lives, businesses and ability to afford things generally as they go about their working week. This is why there has been a special commitment on the part of the Government to address this issue. It is why the working group's report has this dedicated timeline and these dedicated 71 actions. The Government is taking action on this, as is the Oireachtas. If we work together, we can bring stability to the market for motor insurance and deliver measures to ensure fairer premiums for customers. Our focus is on protecting the consumer while ensuring that we have a modern, transparent, stable and competitive insurance sector. I acknowledge the work of the report on motor insurance produced by the Oireachtas joint committee chaired by Deputy McGuinness and the work of the members of that committee and the significant amount of time they have put into this area. I thank Deputy McGuinness for his summary of that report and his earlier comments in the committee this morning. There is a considerable overlap between our respective pieces of work. In implementing the action plan outlined in the working group's report, which already has commenced, the Government will address many of the recommendations contained in the committee's report. The manner in which the committee has worked with the working group is the way we all should approach our work together to try to come to constructive solutions we can get through the House as quickly as possible.
I will put on record some of the action points in the working group's report in order that people can be clear about what we are trying to do with our 71 actions. Last July, I was asked to chair the working group report dealing with the various factors contributing to the increasing cost of insurance. We brought together various Departments to do that work, including the Departments of Finance, Transport, Tourism and Sport, Jobs, Enterprise and Innovation and Justice and Equality. The Personal Injuries Assessment Board was on the working group, as were the State Claims Agency and the Central Bank of Ireland. The objective of the working group was to identify and examine the drivers of the cost of insurance with particular focus on motor insurance - we have commenced work on public liability and employers' insurance - and to recommend short, medium and longer-term measures to address the issue of increasing insurance costs while taking account of the requirement for an economically vibrant and financially stable insurance sector.
I initiated the work of the group by establishing four subgroups to examine particular issues. They were understanding the motor insurance market, improved data availability, the cost of claims and other public policy issues. We then began consulting widely meeting with representatives from AA Ireland, Auto Records Limited, the Consumers Association of Ireland, the Freight Transport Association of Ireland, the Irish Brokers Association, the Car Rental Council of Ireland, the Irish Road Haulage Association, Insurance Ireland, the Law Society of Ireland, the Motor Insurers Bureau of Ireland, Tiomanaí Tacsaí na hÉireann and the CEOs from AIG, AXA, Aviva, FBD, Liberty Insurance and RSA Insurance. Further submissions were received from other interested parties and these were considered as part of the process. The work then began to build consensus around the causes of the problem and to identify appropriate actions to be implemented as soon as possible to restore some stability to pricing in the motor insurance market. Deputy McGuinness spoke about the blame game at committee level. My approach was to look to the future, move beyond that blame game and figure out how we were going to solve this problem. The committee and the working group share that approach.
The deliberations of the group culminated in the publication of the report on the cost of motor insurance on 10 January 2017. The report contains 33 recommendations and 71 actions in an action plan across six main themes. They are protecting the consumer, improving data availability, improving the personal injuries claims environment, reducing the costs in the claims process, reducing insurance fraud and uninsured driving and promoting road safety and reducing collisions. A number of actions are already under way and I am confident that the report's 71 actions will be implemented by the end of 2018 with 45 due to be completed this year.
Some of the key recommendations include actions to address the lack of transparency in the claims environment through the establishment of a national claims information database, which will be located in the Central Bank. I note Deputy McGuinness's comments about the CSO and I will come back to them later in the debate. Others recommendations include addressing the increasing level of uninsured driving through the establishment of a fully functioning database, which will allow An Garda Síochána to check insurance compliance through the use of technology such as automatic number plate recognition, addressing the issue of suspected fraud through the establishment of a database that will be funded by industry but held by an independent body and that will take into account data protection concerns and providing enhanced guidance in how to determine compensation for personal injuries claims through the establishment of a personal injuries commission.
I will now provide some more detail on some of these issues. One of the key findings of the report is the need to enhance transparency and facilitate the use of data sharing and collection to the level that we see in other jurisdictions. This was a common theme of discussions with a wide range of stakeholders and is a matter which needs to be addressed. Currently in Ireland, claims data related to motor insurance are available from a variety of sources. However, such data are not collected or produced for the purpose of improving transparency on emerging risks within the market. Pricing of insurance premiums reflects a current view on the likelihood and cost of claims into the future. Transparency of claims data could feed into insurers' current view of future risks and improve their ability to price more accurately and reduce the cyclicality of their pricing. It should be noted that no organisation is currently responsible for the collection of data from insurers for this purpose thus representing a clear information gap. The working group developed a phased approach to tackle this issue. In the short term, it recommended commencing a short-term publication on a quarterly basis of a number of key aggregated claims-related metrics to be provided by the insurance sector.
Work has begun on the implementation of this recommendation and a request for data will issue to insurance undertakings before the end of this quarter for completion. The metrics will then be published for the first time in the second quarter of this year.
This initial metrics publication will act as a stepping stone for the establishment of a national claims information database by the middle of 2018 which will provide more detailed claims information and should facilitate a more in-depth annual claims trends analysis. The Central Bank will hold this database. It is expected that the national claims information database will provide data on what claims are being made against property or for personal injuries, the legal and other costs that are being incurred and the channel of resolution and what impact that has on the final settlement, among other things. It should assist in identifying emerging risks in the market, such as claims trends and costs. The information will be collected and stored at a level of aggregation higher than individual claim level, that is, not on a claim-by-claim information basis.
The working group also considered the concept of a claim-by-claim register, but came to the conclusion that it does not, in the short to medium term, provide a feasible or credible solution. Relevant to this conclusion was the fact it has not been possible to identify an international precedent for such an all-encompassing claims level register and that such a register would carry a significant cost and lead-in time, both in terms of development and establishment. It was agreed, however, that consideration will be given to such a register at a later stage once the national claims information database is close to establishment in the first half of next year.
The second area where a data availability is an issue is in the field of uninsured driving. Figures from the Motor Insurers’ Bureau of Ireland, MIBI, show that the level of uninsured driving in Ireland rose from less than 5% in 2011 to 2013 to 7.1% in 2015. The MIBI is responsible for meeting the claims of those who have been in a collision involving an uninsured or untraceable driver. It pays out approximately €50 million to €60 million annually to meet such claims and this cost is passed directly on to motorists. The insurance industry estimates that this adds about €30 to each motorist’s premium. It is imperative therefore that we tackle this issue without delay.
The working group has recommended the establishment of a fully functioning database of insured and uninsured drivers to enable gardaí to check motor insurance compliance effectively. A project group has been established between the MIBI and Insurance Ireland to create a central database which will contain certain information required by the Road Traffic Act 2016, such as the driving licence number and policy number of each policyholder. The ultimate aim is to provide An Garda Síochána with a mobile app, on an authorised user basis, to allow for roadside access to the database. The report sets a deadline of the third quarter of this year for the database to go live for privately owned vehicles.
Fraud, like uninsured driving, has been highlighted as an area where more information can reduce its impact on the cost of premiums. While the vast majority of claims are genuine, there is a perception that insurance fraud is a victimless crime. Nothing could be further from the truth and claims, whether of an opportunistic and exaggerated nature or through highly organised crime rings, need to be addressed and made as difficult as possible to get away with. In this regard, the insurance industry has estimated that fraud costs it in the region of €200 million each year, adding approximately €50 to each premium. To deal with this problem, the report recommends the establishment by the end of next year of a fully functioning integrated insurance fraud database for the industry to detect patterns of fraud. It is likely to be modelled on a UK equivalent system, and will be funded by the industry but managed by an independent not-for-profit body. This will be progressed in tandem with actions to ensure any data protection issues are appropriately addressed.
Another core recommendation is the establishment of a personal injuries commission to investigate and make recommendations on processes in other jurisdictions which could enhance the claims process in Ireland. The terms of reference for that commission are set out in the report and they include the commissioning of medical research, benchmarking of international awards for personal injury cases, analysing and reporting on international compensation levels, and compensation mechanisms. The need to begin this work immediately has been recognised by Government and on 10 January, the Minister for Jobs, Enterprise and Innovation, Deputy Mary Mitchell O’Connor, appointed former President of the High Court, Mr. Justice Nicholas Kearns, as chairperson of that commission. The other members are representatives from stakeholders that include the medical, legal and insurance sectors as well as relevant Departments and agencies. The commission met for the first time on 10 February and has agreed a work plan.
