Thursday, 20 September 2018
Central Bank (National Claims Information Database) Bill 2018: Second Stage
I move: "That the Bill be now read a Second Time."
I welcome the opportunity to address Dáil Éireann today on the Central Bank (National Claims Information Database) Bill 2018, which was published on Tuesday, 10 July 2018.
This Bill seeks to provide the legislative basis for the Central Bank of Ireland to establish and maintain the national claims information database which was recommended by the cost of insurance working group in January 2017. Its essential purpose is to improve data availability in the motor insurance area.
One of the key themes which emerged from the discussions of the working group was that an improvement in transparency, through the additional collection and publication of data, was essential. This was something which the joint Oireachtas committee also called for in its report on the rising cost of motor insurance. The working group found there are a number of factors that influence the cost of insurance premiums, and it is not always clear what is the main factor at a particular point and time. Therefore, in order for policymakers to have a better understanding of the causes of any future peaks and troughs in pricing, it is essential to have reliable and regular information on the key factors causing such volatility, in particular, some insight into the different component costs of providing insurance. The availability of this type of information should provide both policymakers and insurers with a better understanding of what triggers market distortions, thus enabling them to respond more appropriately. Examples of the areas that the database will cast greater light upon include legal costs and settlement channels.
Therefore, because of this need for greater transparency, the concept of a national claims information database, to be established and maintained by the Central Bank of Ireland, was put forward and a subgroup of the cost of insurance working group was charged with driving its development. That subgroup, chaired by officials from the Department of Finance, included representatives from the Central Bank, the State Claims Agency, the Personal Injuries Assessment Board, the Central Statistics Office and the Society of Actuaries of Ireland. The subgroup worked from the objectives set out in the working group's report to identify relevant data that could be defined in a consistent manner and to devise a practical method for the collection of those data.
Earlier in the summer this work culminated in the publication of the Bill before the House today. In parallel, work has been undertaken by the Central Bank in close co-operation with the data subgroup on the finalisation, subject to the passage of this legislation, of a specification document which sets out the specific data that will be required from insurers for the purpose of the database. The progression of the specification in parallel with the drafting of the Bill was seen as necessary to ensure that the database can be operational as quickly as possible following enactment. It also provided a means of signalling to industry certain system changes it may need to undertake to be ready for engagement with the database.
I might add by way of further context that as a short-term measure prior to the establishment of the national claims information database, on foot of another recommendation of the working group and based on data collected from insurers on a voluntary basis, my Department has also been publishing key information metrics in regard to motor insurance. These metrics included certain ultimate claims costs which had never been collected on an industry-wide basis prior to this. The logistics of the process in terms of collection, verification and definitional alignment among companies has reinforced the importance of establishing the national claims information database on a statutory footing.
I now propose to give an overview of the operation of the Bill and each of its 14 sections. The first three sections set out a number of definitions to clearly outline the scope of the database in terms of the types of claims in respect of which information can be collected.
Section 4 is a standard interpretation section and defines a range of relevant expressions. Importantly, it sets out the different settlement channels through which a claim may be finalised. For instance, a claim may be resolved directly with an insurer, through the PIAB or by a court decision. As aggregate industry data are not currently available, for example, on direct settlements, this breakdown was identified as important to allow policymakers to see trends or distinctions in the costs related to these channels and to enable them to develop more targeted response measures where necessary.
Section 5 is a standard section to allow for the expenses associated with the administration of the Bill to be met from the moneys supplied by the Oireachtas. While it is intended in the first instance that the database will focus on the motor insurance sector, it was clear from our consultations that many saw a case to extend the scope of the database in the future to encompass other lines of non-life insurance, such as employer liability insurance and public liability insurance. Section 6 allows for this extension of the scope to other classes of non-life insurance in the future on foot of an assessment by the Central Bank of the appropriateness of such extension after consultation with the Minister for Finance.
Section 7 allows the Central Bank to make regulations setting out the exact terms on which a claim is considered to be within the State. The need for this definition is because the scope of the Bill focuses on claims relating to risks in the State only.
Section 8 confers the Central Bank with the function of establishing and administering the database. Subsection (2) of section 8 requires the Central Bank to collect and analyse data from insurance undertakings on the income and costs associated with carrying on the relevant class of insurance. The Central Bank is then required to publish information about those data at least annually. Subsection (4) elaborates on the specific information which can be collected by the Central Bank in execution of this function. For example, information can be collected on different types of income, exposure, business expenses, the number and nature of claims and the costs and provisions associated with those claims, as well as the amounts paid in respect of claims resolved in different settlement channels and the costs associated with those claims. There is also scope to collect details relating to large claims in particular.
