Dáil debates

Tuesday, 4 April 2017

4:35 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

35. To ask the Minister for Finance the status of the second phase of the cost of insurance working group, with particular regard to the increasing cost of insurance for businesses; and if he will make a statement on the matter. [16512/17]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There has rightly been a significant focus on motor insurance in recent times, but there has been less of a focus on business insurance, which is the subject of this question. I am asking about employer liability insurance and public liability insurance, in particular, because businesses across the country are facing an insurance crisis. The cost of some premiums has increased by 30%, 40% or 50%. Unfortunately, it is not uncommon for premiums to double. This is a huge issue across the country.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The working group on the cost of insurance, having published a report on the cost of motor insurance in January, has now commenced the second phase of its work, which involves addressing the cost of insurance for businesses, specifically employer liability and public liability insurance. As Minister of State at the Department of Finance, I chair the working group, which comprises representatives from the Departments of Finance, Jobs, Enterprise and Innovation and Justice and Equality, as well as the Central Bank of Ireland, the State Claims Agency and the Personal Injuries Assessment Board. The working group intends to build on the work done in the previous phase as it relates to public liability and employer liability claims. It will examine personal injury data and information, the effect of legal costs and litigation processes on insurance costs, current claims compensation arrangements and the cost of claims, and the impact of unlawful activity on the insurance sector. The working group is considering the impact of the cost of insurance on the competitiveness of particular businesses, the impact of health and safety issues on the cost of insurance and other related market issues it identifies.

The working group held its first meeting on 26 January 2017 and met five times so far this year. During this time, it has held extensive consultations with a range of stakeholders, including the Irish Business and Employers Confederation, the Irish Small and Medium Enterprises Association, the Vintners Federation of Ireland, the Licensed Vintners Association, the Retail Grocery Dairy and Allied Trades Association, the Hotels Federation of Ireland and Chambers Ireland. Further consultations are planned. Submissions have been invited from interested parties. Like it did during the first phase of its work, the working group will make recommendations based on its consultations and research. Lead owners will be tasked with the execution of the actions required to implement those recommendations. It is anticipated at this stage that the second phase recommendations will take the form of an addendum to the existing report, as many of them will build on the recommendations in the report on the cost of motor insurance.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State. As I said in my introductory remarks, the cost of business insurance is causing a real crisis around the country. I have a list of examples. A hotel in rural Ireland has seen its insurance costs increase from €22,000 to €40,000. A small pub that serves food has been quoted €45,000 for insurance. An issue seems to have arisen with litigation-based insurance, such as employer liability and public liability insurance, because of the lack of predictability and the inconsistency in court awards. In some cases, businesses are taking the risk of not having any insurance at all. They are being forced to take that crazy risk so that they can stay in business. I need to see a sense of urgency in tackling this issue. We will hold the Government to account on the implementation of the good report that has been produced on the motor insurance issue.

We urgently need a similar body of work.

There is some commonality around the injuries board, awards and so on. I ask the Minister of State to understand the urgency and gravity of the situation, which has already closed the doors of many businesses around the country.

4:45 pm

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy. I understand the urgency of the issue because of the engagements we have had with businesses. For example, the hospitality sector is taking a very big hit when it comes to increases in insurance premiums. It has tried to control this risk by shutting down particular parts of businesses, such as nightclubs or the hosting of weddings. However, such services are part of the viability of businesses in the first place, therefore they cannot portion out that part of their business.

The work we have done to date has identified particular problems, to which the Deputy alluded, regarding certain businesses taking on higher excesses which is difficult for them in terms of managing their bottom line. Self-insurance is on the increase. Businesses involved in self-insuring could be putting their entire business at risk if they encounter a problem in the future against which they had not provisioned. It is a worrying trend.

We are also considering the role brokers might be able to play and expanding the terms of reference to include that. Fraud is also important. We are receiving very good information from businesses on how fraud is affecting their businesses.

We need to examine issues in order to bring greater consistency to this area, such as the personal injuries commission that has been set up already and is working, strengthening the PIAB and in the second quarter of this year, the changes to the legislation on that. Pre-action protocols can help to bring consistency to the awards process.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Minister of State is correct in identifying the hospitality sector and businesses in the services sector generally, such as pubs, hotels, nightclubs and anywhere there is public footfall, as being where the issue is most acute, given the uncertainty and inconsistency around the level of awards. The matter has to be dealt with.

The quality of cover is diminishing and the issue of excess is becoming more significant. In one case, the excess is €10,000 for each claim in respect of employer and public liability. Brokers are keeping the show on the road, and many are going to extraordinary lengths to represent their clients and get the best deal they possibly can from insurance companies. In many cases, they are struggling to get any quote. By all means, the Minister of State should engage with them because they have many stories to tell him.

God help any business with an open or outstanding claim which is trying to get a renewal of an existing insurance policy. I will work with the Minister of State on this issue in the spirit of co-operation. It is a significant economic issue which is contributing to the cost base of many businesses. As I said, jobs are on the line. The market is dysfunctional and has to be dealt with.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Quality of cover is key. Certain insurance providers are leaving parts of the market, which is leading to the problem of businesses having to self-insure against particular risks. It is dangerous for businesses and, potentially, the market. We will approach this issue as urgently as we approached motor insurance. The actions under the motor insurance plan are already under way and I look forward to continuing to engage constructively with the Oireachtas committee.

The Deputy will be aware that I already gave a preliminary report on our action plan, which referred to the actions that have begun and the current level of progress. I will continue to appear before the Oireachtas committee as we publish our quarterly reports so that the Deputy can hold me to account and we can get something done. As I said in my initial response, in regard to EL and BL, we will introduce a series of actions with a timeline and work with lead owners so that the Government side can be held to account. We will need to work with the Oireachtas when we need to fast-track particular legislation.