Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Táim buíoch don Leas-Cheann Comhairle as ucht an t-am a thabhairt dom an t-ábhar tábhachtach seo a phlé leis an Aire Stáit. Cuirim fáilte roimh an Aire Stáit. Táim ag cur an cheist árachas margaidh os comhair an Tí. Early this morning, it was confirmed that the Competition and Consumer Protection Commission carried out a series of raids on insurance companies and brokers and their representative body, Insurance Ireland. The raids are part of an ongoing investigation regarding suspicions of the existence of price signalling or price fixing within the insurance sector in this State. This suspicion is most evident in motor insurance prices, which most of us have had to put up with over the past number of years. However, it is far from being limited to car insurance.

I am sure the Minister of State is very well aware that Donegal has a very long and proud farming and agricultural heritage. The diversity of land use within the sector reflects the physical diversity of our landscape. From largely dairy farming in the north to crop growing to the east and throughout the Finn valley to cattle rearing in the south to grazing lands to the west, few counties can boast such a mix and range of farm types. As a rural county, this tradition is not only widely known but widely celebrated because even to this day, the industry remains at the heart of the local economy in many of our smallest villages and towns. The local farmer's mart is at the centre of this industry. Many of our biggest towns such as Letterkenny, the twin towns, Raphoe, Milford, Donegal town, Ballyshannon and others owe much of their success down through the years to the influence of the local livestock co-op or mart. In fact, many of them remain open for business today. They are local trading hubs - institutions in their own right - where farmers and traders come to do business, to socialise and, in most instances, to continue a long and lasting family farming tradition.

Despite this, all is not well at the local livestock mart. It is a business which finds itself coming under increasing financial pressures as a direct result of what is fast becoming the cross-sectoral problem of insurance costs. In my view, the same core issues that have caused the rip off for drivers are driving these increases. In recent weeks, I have been contacted by representatives from the sector who have stated in no uncertain terms that the crippling costs associated with rising mart insurance premiums over recent years are forcing mart operators to consider their own futures seriously as well as affecting the future survival of the wider institution itself. Marts are reporting to me that they are coming under heightened demands from their insurers - demands with which they complied in the past and that are still there. Those demands are to introduce costly structural adaptations and changes to existing practice which it is claimed will help keep the cost of cover down. However, even though some marts have already carried out those works, they are seeing dramatic increases in their premiums. Even though they are open for fewer hours than previously, they are seeing the premiums increase year on year. What will the Minister of State do at this stage of the insurance review to ensure that the plight of marts are brought into the terms of reference? I have written to the Minister requesting that. Can the Minister of State comment on the Competition and Consumer Protection Commission investigation? Will he write to the Competition and Consumer Protection Commission and ask it to look not only at motor insurance but at wider issues, including mart insurance?

Michael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am well aware of Donegal's farming background, which is one of the most mixed and varied in the country. Given Donegal's size in an area where there are challenges, we must do what we can about them. I have been advised by Insurance Ireland that livestock marts have significant exposure to injuries to employees and members of the public. This has resulted in claims occurring with a level of frequency which has led to a reduction in market capacity due to the hazardous nature of the risk.

In response, insurers have developed active risk management programmes in order to try to reduce the level of accidents and injuries. In addition, I understand that insurers have been working with marts with a view to implementing improvements in management practices and facilities to reduce claims as this is the key area in terms of managing claim costs.

Insurance Ireland has advised that it is not aware of any recent major increases in the cost of insurance for agricultural mart owners. However, if the Deputy is aware of a specific issue facing an individual mart owner, I recommend that he or the mart owner raise it with Insurance Ireland, which I understand is happy to discuss the issue as part of its free insurance information service for those with queries, complaints or difficulties regarding obtaining insurance.

The Deputy should note that the Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither the Minister nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products as these matters are of a commercial nature and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance, which expressly prohibits member states from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, the Minister is not in a position to review individual cases nor to direct insurance companies as to the pricing level or terms or conditions that they should apply in particular cases.