Subsections (6) to (9) of section 8 deal with the reporting of information that is collected from insurance undertakings. In particular, subsection (7) sets out the purposes which the reports should try to meet. These include the following: increasing the level of information around the relationship between the cost of providing insurance and the cost of a premium for the consumer; identifying current and emerging trends within the sector; identifying the factors that cause price movements in the relevant line of insurance; presenting a statistical analysis of income and expenditure associated with providing the relevant type of insurance; and presenting a statistical analysis of information relating to claims and of each particular settlement channel used in respect of such claims.
Section 9 makes it a prescribed contravention under the Central Bank Act 1942 for someone to fail to comply with the requirements in the aforementioned section 8 and section 12, which relates to the sharing of data and to which I will turn shortly. Section 10 provides the Central Bank with the authority to require, by written notice, the provision of information specified in the notice. This is to be achieved by an amendment of section 22 of the Central Bank (Supervision and Enforcement) Act 2013, which contains much of the Central Bank's information gathering powers.
Section 11 sets out the funding regime for the establishment and administration of the database. The working group recognised there would be resourcing implications to be addressed as part of the implementation of the database, including an arrangement for financing that ensures the Central Bank is fully reimbursed for the performance of this additional function. One of the reasons for this is to ensure that the financing of the project does not run contrary to the prohibitions on monetary financing set down by the European Central Bank statutes. As such, the Central Bank is provided in section 11(2) with the capacity to levy insurance undertakings for the execution of its functions under section 8, such as the establishment and administration of the database and the publication of reports.
Section 11(3) provides a funding backstop where, notwithstanding the levies being in place, there is insufficient money to meet its costs or where the bank apprehends that it will not be able to meet its costs from the levies raised. Where this is the case, the bank may write to the Minister for Finance to request funding from the Central Fund. The Minister, under section 11(4), has the authority to attach such terms to the payment of moneys as he may determine after consulting the Central Bank. In particular, these terms may relate to repayment and interest.
Under section 12(1) the Central Bank may provide data which it collects under section 8 to any person on request. Subsections (2) and (3) of section 12 then set down conditions where data cannot be shared. Subsection (2) prohibits the sharing of data where a person or insurer is identifiable from the data.
Section 12(3) prohibits the sharing of data where the Central Bank considers that there are exceptional circumstances, including where the provision of the data would be seriously prejudicial to the legitimate interests of consumers or of any company or other undertaking or where the data are unlikely to be of value as they are not complete or sufficiently verified. Section 12(4) allows the Central Bank to attach conditions to its provision of data. Sections 13 and 14, the final two sections of the Bill, are standard provisions which allow for the making of regulations under the Bill and the commencement of the Bill in whole or in part at such time or times as are deemed appropriate by the Minister for Finance.
As those following the progress on the Bill to date may be aware, the Minister for Finance forwarded the heads of the Bill to the Chairman of the joint committee in January to request a determination on whether pre-legislative scrutiny was appropriate in this case. The Minister was advised on 7 February that pre-legislative scrutiny would not be undertaken. As Minister of State with responsibility for insurance matters, I welcome this and also the assurance of the committee at that time that it would engage fully with the Department in the context of the legislative process.
Deputies will be aware that to implement a number of the recommendations made by the cost of insurance working group, there is a requirement to amend existing legislation. Specifically, I refer to recommendations 6 and 14 of the working group's report on the cost of employer and public liability insurance which were addressed to my colleague, the Minister for Justice and Equality, Deputy Flanagan. Recommendation 6 seeks to amend section 8 of the Civil Liability and Courts Act 2004 to ensure that defendants are notified of a claim lodged against them at an earlier date than currently required. Recommendation 14 seeks to amend section 14 of the same Act to allow a court to draw inferences from non-compliance with the requirement to lodge the verifying affidavit within 21 days after the lodgement of the service of the pleading concerned. These are key recommendations and it is important that are implemented as soon as possible. Consequently, I am discussing this matter with the Minister for Justice and Equality to seek his agreement to request the Government to approve the introduction of a small package of amendments to sections 8 and 14 of the Civil Liability and Courts Act 2004 on Committee Stage of this Bill. Subject to these discussions and any subsequent Government approval, the inclusion and subsequent adoption of these amendments through this legislation would allow for a significant reform of the insurance sector. I will keep Members of the House informed of any developments.