While the above measures could be seen as the core recommendations, the report should very much be seen as a package of reforms which, when implemented together, will provide for greater stability in the pricing of motor insurance and will help to prevent the volatility we have seen in the market in recent times. This package of measures also addresses the issue of protecting the consumer, for example, through the extension of the current renewal notification timeframe by five working days. In addition, the Department of Finance is working with Insurance Ireland to develop protocols to require insurers to set out reasons for large increases in premiums and to assist returning emigrants by requiring insurers to accept driving experience from abroad where a person has previous driving experience in Ireland. We touched upon this in detail earlier today at the meeting of the committee. I note the Chairman's commitment and the committee's commitment to addressing this issue.
A portion of the recommendations also centres on reducing costs in the claim process in tandem with the running of the personal injuries commission. These actions will seek to maximise the usefulness of the Personal Injuries Assessment Board and to improve the book of quantum. Further reviews will also take place to examine the impact of the changes in the court jurisdictional limits, the setting of the discount rate in personal injuries lump sum awards, and the introduction of periodic payment orders.
The implementation of the review of the motor insurance compensation framework is also ongoing as we speak. The heads of a Bill are to be brought to Government by the second quarter of this year. Actions have also been recommended to develop a protocol to require insurers to require proof of a national certificate of roadworthiness, NCT, and to promote compliance with road safety legislation. Insurance Ireland will also present the working group with a report on the use of telematics in Ireland by the end of the year.
I will continue to drive the effective and timely implementation of this action plan over the next two years through the working group. In addition, the House should be aware that the second phase of the working group’s review of insurance costs has commenced, as I stated. Based on submissions we have received from the small business sector in particular, we will review and make recommendations to tackle the rising cost of employer and public liability insurance. This is an important issue from a competitiveness perspective, and we will be meeting the relevant private sector stakeholders over the next couple of weeks.
I appreciate the opportunity we have had today to discuss the important objective of reducing the cost of motor insurance. I welcome the constructive debate we have had at committee and look forward to hearing the comments of others in this engagement. I have said on a number of occasions that there is no silver bullet to stem immediately or reverse premium price rises. The Chairman in his own committee report acknowledged that as well. With the implementation of these reforms, however, as well as co-operation and commitment between all stakeholders - Government, the insurance sector and the wider Oireachtas - we can create a stable and more accessible market which can deliver fairer premiums for consumers without unnecessary delay. We can achieve the above for the consumer while also protecting the stability of the insurance market.
I thank the members of the working group who put in such a great time commitment and dedication that went above and beyond the normal commitments people make to such efforts. Given the importance the Oireachtas has placed on this issue, almost every Member of the House has been in touch with me about it. I know the Oireachtas committee has a commitment to this. I, as chairman of the working group, have a very strong commitment to this. That is why we have an action plan. That is why there are owners for each action who are responsible for making sure that they take place. That is why there is a timeframe in place for all quarters of this year and next. I have made a commitment to produce quarterly reports. In fact, we will be producing an interim report on a quarterly report to the committee following our engagement this morning. I am more than happy to appear again in front of the committee to make sure we get this done. It will take collaboration between the Oireachtas and the Government to drive these reforms of the insurance sector to deliver what people want to see, which is a fair and transparent market in order that the people can get insurance they can afford and go about their daily lives as they need to week in and week out. That is the commitment I have given to the committee and give to the House today.
I welcome the fact we are debating this report at last. This is not an issue that has sprung up overnight. The figures over recent years show the increase in motor insurance in 2014 was 11.6%, in 2015, there was a further increase of 30.8%, and in the twelve months leading to August 2016, there was an increase of 28%. The Minister of State has quite rightly said there is no silver bullet that is going to fix this. While we welcome the report and support many of the recommendations, we have to acknowledge that for many years there was total and utter inaction on behalf of the Government of which the Minister of State was a member in bringing about solutions to the issues that are facing so many people.
If we look honestly at where this originated, it goes back to last year in 2016 when we as a party brought forward a policy of recommendations on how to tackle the exorbitant costs of insurance. Subsequent to that, we tabled a Private Members' motion that was debated, voted on and passed by this House.
It was then taken up by the Chairman of the Joint Committee on Finance, Public Expenditure and Reform, and the Taoiseach, who engaged extensively with many varied groupings on what needed to be done to tackle the high cost of insurance. I compliment Deputy McGuinness and his committee and the many witnesses who came before it and engaged with it to examine what could be done to address this issue.
We have been three years examining this problem but I believe those three years have been wasted. Nobody will tell the Minister of State that their insurance premium has decreased in the past three years. I am sure my constituency colleague and the Minister's party colleague brought the example I am about to give to his attention. Only this week, the owner of a small courier firm in Mullingar, in my constituency of Longford-Westmeath, who has three vans on the road went to insure another van because he was getting additional work and he intended to employ another driver, both of which were to be welcomed. The insurance company sought €4,500 to provide that cover to allow the additional van go on the road. He could not do it. He bought the van and put one of his older vans off the road. That is sitting idle in the yard. When we consider the Minister of State's recommendations in terms of Objective 1, protecting the customer, that insurers provide additional information on the breakdown of the cost to consumers, that man must wait until the end of 2018 before he will get a breakdown of how the company came up with that figure. We are already three years in and some of the objectives will not be implemented until the end of 2018. It will have taken five years to have some of the issues resolved.
There is a reference in the report to further consultation and review on review. That is a concern because we will still be waiting in a number of months or years and the people about whom the Minister of State spoke, namely, the hard pressed motorists who rely on their cars to get to work and go about their daily lives, will still be paying high insurance costs in a number of years from now.
One of the main factors in the rising cost of insurance is the issue of personal injury claims, which the insurance companies have said has led to the huge increase in insurance costs in recent years. Despite that, in reply to parliamentary questions from my colleague, Deputy Michael McGrath, there has not been a significant increase in the payout of compensation in that time. The excuse the insurance companies are giving, therefore, does not add up.
It is fair to say, however, that the payout in terms of personal injury claims in Ireland for whiplash and soft tissue injuries is much bigger here than it is in many other jurisdictions in the EU. The Minister of State's report specifically recommends the establishment of the personal injuries commission, which he stated has already been put in place. That is welcome. One of the functions of that commission is to consider the introduction of an international benchmark for personal injury awards, which would bring Ireland in line with other EU jurisdictions. That would ensure that only genuinely injured people would get a fair settlement but it will not be implemented until the end of this year, quarter 4 of 2017. Ultimately, an international benchmark should reduce the costs and frequency of personal injury claims, which would in turn help to address the rising cost of motor insurance for both personal customers and the business community. I would have thought that such international information was readily available or at least it should be.
I refer to the role the EU plays in this area and the role our insurance companies play within the EU. Insurance companies can enter the market here from outside our jurisdiction and offer premiums at a very competitive rate because they do not operate under the same terms and conditions as insurance companies registered in Ireland. We know what happens when they go bust. It is left to the Government to pick up the tab, which ultimately results in the additional cost being passed to motorists in their insurance premiums. I may have missed it but I do not see anything concrete in the report in terms of how that issue will be dealt with in the future. If a company from outside this jurisdiction is offering a service or a product here it should adhere to the same terms, conditions and regulations that apply to the Irish companies.
On the question of safety and reducing the number of casualties, fatalities and collisions on our roads, unfortunately, the past 12 months was the first time in a long number of years that we witnessed an increase in the number of fatalities and collisions on our roads. The primary reason for that is lack of enforcement. The Minister, Deputy Ross, is on a crusade to reduce the drink driving limit but he and the Government would be better placed if they ensured that there was a greater Garda presence on our roads and that the existing legislation was implemented. That would do a great deal to reduce the number of collisions and fatalities on our roads.
I welcome that the report has been launched and that the Minister of State has set targets, which must be acknowledged. However, I am concerned about the length of time needed to reach those targets, some of which extend into quarter 4 of 2018. I ask that this aspect continues to receive the priority that is warranted and that, if at all possible, the targets would be accelerated because we need to ensure that returning emigrants, younger drivers and drivers with older cars can get a reduction in their insurance premiums and that they pay a fair price to have their cars insured on the road.
I do not doubt for a minute that the Minister of State has put a great deal of work and effort into producing this report and examining this issue over the last while but the level of disappointment and, in many cases, despair at the failure of this report, with all its recommendations and promised actions, to address it in any way that will impact in any meaningful sense on the tens of thousands of drivers who are in a desperate position because of the hiked insurance premiums is quite stark. Nothing in the report will impact directly on the extortionate profiteering levels of premium that mean many people are now literally, and it is not a pun, being driven off the road.