Nevertheless, it is possible for the State to play a role in helping to stabilise the market and deal with factors contributing to the availability and cost of insurance. In terms of measures being taken to tackle the cost of employer and public liability, the Deputy will be aware that this is being examined as part of the second phase of the cost of insurance working group. The working group is building upon the previous work done in the motor phase in order to determine how it can be applied in the employer and public liability insurance claims areas. The working group is also considering the impact of the cost of insurance on the competitiveness of particular business sectors, the impact of health and safety issues on the cost of insurance and other market issues. The working group has held extensive consultations with a range of stakeholders, including the Irish Farmers' Association, IFA, which provided a submission to the working group. This issue was not raised in its submission.

It is envisaged that the final results of the second phase will take the form of an addendum to the existing report. As with the first phase, the aim is for all relevant bodies and stakeholders to work together in order to deliver fairer premiums for businesses without unnecessary delay. As it is likely that employer and public liability risks are factors in the cost of insurance for marts, any recommendations emerging from this review should be of relevance to the mart sector. I met with the IFA in Wexford yesterday and raised this issue with it. There are two marts in Wexford and two marts that are very close to the border of Wexford so there are four marts in direct proximity to Wexford but the matter has not been raised with me. However, if there is a specific issue in a specific area, I will certainly take it up to improve matters so that premiums are not unreasonable and unfair.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I appreciate the Minister of State's comments. I will raise this matter with Insurance Ireland and ask the mart owners to do likewise. However, given that he is the Minister of State with responsibility for examining the cost of businesses, and I note his comments about the IFA, I can tell him that the businesses in Donegal with which I have spoken are seeing dramatic increases in their insurance premiums. The Minister of State said the insurance industry is working with the sector to ensure that measures can be taken to reduce the premiums. Many marts have carried out those measures. They have carried out the costly structural adaptations and changes to existing practices but lo and behold, they see their premiums go up when they are due for renewal. For example, despite having spent over €12,000 on introducing such changes, operators of one local mart saw their premiums rise from €8,000 in 2015 to a whopping €15,000 for the period 2017 to 2018. This is an increase of nearly 100% in 24 months.

That is not sustainable for a mart in a rural area. This is a business which is important and which supports an agricultural sector. Another mart has advised that the costs of its renewal is now a staggering €30,000. This cost is among its biggest overheads for the year and the figure is now unsustainable. It is telling us that it is unsustainable. It has scaled back its operating times and cannot scale back any further. The next step is whether to close the mart. This is particularly the case for smaller marts and co-operatives which operate only a limited number of days. Mart owners simply cannot afford to pay such inordinate insurance premiums and many fear that if the issue is not remedied shortly, it will result in their likely demise and closure. What they are reporting is what we know of, but those in the agriculture sector are at the mercy of a highly concentrated insurance industry which is dominated by a relatively small number of big insurance firms that can charge what they want.

What can the Minister of State do? He is carrying out the business sector review. His predecessor took on board some of our comments when he appeared before a committee. Independently of what I have said, I ask the Minister of State to take a sample of perhaps 20 marts across the country to see if insurance premiums have increased dramatically and to look at that when engaging with the sector.

Michael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I did that earlier. I telephoned two of the marts in the area closest to me. The cost for one of the largest marts in the country is approximately €12,500 and its owner said its premium had not increased. I anticipated the question would be about why premiums had increased. The owner said its premium had not increased because he had not had a claim for 12 years. That is the primary issue I see. When I pushed him about his knowledge of other marts, he said from what he has been told, the cost to insure a moderate-sized mart is between €20,000 to €25,000. I take on board the Deputy's assertion that there is probably a bigger issue where premiums for smaller marts, which operate on a smaller number of days and which have a smaller turnover, go from €8,000 to €15,000, thus experiencing a really significant jump. It is concerning in the extreme if they have done the work required to insure there are no claims or where they have done the work if there were issues to be resolved. I have a real problem with that.

If the Deputy supplies me with the details, I will pursue the matter. I will also take it to the next phase of insurance analysis. The marts are crucial and are an essential part of rural Ireland in terms of trade. It is not just the marts because there are shops and other services attached to them. I am from rural Ireland and an agricultural background and do not want to see any further slippage in this sector.