I reiterate the importance of the swift passage of the Bill to ensure that the national claims information database is established and the Central Bank of Ireland can begin collecting and analysing the data necessary to increase transparency in the insurance sector as soon as possible. Doing so will add to the various measures that this Government has been putting in place to address the concerns regarding the cost of insurance. I thank Oireachtas Members for their co-operation, in particular the members of the Committee on Finance, Public Expenditure and Reform, and Taoiseach who facilitated the Insurance (Amendment) Act prior to the summer recess. The Bill is important in the context of grappling with the cost of insurance which is doing far too much damage to people and businesses nationally. I hope we can move the legislation through both Houses as quickly as possible. Pre-legislative scrutiny is not required and we are expecting an imminent response from the European Central Bank on the Central Bank of Ireland's role in this context. This legislation will be a very important weapon in our armoury as we seek to bring down the cost of insurance premiums, not only for motor insurance but also employer's liability and public liability insurance.
I welcome the opportunity to contribute on Second Stage of this long-awaited Bill. From the outset when the working group reported in January last year, the lack of data generally in insurance was identified as a key issue, in particular the lack of data around claims and the claims process. While we had certain data from the Central Bank's insurance statistics on the overall amounts paid out each year by insurance firms in response to claims, we did not have the level of detail we needed to challenge and counter the assertions of various stakeholders as to who is responsible for the hikes in insurance premiums which we have witnessed in recent years.
I welcome the Bill, albeit it must be acknowledged that it is well behind schedule. When the Oireachtas finance committee decided earlier this year not to engage in pre-legislative scrutiny, it was with a view to being helpful and in the expectation that the Bill would be published swiftly and brought before the House. We are now on Second Stage and I pledge my support and that of Fianna Fáil for the passage of the legislation as quickly as possible. When the working group reported initially, the target was to have this database in place on a statutory footing by the end of quarter 2 of 2018, which is to say by the end of June. Obviously, that did not happen and we are a good way behind schedule as a result. As such, we must put this in place without further delay.
The database will focus on motor insurance claims in the first instance. The ambition should be to extend its scope as quickly as possible to include other areas of insurance. Once we get to assess the data and the trends become clear, I expect we will find that those trends will be equally applicable to claims in other areas, for example, business insurance. The trends will become clear very quickly. We need a handle on data on the settlement channels. We know that perhaps 70% of claims are settled outside of Personal Injuries Assessment Board, PIAB, and outside of court. As such, the vast majority of claims are ultimately resolved through neither the courts system nor through the injuries assessment board. We are in the dark, therefore, about how the process works. Not only are we in the dark but so too are policyholders when claims are made against their policies. We need far greater transparency around the data and that is the key objective of the Bill. Once we publish the data, I am sure we will see the trends become evident very quickly.
We want to see a process where the statutory injuries assessment board is the reference point and the place the majority of claims are settled. There must be greater certainty as an absence of certainty is the reason we have seen such fluctuations in recent times. When they speak to one in private, insurance companies say they do not want to take the risk of taking a claim into court, notwithstanding the view that it might be dubious, because they are afraid of what the outcome will be. As such, we need greater certainty around the cost of settling individual claims. We can get a certain amount of that by reforming the work of the injuries board, but we also need greater consistency from the courts. That issue will have to be addressed as part of the overall mix of solutions to deal with this.
The Minister of State has described the problem and he is right to say it is an enormous one. We have the data around motor insurance premiums and know that very significant spikes took place before there was some reduction in recent times. That said, premiums remain perhaps more than 30% higher than they were before the increases started to apply. That has had a huge impact on younger drivers in particular and on many older drivers or those driving older vehicles. It has impacted on the capacity of some people even to get an insurance quote. The motoring population in general has felt the impact of the trend in a very serious way. We do not have a handle on the position relating to the cost of business insurance, and that is because we do not have any Central Bank data. We have no data whatsoever on employer liability and public liability from the CSO. We know from the feedback we get from individual businesses and the representative bodies that there is a problem with hikes to premiums and changes to the nature of policies.
I refer to levels of excess being increased and more and more exclusions being provided for within policies. This is therefore a matter not only of the price of insurance, but also of a diminishing of the quality and the coverage of insurance policies. This can be an equally important aspect for businesses that might now face costs of in excess of €15,000 for any individual claim. They are questioning the value of paying insurance, and I suspect a growing number of businesses are now effectively self-insuring and taking the risk. They are not paying insurance because they wonder what is the point of doing so. This is not a road we want businesses to go down. It is a legal requirement that motorists have insurance, and businesses, if they have loans and so on, are required to have insurance in place, but many of them are taking the risk of operating without insurance. This is not a trend we want to see develop because they are exposing themselves to enormous risk involving their business, their families and, potentially, their homes. Everything could be on the line if there is no limited liability or an insurance policy in place. We must reiterate this message.