They cannot afford to pay the premiums being asked of them. They hoped this report would do something about it, but quite plainly it does not. The Minister of State put it mildly when he said there was no silver bullet. It is a phrase he used liberally in the various interviews he did at the time of the report, which was repeated in the replies to a number of parliamentary questions and in the introduction of the report. To say there is no silver bullet is putting it mildly. There is no bullet at all. There is no action which will actually impact on premiums in a way that would make them affordable. This is why people are worried.
The stakes in this are pretty high. The Minister of State mentioned Tiománaí Tacsaí na hÉireann. I attended its AGM several weeks ago. To be honest, I was quite shocked by the accounts I heard. Some of the taxi drivers told me afterwards they were literally suicidal because the premium on their car, which is their livelihood, had increased to such a point they simply could not afford it and their jobs were gone. The livelihood was gone. That was it, they were off the road. It is not exaggeration because we know suicides among taxi drivers spiked dramatically after deregulation. The Minister of State will remember there were protests a number of years ago by the predecessor of Tiománaí Tacsaí na hÉireann, Taxi Drivers for Change, because there was a terrifying spike in suicides among taxi drivers.
I witnessed a level of despair among people trying to make a living and working very hard. Taxi drivers have been hammered by deregulation over recent years and are struggling to make a living. For this to be loaded on top of them has broken the back of many of them. I will give some examples. In one year, the premium of one driver with no claims or accidents increased from €1,500 to €10,200. A new taxi driver seeking insurance on his taxi for the first time was quoted €11,000 third party only. This is unbelievable. In one year, the premium of another taxi driver with a full no claims bonus increased from €1,800 to €5,638 and his cover was reduced from fully comprehensive to third party. If drivers actually have a claim they are gone. That was the message. These are people without claims, including new drivers and people with a no claims bonus, who are seeing 300%, 400% and 500% increases. A taxi firm in Limerick, Tower Cabs, which has eight taxis, saw its insurance for the fleet increase 700% from €7,000 to €56,000. This is just not sustainable. It will be out of business if something is not done about this.
I have just come from a protest of taxi drivers, young people and pensioners. All of the drivers there said they are terrified about their premium coming up for renewal. They do not know what they will do. If it is anything like this, they just will not be able to afford it. What will the Minister of State do for them? There is nothing in the report that does anything for them. They will be gone. Taxi drivers are a critical part of our public transport infrastructure. They asked whether there could be recognition from this or any Government that taxi drivers are part of our public transport infrastructure, that we need them and that they should not just be thrown to the wolves and taken for granted as if we can do anything to them and they will just be there. They cannot do it any more. Many of them are being broken by the experience. Their mental health is breaking down, their livelihood is being taken from them and they do not know how they will manage. I appeal to the Minister of State. There has to be, because there is none, recognition of the role that taxi drivers as a particular category of driver play in our public transport system and premiums have to be set at a level that allows them to function in their job. If not, the Minister of State will write off the livelihood of thousands of people and it is not fair.
I have quoted examples of people who have had no claims. Obviously if there is a sustained record of accidents or bad driving a significant increase in premium might be justified, but in the day to day doing of a taxi driver's job people may have little prangs, but if they have a little prang now, even the smallest thing that is not their fault, they are gone. Only two insurance companies will insure them as it stands. I and the taxi drivers appeal to the Minister of State because it is a ticking time bomb for taxi drivers. They have no choice but to fight this. They have told me they are absolutely determined they will fight because their livelihood is on the line. I appeal to the Minister of State on this level.
The taxi drivers approached me and asked me to help them get a campaign going on this because they were so disappointed. The other groups who came along to the press conference we held today included students and young people who are banjaxed with these premiums. Young men in particular are affected. It is really putting them in a very difficult position. There are excessive premiums for older cars. Young people do not have much money and they buy older cars. Today, the USI president said young people are charged premiums of €5,000 or €6,000, which is three times what they receive in a grant but they need these cars. They cannot do it, which inhibits them from being able to apply for certain types of jobs. Students from the country in particular may have to go back and forth from college in the city to the countryside.
The other group involved is the elderly. For many of them, their car is their lifeline. It is their connection into society and their ability to get around. They are experiencing massive hikes in their premiums. As a category, they are being discriminated against. I want to emphasise the phrase discriminatory premiums. Particular categories are being targeted and tarred with one big brush, with extortionate premiums imposed on them because the insurance companies decide to do so. It is baseless. The elderly are much less likely to drink and drive, much less likely to go out in traffic and much less likely to drive at night. These are all the places that might put more in danger. However, they are hit with higher premiums.
There is no justification for these premiums because road safety has improved dramatically in recent years, with fewer collisions and fewer fatal collisions. This is profiteering. What is necessary is a cap on premiums. I would like a State insurance company, as there is in Canada and elsewhere. If the Minister of State is not willing to do this, and it is what is necessary, we need caps on premiums to make them affordable and we need an end to discrimination. There cannot be categories of drivers who are discriminated against and persecuted in this way. I appeal to the Minister of State that we need action or there will be an explosion of anger on this issue.
I welcome the two reports and compliment all involved. The major focus is on the cost of motor insurance but I wish to comment on the issue of public liability also.
The key issue is implementation of the recommendations and for people outside and in the House to achieve reduced motor insurance premiums. I have no doubt this is the intention of the Minister of State and the intention of the House. I would like to see more mention of proactive monitoring of the targets and finding solutions for many of the issues raised today.
Year on year we have seen massive increases in premiums. Deputy Troy referred to the figures and I will not go back over them.
The problem is that there is no competition in the marketplace. It is appalling that it took until January 2017 for the Government to respond to this crisis, despite the fact that in every constituency office across the country the young, the middle aged, the old and the returning diaspora were complaining that motor insurance costs were spiralling out of reach. We need urgent action and do not want to see this report gathering dust. The key recommendations outline what Fianna Fáil proposed in its policy previously. They need to be acted on. It is not acceptable that legal claim costs are the reason premiums are increasing. Over 70% of personal injury claims are settled out of court and we need more transparency on them. We urgently need to establish benchmarks for claims, some of which are far too high. We need to introduce an insurance fraud database.
The market is out of reach for most young drivers. How can they establish themselves as drivers and work up a no claims bonus when they cannot afford the cost of insurance at all? The cost for young drivers driving on a parent or guardian's policy has also gone out of reach. I welcome the working group's recommendations, particularly at the transparency end, to sort out any closed shop mentality prevailing among existing insurers. I will not go over Fianna Fáil's recommendations as they are on record. A lot of insurance policies for young drivers include the installation of telematic devices to track speed and driver ability. They should be compulsory for all young drivers. They would promote better driving and, more importantly, insurance companies could then be compelled to reward young drivers who used this system by greatly reducing renewal premiums if they abided by the telematics which transmitted information, both to the driver and the companies. These tracking devices should be available to young drivers, the elderly and returning emigrants who wish to prove their driving ability and avail of reductions in their premiums in the shortest possible period.
The Minister is not a member of either committee, but can he comment on whether his Department looked at different models of insurance such as a floor insurance, coupled with a Revenue tax on fuel which would ensure one would pay for the distances driven and lighten the undue burden on elderly drivers who are isolated and only use a vehicle for short periods?
I agree with Deputy Richard Boyd Barrett on the difficulty of public liability insurance. Unless somebody gets to grips with various organisations such as Tidy Towns and other community groups which do the work of the State in health services and other areas and ensures they can get insurance cover from IPB and others, voluntarism will go out of the window within ten years. Voluntary organisations cannot pay premiums and are struggling with spuriously lodged claims. Work signed off on by local authorities such as CE schemes should be covered and stood over by the local authorities and the State agencies the work of which they are doing.
I compliment the work of Deputy John McGuinness and his committee in producing this report which was published in November. There is commonality with a report produced by our own party early last year and one from January this year on how we might address issues such as the lack of transparency of data. There are also a lot of concerns about implementation.