The key section of the Bill is subsection 8(4), which details the specific information that will now be gathered in this database. The Minister of State went through some of this when he referred to the cost, the expenditures, the number of claims, the nature of the claims, and information on the various settlement channels. Are settlements being made outside of court? As we know, they are in many cases. To what extent is the final settlement a result of a court award and to what extent is it a result of a decision by the Injuries Board? What are the costs associated with these claims? We have seen many debates between Insurance Ireland, the legal profession and other stakeholders in which they all blame one another for rising costs. For this reason, we need to have the relevant data to call out some of the assertions that have been made in recent years when we have engaged in this debate on why insurance premiums have been going where they have been going.
What we really must get a handle on is information on pricing. How do insurance companies arrive at a certain price, a certain premium, which they quote to the motorist, principally? If we can get a handle on the issue of the claims, we will go a long way. It is not the only issue; there are many other issues involved. Insurance companies have suffered from very poor investment returns in recent years, as a result of which they have placed a large burden on claims and premiums to get the return they need to generate a profit. This must be acknowledged as well, and they need to get their house in order in dealing with this problem.
Section 11 concerns the expenses and costs involved in establishing and administering the database. Reference is made to a levy on the industry in order that the Central Bank recoups the costs it is incurring. The Minister of State made reference to ECB monetary financing, which he said he cannot contravene. However, he needs to hear the message loud and clear that consumers have had enough insurance levies. He might say this is a levy on the industry, but we all know that when the industry is levied, the cost of the levy is automatically added to policies and premiums. I ask the Minister of State to clarify what are the expected costs involved in establishing and administering this database. Will all those costs have to be recouped from the industry? If so, how and when will they be recouped? Will this be done in the form of a levy? The Minister of State cannot give any assurance whatever that these costs will not be passed on directly to the policyholders. The whole objective here is to apply downward pressure on premiums by getting more transparency, more data and more information on the claims environment. We do not want this to have the opposite effect indirectly in any way. I know that is not the intention, but it is an important issue that the Minister of State should address.
I welcome the Minister of State's comments on the Civil Liability and Courts Act 2004 and the amendments he intends to table. We have not seen those amendments yet, but I understand that the issue he seeks to tackle here is the discrepancy between the length of time a business can retain CCTV footage, which, I think, is typically a month, and the period within which a person can lodge a personal injury claim and notify the business that he or she is making a claim. We have heard story after story of businesses that have wiped CCTV footage, as they are required to do in accordance with the law, and some months later, perhaps on the eve of the deadline, they are informed of a personal injury claim and the evidence is gone. The evidence may well have been such that it would have proved that a claim was without foundation, whether completely bogus, exaggerated or downright fraudulent. We will have to find some way of aligning these issues because it is completely unreasonable that businesses are not allowed to retain CCTV footage beyond a certain period, after which there is a further period within which people can make claims and the businesses cannot defend themselves. The Minister of State needs to align these issues in the best way he can and, of course, in a manner that is constitutional and protects the independence of the courts. We all understand that, but this issue is key and must be dealt with.
As for the passage of this legislation, Fianna Fáil will not be found wanting and will support it. We will consider tabling certain amendments, but now that the Bill is before us, we need to move swiftly to enact it and get the operational provisions in place in order that this database can be established and up and running and can start making data available within a short period. There are many other strands to the insurance debate, including the various other recommendations of the working group on motor insurance and the report on employer and public liability insurance. There is also the issue of tackling insurance fraud and many people will have seen the recent "Prime Time" investigation. There are so many issues there that need to be dealt with. We need to get to a point at which people will not take the risk of lodging bogus or exaggerated claims because there will be consequences for doing so. We are too soft in this country in the way in which we deal with such issues. There should be a very serious penalty and we need to see cases brought to court where there is clear evidence that claims are fraudulent, without foundation or exaggerated. People need to be held to account for that and penalties imposed. I know not all of this is directly within the Minister of State's control, but there is no doubt but that it is a key factor. It does not fully explain the increases in insurance premiums in recent times, and I would never suggest as much, but it is certainly a factor.
The overall message on claims and the claims environment is that we need greater certainty about outcomes. If there is less fluctuation and the outcome of the claim can be predicted with reasonable certainty, there will be less of an incentive to delay, go to court, engage in adversarial proceedings and incur substantial legal costs. That is the ultimate destination. The national claims information database is a vehicle to help us to get to that point. Once we have the data, we can assess many of the assertions that have been made in recent years.
I pledge the support of the Fianna Fáil Party in dealing with this issue. We will seek to improve the Bill as necessary in the period ahead. I want the Minister of State to use the mandate from this House, once the Bill is enacted, to get the national claims information database up and running without further delay. There is support across the House for tackling the issue of insurance costs, which is affecting many motorists, businesses and community, voluntary and sporting bodies. There is now hardly an event where the question of insurance is not centre-stage, and this is because of the claims environment that has been created.
It needs to be dealt with and this database is a vital step in tackling the issue through the provision of accurate and reliable information which will come from the industry but which will ultimately be validated on a statutory basis.
Cuirim fáilte roimh an deis chun labhairt ar an ábhar seo mar is ábhar iontach tábhachtach é gan dabht. Tá na mílte duine thar timpeall na tíre ag fulaingt de bharr na praisí ina bhfuil an córas árachais sa tír seo. Is léir go bhfuil an córas sin iomlán briste mar tá daoine ann nach bhfuil in ann taisteal, tá daoine ann nach bhfuil in ann post a fháil ag an mbomaite, agus tá daoine ann nach bhfuil in ann dul isteach i ngnó ná gnó a chruthú toisc go bhfuil an córas seo lofa. Tá sé lofa le fada an lá. Really tá faic déanta. Maidir leis an méid atá déanta ag an Rialtas go dtí seo, rinneadh é go huafásach mall. Tá go leor daoine thar timpeall nár féidir leo fanacht ar na reforms seo. Caithfidh na reforms seo a bheith curtha i bhfeidhm go tapa.
I appreciate the opportunity to speak about the issue of insurance. Motor and business insurance are two of the major issues that continue to hammer local communities throughout the country. It is a sore that has been left to fester for many years. The result is that many businesses are teetering on the edge of viability. They are experiencing year-on-year increases in their insurance costs. Many drivers are literally being pushed off the road. Those who are being pushed off the road typically are in the sectors that are most vulnerable. They include people living in rural communities who obviously have no access to bus or other public modes of transport, young people, older people and poorer people who just cannot afford the premiums being quoted.
The major problem people have is the glacial speed at which things are changing. We have been talking here about the cost of insurance for a long period. Everybody seems to know the answers and the necessary changes to be made, yet when we actually talk about implementation, people wonder why they are not being implemented. Perhaps they are not being implemented because vested interests in the industry are too powerful or perhaps because the Government is shy in implementing them. We are, however, finally discussing the national claims information database. It is better to discuss it late, rather than never. The Minister of State will not need to be reminded that when the cost of insurance working group published its report, its action plan contained a commitment to have the database set up by the second quarter of 2018, by which it meant it would actually be in place and functioning. We are now looking at that date in hindsight. The action plan stated the legislation would be in place in the winter of 2017. That story sums up the Government inaction in this area. Perhaps it has good intentions, but it is clear that it is failing to get to grips with the crisis.
Obviously, transparency is key. The lack of it only benefits one particular group of people - the insurers. We know that the insurers are under investigation both domestically and by the EU powers with responsibility for dealing with anti-competitive practices. When we asked the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to look at the reasons behind the spiralling cost of motor insurance, it was very clear to us that transparency would be a key part of whatever reforms were necessary. The report made 12 recommendations in respect of data and the need for transparency and among them was the idea of the database.
We are at the point at which we need to make big decisions on how the insurance industry works. One of the questions is whether the Central Bank can play two roles. Can it be the watchdog and the protector of the insurance industry? By making it the guardian of the database, the Bill, once again, pushes more responsibilities onto the Central Bank. We have concerns about whether it is stretched in terms of its resources. Simply turning to it to deal with all of these issues may be unrealistic owing to its capacity limitations. More importantly, there is a major question about whether it is the best body to deal with these duties. Fundamentally, can it be the institution to carry out the mandate to ensure stability in the sector and the institution to ensure the protection of consumers? That is one of the questions before us. ISME and the Alliance for Insurance Reform have both called for the Central Bank not to be put in charge of the database. I understand why that call has been made and that question will be before us for careful consideration.
This is not the first time the issue of whether the Central Bank, or any central bank, can do consumer protection alongside other roles has been raised by my party. There are a range of other bodies, including the Personal Injuries Assessment Board, PIAB; the Competition and Consumer Protection Commission, CCPC; and the Central Statistics Office, CSO, that could hold these data. There may be technical reasons the Central Bank has been given this role, but any technical skill could be transferred to one of the other bodies. Obviously, we are not going to hold up the Bill on Second Stage because of this issue, but I am pretty sure it will be central to the discussion on Committee Stage.