Deputy Robert Troy gave some figures. He said there had been an increase of 11.6% in the cost of motor insurance in 2014, that in 2015 there had been a further increase of 30.8% and that, in the 12 months to August 2016, there had been an increase of 28%. In his opening comments the Minister of State said the objective of the working group was to identify and examine the drivers of the cost of insurance, with a particular focus on motor insurance, and to recommend short, medium and longer term measures to address the issue of increasing insurance costs. That is not enough. The historical increases have been too large and we need a reduction in insurance premiums, not just a levelling out. They have reached an unsustainably high level in the past two or three years and the success of the action plan will be measured by a reduction in premiums.
There was a lot of talk about data. I have given figures for the rates of increase, but other things happen which are not captured by data, in particular the number of people who fail to get quotes from motor insurers, particularly on older cars, even if they have passed the NCT test.
I wish the Minister of State well in the implementation of his report, but that is not my main concern. I have two concerns. First, I want the key recommendations made in the report which contains 33 recommendations and recommends 70 actions to be identified and the potential savings and reductions given. The Minister of State did this when talking about establishing the database when he said some €50 million or €60 million had been paid out for uninsured drivers, the equivalent of €30 in a premium. There is frustration among the public who are finding it very difficult to cope. A number of things can have more of an impact than others, although I am not saying they should not all be implemented. The Minister of State should consider which actions have the greatest potential for savings on premiums and which could be fast-tracked. He spoke about extending the period of the notice of renewal from 15 to 20 working days but the second quarter of 2018 seems to be an awfully long time to wait.
I am concerned about the drift in timelines and some of the targets are for the production of further reports, meaning that the impact on premiums is some way down the road. I wish the Minister of State well and hope his colleagues will row in behind him because he needs to drive this. In May 2016 I asked a question of the Minister for Transport, Tourism and Sport. He replied:
My Department has been pursuing for some time the establishment of a properly functioning motor insurance database with the insurance industry here to show who is insured and who is not. Such a database would facilitate enforcement by An Garda Síochána, and could make a significant contribution towards reducing the level of uninsured driving in Ireland.
In September 2016 I followed up on the issue. The reply on that occasion was:
Further discussions have taken place with the insurance industry during 2016 regarding the database, most recently a meeting between my Department, An Garda Síochána, the Department of Justice and Equality and the Department of Finance with Insurance Ireland and the Motor Insurers' Bureau of Ireland on Wednesday, 14 September 2016, with a further meeting planned for later this month. My Department understands from discussion with the industry that the industry hopes to have the database ready for use by An Garda Síochána, my Department and the Motor Insurers' Bureau of Ireland early in 2017.
In early 2017 I asked the Minister how he was getting on with his database. He reply was:
The establishment of the database is a complex piece of work, requiring the insurance industry to gather certain information from its customers which many currently do not have, and requiring IT changes to datafields and to policy documents. Until the design and project plan have been agreed, proposed dates for the database to become fully operational are obviously going to be tentative, but the insurance industry is optimistic that an initial phase of the database will be available for testing by end September 2017.
The drift of the policy is my concern, not the Minister's integrity or the plan. He needs his colleagues to row in behind him to support the active implementation of the plan in a timely fashion.
I welcome this debate. We are discussing two reports: the Minister of State's report and that produced by the Committee on Finance, Public Expenditure and Reform, and Taoiseach, which is chaired by Deputy McGuinness and of which I am also a member. My amendment called on the committee to undertake that work. The Chairman prioritised that work because we can all see the type of pressure that has been put on individuals and businesses throughout the State in recent years. It was about time that action was taken on this matter.
I appreciate that the Minister of State has put a lot of work into this, but I am frustrated by the amount of time it took him to begin the process. We questioned the Minister for Finance time and time again about when he would begin dealing with motor insurance. This predates the Minister of State's work because it has been going on for a number of years. I am saying this because the horse has bolted. We heard statistics from other colleagues in the House concerning the increases year on year, and I do not want to rehash those. We know, however, that over the past three years there has been a 70% increase in premiums. The Central Statistics Office says that, last year, premiums increased by just under 9%. Looking at the last quarter, increases were marginal and in some cases there were no increases, although the last month has shown a month-on-month rise of about 1.8%, which is alarming.
The insurance companies have done the dirty deed. They have completely and utterly fleeced their customers. They have done so because they pursued a reckless policy. They had a model which the ordinary lay person would say was based on taking premiums and then gambling with them, although they called that investing them in international stock markets. They gambled and expected a return of 4% or 5% on safe government bonds. However, because of what the ECB has done with quantitative easing, we all know that investing in German bonds, and in some cases in Irish bonds, means the returns are negative. That is what happened.
I mean no offence to any of the previous speakers but we are talking about things that are marginal to what happened over the past three years. That is why I was forced to amend the original motion. At the time, I commended the Deputy on bringing forward the motion, but it fell into that trap which is what the insurance industry wants us to believe, that this is about fraud, high legal fees, uninsured drivers or the risk of something that has not happened, such as Setanta Insurance or changes to the courts. That is all bullshit, however. It is absolute nonsense. That is not what caused a 70% increase in premiums. I challenge anybody, in either report, to show us that is the case.
The Minister of State's report talks about fraud in the context of a footnote. There are about 15 recommendations concerning fraud, which I welcome. Anybody who denies there is fraudulent activity going on in motor insurance would be a fool. We all have to work together to stamp it out and get to the core of what caused drivers to be fleeced. Some people who required their business vehicles to keep food on the table found their mental health was seriously impacted. There is no evidence to suggest, however, that fraud has increased over the past three years and the same applies to legal fees. The Minister of State's report says that increases in legal fees do not contribute to a significant increase in premiums. Of course they do not.
Meanwhile, the industry peddles the idea that it is because of Setanta Insurance. If Setanta Insurance had to pay up in the morning, it would cost €90 million, yet the insurance companies have increased premiums over the past three years by multiples of that. Therefore, it is not that either, so what is it? It concerns the model they had, which was rightly identified in the committee's report but is completely absent in the Minister of State's report.
The Minister of State's recommendations should be implemented, but let me add a caveat. In no way should we be privatising our police force. In no way should we be allowing multinational companies to fund members of the Garda Síochána directly. It is unacceptable and will not be accepted on Sinn Féin's watch. I understand the motivation for it. The Minister of State says it is being pushed heavily by the industry and that the model is in place in Britain, but it is a flawed model. The London Metropolitan Police has been doing this since 2012 or 2013, but it has also been doing other things. There is a privatisation agenda concerning the police and other sectors in Britain, but we should not follow that model.
Those recommendations are fine in other areas. The timeframe for them is incredible in my view. Some of them are obvious, such as the action points. For example, we are told the Department will monitor EU developments. I would have serious concerns if the Department was not monitoring them, so that does not merit being put down as an action point.
Another action point was for the industry to develop a protocol by quarter 2 and another one by quarter 4. As regards the third action point, the industry will say it has done that. The number of action points has been beefed up a bit with some things which are not really action points, but that could be seen as nit-picking.
My concern about some of the action points is the delay in implementing them. Let us look at drivers who had to leave this country. By the end of quarter 2 of this year we will have a protocol to recognise the experience of drivers who are driving in England. That does not make sense. Why is it not in the interests of the insurance industry? They are driving on the same roads. If I go to England my insurance premium does not go up and I do not have to get new insurance. In addition, we have to wait another six months to get a protocol agreed for those who drive on the other side of the road. It is incredible. If I go to France I do not have to get a special dispensation from my insurance company that I am going there for a month and will be driving there. If I am insured, the policy covers me across Europe. Why would one have to wait for six months when Insurance Ireland already has a protocol to accept the experience and no claims bonus of returning emigrants, which is available on its website?
If all of this had been implemented three years ago, would it have prevented a 70% increase in premiums? No, it would not. That is because something different happened. It was a flawed business model by the insurance industry. I am not quoting him directly but the then Central Bank governor, Mr. Honohan, said that they were involved in risky practices and started to use up their capital reserves. That is what happened. New CEOs were put in place across the insurance companies, and because this State makes it compulsory to have motor insurance, it was like shooting fish in a barrel. One after another, therefore, we got our increased renewals in. This report will not do anything about that, however, because the motion passed in this House was to investigate the Central Bank's handling of the matter, and it has not been done.
The Central Bank's handling of consumer protection issues, and this is not directed at any individuals in the Central Bank, whom I am sure are working hard, was pathetic and unbelievable. Some 15,000 people will be repaid for tracker mortgages. Some 22% of all payment protection insurance sold in this country was paid back just two years ago in the sum of more than €70 million. If that happened in any other industry, such as high street shops, they would all be in Mountjoy jail. It is big business, however, so instead of holding them to account we say they should pay for our police They give us a few pounds and indirectly employ gardaí to help them increase their profits.