The other question put before us is what should the database actually contain? In the interests of consumers, we should have the greatest level of granularity possible in the database. Even though, obviously, there are data protection issues, in the long run it would be much better for consumers if we had plenty of detail in it. I understand the insurance industry is looking for the lightest possible level of detail, but that is what it would do, is it not? It should drop its very weak objections and accept, whether it likes it, that there is a need for change into the sector. Ironically, it claims that the new system could create barriers to entry to the market. That is bizarre considering the ongoing investigation by the European Union and domestic competition bodies. It also points to the need, as Sinn Féin as has stated before, for legislation to allow for proper sentences, including jail sentences, if necessary, to be imposed on insurers who lie to the Central Bank. It was misleading information from insurers that put the need for this new law into the political sphere. We must follow through and make sure there will be real punishments for bankers and insurers who lie to their regulators. If there are no punishments and consequences for lying to regulators, the influence and power of the regulators are much diluted.
I am convinced that the insurance industry has no interest in this forum and that it is actually stringing the Government along. That is an issue of which the Government needs to be conscious. To take as an example the Garda insurance fraud unit, one would have thought the industry would be delighted with such a move, yet documents released under freedom of information legislation and received by Sinn Féin show that Insurance Ireland has missed a series of deadlines in the development of this idea, the proposal to set up an insurance fraud unit within An Garda Síochána. The freedom of information requests relate to all records on the establishment of the unit. Clearly, Insurance Ireland is dragging its feet. The proposal to create an insurance fraud unit has been on the agenda since 2017 and was identified in the report of the cost of motor insurance working group in January 2017. An Garda Síochána submitted a mechanism for further co-operation to Insurance Ireland in the first quarter of 2017. It was to be discussed first in June 2017 at the meeting of the non-life council in Insurance Ireland, but the discussion was deferred to September that year. The decision was due to be communicated to An Garda Síochána by October 2017. By December Insurance Ireland had come up with a proposal for a full cost-benefit analysis of the subject for approval by the Garda Commissioner and the Minister for Justice and Equality. That analysis, as well as a definitive response to the proposal from An Garda Síochána, was due before the end of the first quarter of 2018, but on 12 April Insurance Ireland stated it expected to be in a position to provide an update on the cost-benefit analysis by the end of June.
It is phenomenal that one would have an organisation literally stringing the Government along quarter by quarter and being inactive with regard to the development of a body that logically one would imagine is in its greatest interests. The briefing note prepared by the Minister for the Oireachtas finance committee meeting on 29 May stated Insurance Ireland expected to be able to provide an update by June 2018. From my understanding, as of 31 May, from correspondence between the Department, newspapers etc the cost-benefit analysis is still awaited. Will the Minister of State confirm this?
I support the creation of an insurance fraud unit. Insurance fraud is theft, robbing money from people's pockets. It is breaking the system, resulting in certain people suffering more. It must be vigorously pursued and prosecuted. Sinn Féin still has concerns, however, about the proposals for a section of An Garda Síochána to be funded by the industry. Again, any such funding should come from the State. The cost, approximately €1 million, is within the capacity of the Government. The Government has left this particular proposal slip off the agenda by abdicating the State's responsibility for tackling insurance fraud and allowing the insurance industry string us along for so long. It is clear Insurance Ireland, despite its protestations that fraud is the cause of increased premiums, has decided tackling fraud is not the most important part of its agenda.
To be fair, the Minister of State is up against it when dealing with this particular industry. Perhaps the industry should be careful for what it wishes. If it keeps delaying and frustrating reform, it will convince more Members and others that this type of piecemeal reform will not deliver a fairer insurance market. As part of the Government's working group study, international examples of how the insurance industry might work were examined. Having examined the work done, we are of the view that it was not a serious exercise in looking for an alternative model but more a box-ticking exercise.
There are real alternatives to pure reliance on the private market. The State makes motor insurance compulsory, meaning it has a role in this from the outset. It then, however, leaves the process to a private market in which there is no real control and which is broken and in crisis. The State is not upholding its side of the bargain. It should be looking for alternatives. In New Zealand, for example, all drivers are covered for the basic legal requirements by paying registration while paying added funds towards the system through the petrol pump. Accordingly, no young person or isolated family would be taken off the road because of the whims of a private insurance industry. That is why we must ensure we provide a system that is not constantly in flux. The EU would have to decide with regard to this but I understand the Central Bank has ruled that such a system would not be illegal. This is the type of thinking of which the Minister of State needs not to be afraid to ensure we fix this.
Sinn Féin supports the Bill, notwithstanding issues regarding who runs the database and what goes on it which can be dealt with on Committee Stage. There is also the issue of who pays for the database. I am open-minded to that but the cynic in me believes policyholders get stuffed no matter what happens and that the insurance industry has a knack of ensuring policyholders pay through their premiums. I am hopeful in the medium term that, once established, this database will result in lower premiums as increased transparency shines some light into the industry. Transparency, along with collating and exposing data around costs and premiums, is in the interests of consumers and the wider economy. We need a functioning insurance system. Accordingly, Sinn Féin will support the Bill.
I hope these solutions could be extended to include the business insurance sector. It is one of the biggest issues coming up in my constituency office these times. I am ringing the large insurance firms on behalf of small businesses, teetering on the edge, to get them lower premiums. The Alliance for Insurance Reform is building a massive head of steam around the country. Through its membership, it has a base of 640,000 employees, a massive chunk of people who are concerned about the feasibility of their sectors due to the dysfunction within the insurance industry. I know a business in County Meath which has had its insurance cover increased by 185% in the past year. From the businesses I am talking to, I have learned insurance costs represent 10% of their turnover, making it hard for them to be viable. A business in County Meath that I know of will pay €139,000 in insurance costs this year. That is a phenomenal figure for a relatively small business.
I am aware of a case of one particular individual who made a soft-tissue injury claim against a premises 12 months ago. However, there was no evidence, either a receipt or CCTV, that this individual had ever been on the premises. The claim was not challenged by the insurance industry. If one is paying top dollar for insurance but the industry is not even challenging fraudulent claims, then there is something wrong. The insurance industry will claim the legal system is stuffed. If it were to start suing every insurance claim, the legal costs would rise so much that it would cost more in the long run to settle. These are the reforms needed to solve these issues.
If the insurance industry does not want these reforms, it will slow down the process radically. It will see out the Government until a new regime comes in. If it picks up the issue, it will spend three years fighting the case for the citizen. In all that time, there will be thousands of businesses and investments going to the wall with thousands of lives ruined. The only antidote to this is for the Government to accelerate the rate of development on this issue to ensure the necessary reforms are put in place before the Government signs off.
I welcome the opportunity to speak on the Central Bank (National Claims Information Database) Bill 2018.
It comes from one of the recommendations of the cost of insurance working group which urged the setting up of a national claims information database. We are all too well aware of the crippling insurance costs experienced by anyone with car, home, farm, business and even pet insurance. The list is endless because the bottom line is that insurance costs have risen to an all-time high. One of the purposes of this Bill is to provide transparency on motor insurance costs. This will facilitate a more in-depth analysis of motor insurance claims trends which is key to understanding how claims costs are impacting premiums. I welcome this because we urgently need transparency in the insurance industry and costs, which are crippling people, must be reduced.
It is believed the identification of settlement channel information should lead to greater consistency in award levels and a greater use of the Personal Injuries Assessment Board. This, in turn, should lead to a more stable claims environment which should have positive impacts on the price of insurance paid by consumers.
I stand here with bated breath waiting to see if this promise of transparency will lead to reduced premiums or if it is another promise that will look good in the headlines but will never have a real effect for the people of Ireland. For more than two years, I have begged in this Chamber for something to be done about rising insurance costs. I am inundated, as other Deputies must be, with constituents contacting me distressed and upset about the quotes they are getting for motor insurance. Will this be a solution, finally, to this problem? Will people finally see their insurance premiums reducing?
We need to examine the issue of returning emigrants accessing motor insurance and ensure they are not priced out of the market. During the economic downturn, many of our youth emigrated to countries around the world. That trend is reversing as many of those people now want to return home. Not only will many of them face difficulty obtaining driver licences, which is absurd because many of them already have full driving licences in other countries, but they must start from scratch here. They must do the required number of driving lessons and will need a fully licensed driver to accompany them for a period of time. That is outrageous as these are experienced drivers. We must make allowances for Irish people returning home after years abroad. We should make it easier for them to return home rather than put obstacles in their way. The quotes people are receiving for motor insurance when they return home are off the scale. We need to address this issue and take all necessary steps to encourage people who had to emigrate during the downturn to return home. We should promise them affordable motor insurance and give consideration to the non-Irish driving licences they hold and the years of driving experience they have, regardless of whether that experience was gained outside Ireland.