That is what the Minister of State is doing here. The recommendation the Government brought forward is unbelievable. What is more unbelievable is the fact that the Government has not dealt with the boom-and-bust business model the insurance companies have used. That boom-and-bust cycle must be broken. They have sorted out their books and it is unlikely that we will see further massive increases. However, as somebody who 20 years ago began his first campaign outside of a political party on the rising costs of motor insurance, I guarantee that this will happen again unless the Government tackles the Central Bank issue or authorises direct state intervention in the insurance market.
I compliment my colleague, Deputy John McGuinness, and the committee on the work they have put into this. I understand and believe the Minister of State is very sincere on this issue and puts a great deal of work into it. It is absolutely necessary that we get most of these recommendations in place without delay.
The best approach for me, to be practical about it, is to give examples. These are examples that have come into my constituency office in respect of Roscommon, Ballinasloe and Strokestown. These are the cases my constituents in Galway Roscommon are bringing to me. A girl of 19 years with no penalty points and no claims has seen her insurance go from €3,500 to €5,100. Another young lady is 18 and a half years old and owns a car purchased by her parents at a cost of €2,800. The car flew through the NCT and has low mileage. Her insurance quotation was €6,500. The Minister of State might recall that one of the first items I dealt with when I entered the Dáil was the difficulty people with wheelchair accessible taxis were having. I had it out with the Minister for Transport, Tourism and Sport, Deputy Ross, about the case of a young man in Carrick-on-Shannon who bought a vehicle and obtained a grant to convert it. Prior to that, he had sought and been given an insurance quote of €4,000. When he went back, lo and behold, he was quoted €12,500. He went ahead with the business and is paying back an enormous sum each month. I was approached by another lady who sought insurance cover for a wheelchair accessible taxi and was refused quotations by nine companies. Among those companies was one which is involved in sponsoring the Special Olympics. What a fraud that is. I use that word. These people give money to sponsor the Special Olympics while refusing cover to a wheelchair accessible taxi.
I am aware of another case of parents who bought an eight year old car in the Dublin region. Coming from Dublin, the Minister of State knows that a Dublin car can have low mileage after eight years. In this case, the mileage was 60,000 km because the can had not been used much by the previous owners, an elderly couple. It was sold for €2,900. The car flew through the NCT. All it needed was a new set of tyres. It was a perfect vehicle yet no company would insure it. This is the latest problem. In recent months, eight, nine and ten year old cars are not being insured. We must look again at the practicalities of this. We have an NCT, which we all agree is a good thing. The NCT is very rigid and one will not get away with much. We all acknowledge that to be good. We then have a situation in which the Irish motor insurance business refuses to insure cars that have been passed by the system and are in excellent working order. A car might be bought by parents for a student in Maynooth or Dublin or Limerick, but that individual cannot get insurance cover. These situations are outrageous and it is getting worse. As colleagues have pointed out, we now find that more and more elderly citizens with impeccable records are being refused cover.
The following really annoys me. We have a good and rigid system of driving tests. Again, that is good. One has to go through ten driving lessons, a theory test and a driving test. Young people go through that but before they ever sit into their own car, they are penalised by the insurance business. Why should one penalise someone who has not committed an offence or received penalty points? All of these matters need to be looked at. We need a root and branch reform of the insurance business. The Minister of State is committed to doing it but it cannot be put off for a year or two. It must be done. In recent weeks, a situation was brought to my attention whereby a lady who was a nurse in a major hospital has packed her bags and gone to Australia because she could not get car insurance at less than €5,000. That is the reality of what the motor insurance business is doing to us.
I congratulate Deputy McGuinness, Chairman of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. We welcome the working group's report. The key issue is implementation and the reduction of motor insurance premiums. Premiums for consumers in Cavan, Monaghan and across the country are soaring while the Government drags its feet on the issue. Fianna Fáil has long called on the Government to act on the rising cost of motor insurance. In 2014, motor insurance costs increased at an annual rate of over 11% while in 2015, they rose by 30%. In the 12 months to August 2016, motor insurance costs increased by 28%. It is completely frustrating that it has taken until now for the Government to respond on this major issue.
Fianna Fáil proposed a policy in the middle of 2016 on motor insurance premiums and has contributed heavily to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach's report on the rising cost of motor insurance. These policies and reports require a Government response to tackle the issue. The key recommendations of the committee mirror what we proposed in our own policy and the key issue now is implementation. The report will be of no use unless it is followed by Government action and, ultimately, reduced motor insurance premiums. People are contacting my constituency office on a weekly and daily basis to complain about rising insurance costs. I have heard horrendous stories from people in my constituency who were involved in accidents with individuals that were uninsured. A person badly injured in such an accident is forced to follow it up with the Insurance Federation of Ireland for compensation. I am sorry to say that I feel it is a direct result of the Government's failure to address the high cost of insurance premiums.
Since January 2011, the cost of insurance has rocketed by 51% in some instances. Business customers needing to insure cars, vans, fleets and busses have fared even worse. Some people who have returned to this country to find a job or who have returned to work for the first time since the recession as self-employed business persons have told me they cannot get motor insurance. Fianna Fáil has raised this issue in the Dáil consistently and put forward numerous motions and published proposals to tackle these exorbitant costs. It is an issue that is affecting thousands of people across Cavan and Monaghan. Motor insurance is not an additional thing we need, it is a legal requirement. People are now seriously considering whether they can afford a car at all. It is a growing irritation among motorists who are having to fork out for insurance, motor tax and high fuel costs, many of whom feel completely ripped off. Businesses are also being hit with the rise in premiums squeezing profits and ultimately risking jobs.
It has taken the Government too long to wake up to the problem which had already become a crisis before it called on the finance committee to find ways to curb the rising cost of insurance. These recommendations were signed off last November, but it is only this week that they have come to Cabinet. There is no sense of urgency from the Government on this matter, which is deeply worrying for the thousands of motorists whose premiums continue to increase.
I am worried about the timeline being reported regarding implementation of the committee's proposals. It has been suggested that it could take as long as 18 months before certain measures, such as the creation of a detailed database to combat fraud, are implemented. This indicates that the Government is not paying the right attention to the crisis. The key recommendations around the following issues are mirrored in our policy and the committee's recommendations: protecting the consumer; improving data availability; improving the personal injuries claims environment; reducing the costs in the claims process; reducing insurance fraud and uninsured driving; and promoting road safety and reduced collisions.
I ask the Minister of State to take charge of the situation and ensure that these proposals are implemented without delay so that the rip-off culture which has been perpetrated by the insurance industry over the past number of years is effectively tackled.
The increase in motor insurance prices over the past three years is unjustified and unsustainable. It is placing major financial stress on citizens and businesses. Up to July 2016, motor insurance costs have increased by 30% year-on-year. The CSO figures over a three-year cycle show increases in the range of 70%. In some cases, insurance premiums and quotes have risen by as much as 200% and 300%.
The recommendations on the rising cost of motor insurance report of November 2016 need to be implemented as a matter of urgency. We need an integrated insurance database service. We need insurance companies to be mandated to explain why they are increasing their customers premiums. We need to strengthen road safety measures and enforcement of these measures. We need to clamp down on fraudulent and exaggerated claims and ensure that they are pursued and tackled more aggressively by the Office of the Director of Public Prosecutions and insurance companies.
As the report recommends, we need to examine the issue of returning immigrants accessing motor insurance and ensure that they are not priced out of the market. The Government needs to review and implement the recommendations of the report as a matter of urgency and not let the situation continue. Citizens and businesses are under significant financial pressure.
In 2002, the Motor Insurance Advisory Board made 67 recommendations on the insurance sector. In 2005, the Competition Authority published a report containing 47 recommendations on the insurance sector. However, not all of those recommendations have been implemented. Why were they not implemented? I hope that this report will not face the same fate. We cannot let the report gather dust. Its recommendations must be taken seriously because each day that passes means more businesses are being forced out of business by rising insurance costs.
People throughout my constituency in west Cork are continuously ringing my office and pleading with me to force action on this issue in the Dáil. Young people have to pay €4,000 or more to be insured, which is another attack on the people of rural Ireland. We have to use our cars in rural communities where public transport is not readily available. We need action. I ask the Minister of State to act immediately.
I compliment Deputy McGuinness, his team and the officials for their work. I shiver when I see a report or inquiry, with 71 recommendations - seven recommendations would be enough for action, and if we acted on five, three or four we would be doing all right.
The Association of British Insurance, ABI, which represents the views of the UK's insurance industry, stated that the average price paid for comprehensive car insurance in the fourth quarter of 2016 had increased by 4.9% on the previous year, the highest ever increase in England. In Ireland, there is a industrial problem of collusion across the insurance industry. What do people outside of the House think of us in here? They watch us all week and there is a frenzy in the media about scandals, intrigue, evasion, deception and God knows what. This is disgraceful. Some people tell me I have a good turn of phrase, but I do not have the words to describe what is going on.
I listened to Deputies McGuinness and Murphy speak earlier. We all have the same experiences every day of the week. Insurance costs have increased by 70%. Insurance companies are reckless and careless. Just when we came out of a recovery, they were mundane enough for a couple of years. I have been business for 32 years and know all about the cost of insurance. The insurance companies decided, systematically, to jack up prices three years ago. The fools keep paying because they have no choice. One has to have insurance to be on the road. There are uninsured drivers on the road because they cannot get insurance.
Deputy McGuinness referred to the book of quantum, judges and barristers - Deputy O'Callaghan is not here. The fat cats get fatter. There are payouts for whiplash and everything else. It is a disgusting racket.
We heard that people who drive taxis to cater for people with disabilities have been turned down for insurance. I have one myself and sponsored voluntary organisations. The system is obviously very corrupt. My insurance costs went up by over 40% and I got less cover.
Deputy Murphy mentioned young people. 17 year olds have to have 12 driving lessons, which I welcome, and then pass their driving tests but cannot get insurance. They are criminalised before they go on the road. It is not acceptable. I want to see action.
Deputy Collins mentioned a 2002 report which made 61 recommendations. A report in 2005 made 45 recommendations. That is a total of 106 recommendations, none of which were acted on. We do not want reports; we want action. We want to allow returned immigrants, those who want to go to work and those who want to play games in social clubs and community organisations to be able to get insurance. It is crippling the economy.
Many members of the Road Haulage Association have moved their businesses to England, Northern Ireland or elsewhere in Europe. They had no choice because of the cost of insurance premiums. The costs for a haulage company in my area increased by 200% and another's costs rose from €50,000 to €120,000 without any claims. It is a licence to print money.
If such people were robbing people they would be arrested and locked up. It is robbery without violence. I have experience of it. There were community employment schemes in Newcastle, Ballymacarbry and Ballybacon, but insurance costs increased by €1,000, which meant that the costs for the 15 participants increased from €50 to €150. But for the contact of Deputy Collins and BHP insurance the matter could not have been addressed. It gave me a quote that was €1,000 less. The company I had been with for more than 20 years, which we thought looked after us and with which we had a good relationship, said it wanted to match the quote. I will not say what I told it to do with the quote. We got the premium from BHP. That is an example of indecent, unashamed and corrupt theft from communities and young people. Anybody and everybody is fair game for such companies.
People driving a car, van, truck or tractor or a person in a motorised wheelchair are affected. It is outrageous robbery. It affects businesses right across the country. The Competition Authority is toothless, useless and fruitless. I mean that. It does not get involved with the issue. When companies were taken over, Quinn was blamed. I saluted Quinn. In fairness to the Fianna Fáil Government, it supported Quinn. When Fine Gael came into power, it dumped him down the river. We are supposed to be paying for Quinn and Setanta. We are being fooled.
The people expect the Legislature to do something for them. We are doing nothing. We are compiling reports with 71 recommendations. Serious legislation must be introduced. Insurance is one thing and health and safety is another. The NCT has to be paid for. We need some modicum of fair play.
Taxis over ten years of age have been put off the road even though they have passed the NCT and another test for luggage and everything else. The same is now happening to other cars that are over ten years old. It is a cosy cartel that stinks to high heaven, with the complicity of Government agencies. The Government is rubbing its hands and doing nothing about it.
No action on the report is expected for 18 months. A lot of people will be out of business or will lose their jobs and community organisations will have closed down by then. The courts will be allowed to carry on in a merry-go-round, revolving door fashion. People are given free legal aid to take on cases. Insurance companies are sitting outside of the courts. In my case, several claims were settled outside of the court and the insurance companies did not contest them.
It is bordering on total and naked corruption and it is disgusting in the extreme when, as I stated, a company insuring a voluntary organisation could jack the price up by €1,000. When we get a quote of less than €1,000, it says it will match it. It will come down further even.
There is then the ads on the television about the neighbour or friend "with his hand in my pocket" but these insurance companies have their hands in our pockets. They dig until there is nothing left in the pocket. They leave holes in the pockets of the people. The people are downtrodden. Older people who cannot get insurance for their cars to bring their wives to get their pensions or to the doctor or anything else out in the country are penalised altogether. It is totally outrageous and we are doing nothing about it. No disrespect to the people who gave all their time and work to it, but this report will not be acted on. There are too many items listed in it anyway. It will be filed away like all the other reports. We will have to build a new place for the reports that will be piled up instead of doing up the Chamber in the Seanad. We are the laughing stock of Europe and a laughing stock to the people, but the people are not laughing any more because they are so angry with us for being so useless in defending them from daylight robbery, scams and con artists. They are literally robbing us and having a good time at it and then sponsoring charities to satisfy their consciences. It is disgusting.
I welcome the opportunity to speak tonight on the issue of car insurance and the reports that are before the House. I will start with the committee report. It states that "[t]he single most important issue identified during [our] hearings was the lack of transparency and shortfall in data-sharing in the insurance sector". I am in favour of shedding light on the activities of a secret industry but I disagree with the statement. I do not believe that to be the single most important issue. The single most important issue is the fact that private insurance companies are making huge profits while utterly failing to provide affordable motor insurance for the majority of people. According to Central Bank data the Minister of State's committee got a hold of, these companies and this industry made €2.86 billion in profits on car insurance alone in the years 2002 to 2017. The committee must give more than a faint nod to that fact when it states that "the premise that recent losses are the reason for insurance premium rises does not hold". This clearly points to the fact of profiteering. The committee goes on to state that "claims and awards are not the driving force behind steep increases..." contrary to the arguments of the insurance industry. Those final words are mine and not those of the report. The report continues, "the level of premium increases far outstrips the actual increase in the amount of claims paid out by the industry." Therefore, the Minister of State's committee is underlining and backing up the argumentation made by motor insurance justice campaigners and socialists and we on the left that profiteering is the root cause, but does not have the courage to come out and say explicitly that that is the case.
Then we have the Government's report. The Minister of State wrote the introduction to the report. He states:
The burden for reforming the insurance sector naturally rests with the industry. I believe that participants in the industry recognise this and I am sure they will deliver the necessary reform to ensure a stable, transparent and open market place for motor insurance.
That is an incredible statement. Why on earth would he believe that the industry would deliver a stable, transparent and open marketplace. It does not and has never done so and it does not want to do so because it masks the trickery that takes place in order to accumulate those massive profits that I referred to earlier. Naturally the burden for reforming the insurance sector rests with the industry. The Minister of State might as well say that naturally the fox must be trusted to look after the chickens. There can be no faith or trust in the people who run this industry. It is not just we on these benches who say it. A hell of a lot of people who are being ripped off when buying car insurance would agree.
I will return to the committee report. Buried deep within it, there are a couple of points that point the way forward on the issue. A proposal that was made by our representative on the committee that the State assume the responsibility to provide motor insurance as an essential public utility and provide motor insurance on a progressive non-profit basis that takes account of people's ability to pay and this was recommended in the official committee report. The report actually outlines the steps that might be taken. One good recommendation is that "the Minister commission a study on the operations, benefits and weaknesses of state insurance models such as those in existence in Canada and New Zealand with a view to possible implementation in Ireland". That is a very good recommendation.
If it was taken up seriously, we might look at the example of the Canadian province of Manitoba. In 1971, a Manitoba public insurance company was established to provide basic compulsory car insurance. Forty-five years later it is still providing one of the cheapest car insurance services in North America. Part of its remit is to reduce costs through a transparent charging system that does not discriminate by profiling particular categories of drivers. Young drivers in particular in this country would be very interested to hear a little more about that. However, the Government's concern in its report is to bury recommendations such as that one. Why? It is because the Government supports a completely different model, which is a for-profit and pro-big business model. It is a model where the market is king. In other words, precisely the model that has failed tens of thousands - even hundreds of thousands - of motorists in this country.
We argue for a model of a completely different type, which is based on social needs and the needs of the motorists and which puts - Deputy Boyd Barrett will be delighted for the plug - people before profit. Those are the kinds of proposals that would be implemented by a left Government but we have no faith in the insurance industry to reform itself or in the Minister of State's Government to bring forward proposals of that kind, but it is what is needed.
I thank everyone for their contributions. I took notes and would like to touch on everyone's contribution, if I may, in the time that I have available to me. The Chairman of the Oireachtas committee commented on the deadlines and how we drive the implementation of this report. As I said in the committee today, we have to be realistic about the timelines in terms of certain actions that require public consultation if we are amending legislation or the building of a database and how long it will take. I put in timelines that reflect the time it might take but I have also stated that we will do it more quickly where we can. The House will start to see that in some of the updates that we provided to the committee in terms of the transparent reporting we want to do.
I spoke to the Central Statistics Office, CSO, about whether it would host a national claims information database instead of the Central Bank. If I am correct in my memory, its view at the time was that the type of information database that we were talking about would not be appropriate for it, which is why we went for the Central Bank in the end. A different type of claim-by-claim registering mechanism would be appropriate for the CSO but, as I mentioned in the committee, the time and cost involved would be unknown and I did not want to put something that could take five years and cost billions into the report. Therefore, we have gone with a national claims information database, which we think will be sufficient, to be hosted by the Central Bank. Certainly, regarding Setanta, it is essential. Unlike other contributions, I think this is playing upon the fears of insurance companies in terms of their reserving practices and work is being done at the moment to try to bring certainty in relation to the failure of an insurance company in the future.
The issue of introducing legal fees at the Personal Injuries Assessment Board was raised. Legal fees are there for a small portion of cases depending on the circumstances. We debated it at length earlier on and I take the Deputy's point. My view is that it could be inflationary in the short term without actually delivering the successes we might want to see. As I am quite focused on the short term and how we can help the situation for drivers in the next two years, we have not gone down that path.
I concur with the Deputy that section 30 must be commenced. This is set out in the report, as is action on the court jurisdictional limits. I will return to the importance the Deputy places on transparency because unlike the contribution made by the previous speaker before leaving the Chamber, this is incredibly important in terms of understanding what exactly is happening here and protecting consumers in light of concerns that the industry could take a dominant position in the relationship. The Deputy is right to focus on that issue.
I thank Deputy Troy for his comments. While I am aware that the problem did not spring up overnight, the troubling spike in premiums has only occurred in the past 12 or 14 months. The Minister for Finance was aware that problems were coming in the area of insurance and moved to examine the compensation framework for insurance first for this reason. We then examined flood insurance because of what happened last winter. That work was completed in June and in July I was appointed as chair of the working group to examine non-life insurance. We prioritised motor insurance because of the impact it is happening throughout the country.
The Deputy spoke of too many further reviews being done. The report speaks about actions such as establishing a national claims information database, a fraud database and an uninsured driver database, introducing new legislation and setting up a personal injuries commission. These are actions. Other areas must also be examined, for example, we must look at the models in place in Canada, Australia and New Zealand and do further work on international benchmarking. We are taking action by setting up new databases, introducing new legislation and establishing commissions. We will reform the insurance sector, which is the issue to which the report speaks.
On timelines, we cannot do everything at once. This means we must prioritise some actions over others and be realistic.
Deputy Troy is correct that there has not been a significant increase in the pay-out on claims in recent years. This is referred to in the report. However, there has been a major increase in reserving as a result of the uncertainty the insurance companies project in the future. Claims are not settled immediately and take a number of years to process. As changes are introduced, the amount of money companies must reserve also changes. For this reason, we must be careful in this regard. Deputy Pearse Doherty spoke about making changes quickly. If we can make changes quickly, they can be reversed again very quickly. How can we expect companies to operate in an environment in which they do not have certainty as to what exactly the market will be for them in the years ahead?
There will be three reporting periods for the personal injuries commission. As such, we will not wait until the commission concludes its work to find out its conclusions. Different reporting periods have been provided for in the terms of reference set out in the report.
International benchmarking cannot be done overnight. We cannot simply find out what the amount of claims is in another jurisdiction. We must ascertain precisely how other systems work, for example, what level of taxation applies, what is the population size, and how the social insurance system and health system operates. All these areas must be considered in terms of how a court may determine an award to be paid.
On freedom of establishment and freedom of services, EU legislation means this cannot be done on the same terms. The Central Bank scrutinises the businesses in question in respect of conduct of business. However, it can only consider factors such as authorisation and prudential work if it has established there. There is, therefore, a difference in this respect. From discussions with the Central Bank, I am aware that it is doing more work in terms of co-operation with other jurisdictions, for example, Malta, to ensure it is fully aware of what is happening in so far as it is monitoring and regulating insurance companies in its jurisdiction that are offering business in other areas.
Deputy Boyd Barrett stated the report did nothing and would not impact on premiums. I am not sure on what basis he made that statement.
Exactly, the Deputy believes it will not impact because I am not directly intervening on the issue of premiums. I do not have legal power to make such an intervention. I could not do so under EU law. The Deputy referred to my comment that there is no silver bullet. We must properly manage expectations. I cannot give people an expectation that I can change their insurance premium price if they contact me because it is not possible for me to do so.
It is not possible to introduce caps either. I must be responsible and I cannot promise something I cannot deliver.
I respect the fact that Deputy Boyd Barrett spends a great deal of time listening to the concerns of taxi drivers. It cannot be easy for them and I am aware of the frustrations and difficulties faced by individual taxi drivers. The industry faces particular issues because it operates as a public service and taxis take public passengers. A number of people share one vehicle and some use them for only a period. Many issues arise in this regard and a number of the issues set out in the report will speak to insurance broadly and this will impact on taxi drivers. The report also includes recommendations as to how this specific area can be addressed in future. We will look at that and see what recommendations could flow from that.
The Deputy pointed towards State involvement in the insurance market. If the State were to become involved in the sector, it would face the same costs and problems as private companies in respect of reserving, price and uncertainties concerning pay-outs. The insurance sector would pull out of the riskiest business, leaving the State exposed. As a result, the industry would make even larger profits because it would no longer take risky business. The State would have to take on risky business, which would result in a massive, unquantifiable explosion in costs and taxpayers would have to pay this liability at a point when they cannot pay any more. In addition, this approach would take a number of years and would not resolve the problems we have today or lead to reform of the insurance sector.
I will address Manitoba when I respond to Deputy Mick Barry's contribution because he referred to it specifically.
We must also consider moral hazard when it comes to driver behaviour. If everyone were to get free insurance, what would be its effect on the way in which people drive on the roads? This is not a casual or throwaway line about moral hazard. We would get some interesting feedback if we were to seek data on the effect on driver behaviour when people renting cars cover the excess versus those who do not do so.
Deputy Boyd Barrett also raised the issue of insurance costs for young and elderly people. Insurers must price based on the risk as they perceive it. If we bring transparency to the information, as the Department and the joint committee are proposing to do, we will be able to identify the actual risk. If we have the data, the insurance companies will be able to price insurance accordingly.
Given the time constraints, I will have to skip through my responses, unless I can have more time.
Deputy Breathnach raised the issue of competition. The lack of transparency in the insurance market is hurting competition. The joint committee focused on this issue. If more companies compete in the market in a safe manner under current Central Bank prudential regulation and the new Solvency II limits and everything else we are trying to achieve in the report, we will attract new entrants to the market in a sustainable and safe manner that will not result in the race to the bottom that we had in the past. The recommendations must be acted upon. For this reason, we have 71 actions stemming from 33 recommendations, with timelines and different owners for each action.
Telematics will revolutionise how we drive on our roads and the insurance sector. Some companies use this technology and we want more companies to do so. This is one of the recommendations and actions in the report.
We have examined different models of insurance and more work will be done in this area. Deputies spoke about having insurance costs covered through paying at the pump. This approach would penalise those who drive more. People may argue that those who drive more are more of a risk but that is not necessarily the case. This depends on the routes driven. A pay-at-the-pump model would be highly damaging for business. My initial view is that we should continue to look at models that are based on risk. We have discussed this issue previously but more work will be done on it. It is not, however, a priority because we need to fix the insurance industry we have now to get it to work for people who are purchasing insurance now.
We are examining the issue of public liability while I drive the implementation of the report. We will not have to wait for ten years to fix this sector. What we are trying do through the motor insurance report is a two-year process and the public liability side will be an addendum to the report. We are looking at having a time horizon of between two and three years within which we will have reformed the insurance sector.
Deputy Curran referred to levelling out premiums. As the proposed actions are implemented, we hope to drive fairer premiums for consumers. This would mean a reduction in the increase that consumers have experienced in the past couple of years. We will not return to the types of premiums we had ten years ago because they were not sustainable or affordable.
We have prioritised some actions over others. We had to put in place realistic timelines. The database on uninsured drivers will go live in quarter three of this year, starting with private vehicles. It will not be kicked out any further and the commitment on this in the report will be met.
Deputy Pearse Doherty stated the horse had bolted. This is because we did not have transparency with regard to data, information and the insurance industry. For this reasons, it was not clear exactly what would happen. Now that we are introducing reform and transparency, we will get a better idea of exactly what are the trends in the market and we will be able to take whatever actions are necessary in future to counter them. The boom and bust cycle is referred to in the report from the working group and measures have been implemented to prevent it. One of these is Solvency II, which is very important. The national claims information database will deliver the level of transparency we all seek and will also help prevent a boom and bust cycle developing.
I discussed with Deputy Doherty the increase in premiums at a meeting of the joint committee earlier. The Deputy makes relevant points in this regard. We can, in some ways, separate out the history and problems associated with the insurance industry. Part of the problem is that premiums were too low, in other words, underpricing. Part of the problem is the loss in yield from companies' investments abroad to counterbalance the risks they were assuming. Another problem is the recent uncertainties arising from changes in court jurisdictional limits, the introduction of PPOs, issues around Setanta Insurance and other matters. There are two different factors involved in the trend towards increasing premiums in recent years.
I am not recommending the privatisation of the police force and this is not provided for in the report. This approach is working in another jurisdiction and it is only sensible that we examine whether it could work here. I discussed the matter with Deputy Doherty in the committee and we will discuss it again. We should consider the issue to rule it in or out.
I cannot give a commitment on a timeline by which an action will be taken at European Union level because action must be taken in a co-ordinated manner involving 27 member states. It will probably not be completed before the Brexit process concludes, although I hope it will not take that long. How can I commit to a timeline that operates at EU level?
This is a debate on two reports. In the interest of fairness to the committees of the Houses, the protocol should be observed that it is the committee's report that is taken. However, that is a matter for the Business Committee. During the course of the this debate members were speaking to two different reports. Most of the criticism about timelines and so on relates to the Minister of State's report. Most of the reasonable contributions were on the committee report.
I am sorry that my socialist colleague, Deputy Mick Barry, is not here but Deputy Boyd Barrett might mention to him that as a socialist myself I accept fully the argument made about taxis. The organisation representing taxis did appear before the committee and made an excellent contribution. I agree that the taxi sector is a part of the SME sector that is weak because of the level of regulation and costs involved and it will not be able to sustain further years of nothing being done. Therefore, in some way, as part of the public transport system, it should be acknowledged and supported, if that can be done. The taxi sector is under serious threat in terms of its existence.
The Minister of State mentioned a lot of figures regarding the cost of insurance, as did my colleagues. We have all had cases raised with us at our offices. What I learned from the hearings is that there is a cartel-type activity going on between the insurance companies. For example, only two or three companies will quote people in the taxi business and such quotes are excessive and not sustainable. When it comes to the insurance companies - the blue books from the Central Bank - as rightly said by Deputy Mick Barry, the insurance companies made €3.1 billion in profits from 2001 to 2012 compared with a loss of only €330 million in 2013-2014. The pattern for them as far as profitability is concerned has been massively on the increase, with some blips along the way, but they would expect that. The insurance companies would have that factored in. What Deputy Boyd Barrett said earlier is true, namely, by comparison with the profits that are being made, the people in need of insurance are being squeezed so much they cannot take any more. As I said earlier, the Central Bank was asleep on duty in terms of regulating and protecting consumer rights. That is why I emphasised in my contribution the need for that protection to be extended and to be robust. That is a must in terms of anything that happens.
Rural proofing in terms all this is necessary. People who live in rural areas are faced with huge difficulties in terms of having no access to public transport nor being able to afford taxis for hospital appointments and so on. Now they cannot afford insurance. As stated by Deputy Mattie McGrath, even when a person over 70 years of age has a clear medical report, the insurance companies still will not insure him or her. In the context of the timelines to which the Minister of State referred, there may be issues he can deal with that will immediately affect the premiums for those sectors that are under so much pressure, for example, the taxi sector.
The Irish Road Haulage Association appeared before the committee. Its representatives pointed out that if its members can get re-registered elsewhere in Europe or if they can get re-flagging, they move out of Ireland and the loss to this country per truck is €250,000. How can we as a country sustain that? What we need is a single insurance market. The Irish Road Haulage Association representative, Ms Verona Murphy, made great sense. She pointed out the issues. As in the case of the individuals who are affected by premiums, the organisations that represent the bigger groups that are able to articulate their argument better have so much common sense to put forward. All they are asking for is for the Minister of State to take the action that is necessary.
The Minister of State told me this morning in relation to the European directive that it takes time for that to be teased out and so on. While that is happening, according to Ms Murphy on behalf of the Irish Road Haulage Association, businesses are going bust. They cannot take any more. I know from my background in the haulage business that there is very little mark-up in it. Businesses are trading on a wing and prayer. If we do not do something about the SME sector, including the taxi sector, businesses will not be with us. All of this is affecting our possibilities in terms of our economic development and in terms of the social affect it is having not only in cities but particularly in rural Ireland. As I said earlier, the timeline is crucial.
In terms of the profitability of insurance companies, I do not mind business making a profit once it does not do so on the back of a cartel or citizens being screwed. Something has to change. The Minister of State referenced the awards. We are always told by the insurance companies that the reason for the increase in premiums is the level and number of awards. I referred earlier to the profits being made by the industry. In 2013, the average award was €21,730. In 2016, the average award was €21,782 which means nothing has changed. The insurance industry's argument does not stand up. The argument around profitability does not stand up. The Central Bank should have been working with the industry such that there was no road bump in terms of costs. We should have had regulation, clearer understanding of premiums and we should have brought the public with us over the past seven years, but that did not happen.
I do not accept Deputy Mick Barry's argument about the information provided in the report. Deputy Boyd Barrett might pass on to him the point that there is nothing buried in the depths of the report. It is a report that has been supported by socialists and others alike. It is a report unanimously accepted by the committee. The information is not buried; it is in the report. I do not mind criticism but we all need to work in a constructive way to get the report right.
On legislation and the EU directive, the Minister of State must do something to speed up that process. Other members referred to legislation that was passed, parts of which have not been enacted and recommendations made but not implemented. It is in that context that the Minister of State should be ensuring tighter timelines. I referred earlier to the committee's officials, the excellent work they did, their professionalism and so on. The witness who struck a chord with me and others in terms of how forthright she was in the description of what is going on in this industry is Ms Dorothea Dowling. She has been a voice in this area for a long time. She reminds me of John the Baptist but she has not lost her head yet. She gives a true picture of the insurance business and does a good job. I encourage the Minister of State to bring forward the timelines to try to decrease the cost of insurance. I know he wants to manage expectations but perhaps we should examine the expectations of the insurance industry. It expects us to continue to protect it and to not acknowledge that it is a cartel.
Let us turn the tables on them and ensure they now feel the pinch from us, the elected representatives who represent the people.
I assure him he has not been a voice crying in the wilderness. He referred to the Business Committee and the request to have a debate on both of these reports. It was the decision of the Business Committee initially that both reports would be considered this evening. It was also the decision that if additional time was required, the Business Committee would favourably consider that in order that the reports could be considered further.
This was a very good debate. One gets the messages out and hears other sides of the argument. Maybe it is the job of the Government to order some time in regard to this. Let us have a full debate on it. Let us keep the heat on the insurance business.
I would have appreciated more time to address properly the concerns raised. I did not get to refer to a number of Deputies' contributions. They stayed here late on a Thursday to make them. I thought it would have been better to debate the two reports separately. It is typical when there are two reports on one issue to try to separate them. Of course, we can come back to debate this, or do so in committee, whatever is appropriate. If the motion is agreed to, the report will be agreed to.