Businesses have suffered greatly as a result of crippling insurance costs. A wonderful business, West Cork Secret, in Kilbrittain, which is known as the secret garden, has found its insurance cost has increased from under €5,000 a year to in excess of €20,000. The owners told me about the hike in their insurance cost before going public a few months ago. That huge increase could wipe out their business as they are struggling to keep their doors open. As popular as the secret garden in Kilbrittain is, it cannot continue or sustain such an outrageous hit. How does the Minister of State expect any business to be able to cover an insurance hike as high as that? This business is an extremely important amenity in west Cork. It is used by people far and wide and gives employment in a rural area. Why are we allowing such businesses to face such crippling insurance costs? This issue needs to be addressed as a matter of urgency.
I have seen a number of business in west Cork close in the past two weeks. I am not saying those closures were directly related to insurance costs but the rising cost of insurance premiums for businesses is putting enormous pressure on them and does not in any way help to keep the doors open.
Garage owners have told me they are facing huge insurance premiums. Consumers are tired of rising costs. Garages are struggling to keep their doors open and their costs low for consumers but they have to bear the cost of outrageous insurance premiums.
Another sector that is suffering greatly is self-employed tradespersons. Their insurance costs are extremely high as standard. It is normal in any business to have a claim on one's insurance at some point. However, but when even a minor claim is made by a tradesperson, it gives rise to inflated insurance premiums the following year. How can we expect tradespersons to make a living when they are up against these types of rising costs?
We are afraid to tackle the insurance companies. They are paying out on foot of many insurance claims when they should be stronger in fighting cases. They are stepping back from doing so because they find it is cheaper to pay out. I have experienced that in a community and voluntary group in which I am involved. I have seen pay-outs being made on foot of insurance claims that the insurance company should not have paid. There were very suspicious claims. This puts great pressure on the community and voluntary sector. Regardless of whether one is a councillor or has another role in the community, organisations that are in any way active in the community are paying a few thousand euro for insurance annually. That is a terrible burden for a voluntary organisation which must raise funds to pay for it in the community.
I mentioned motor insurance. We have to single out young drivers who are trying to pay huge bills. Some of them are just working to keep their car on the road. It may be a lovely car but the insurance costs a hell of a lot more than the car, which is terribly unfair.
Recently, AXA Insurance sent out a letter to its customers in Castletownbere and surrounding areas in west Cork stating that its Bantry office is to close. Customers were advised that when the office closes, they should travel to Midleton if they need to go to an office. That is a distance of 147 km each way, which is a journey of two hours and ten minutes by car and a return journey of four hours and 20 minutes. If I had been told that on 1 April, I would have thought it was an April fool's joke being inflicted on the people of west Cork. How can AXA Insurance think that is acceptable for its customers? It is outrageous that the company can simply withdraw its services in rural Ireland, in this case in Bantry in west Cork. It is a continuation of the closure of services in rural Ireland and AXA Insurance is getting away with it. The company has no problem taking people's money but it has a major problem maintaining a manned personal service that has been in place in Bantry for many decades. I ask the Minister of State to intervene on that issue.
We have seen the closure of post offices. I could go on forever talking about closures, but this is a very serious issue for the people of west Cork. AXA Insurance, like other insurance companies that are turning over handsome profits, is not showing any respect for its customers in west Cork. It expects people to make a return journey of four hours and 20 minutes to talk to someone or else go online. For many people in rural Ireland, the only line they know is a clothes line. Not everybody sits in front of a computer to sort out these issues.
People sometimes need to talk to a person face to face. A person who is hit with a massive insurance bill will need to go into the office of the insurance company to discuss it. He or she cannot be expected to spend ages on the telephone dealing with the issue or to hit a button on a computer which may or may not work and, if not, it is a case of tough luck. That shows total and utter disrespect for the customer. I urge the Minister of State to intervene in this case if he has powers. Perhaps the insurance companies are untouchable. He should tell AXA Insurance it is not allowed to close its branches in rural Ireland. It is not the case that it has a branch in every town. I know of only one branch in my constituency, namely, the Bantry office. The nearest office to Bantry is in Midleton, which is in another constituency. The company is walking away from the people of west Cork. I would advise the customers of AXA Insurance or any other insurance company that wants to walk away from them to seriously consider walking away from the company. That is what needs to happen to such insurance companies. If people want to do their business on the Internet, they can do so but not with companies that have forced them into that position. I urge the Minister of State to step in and ask the insurance companies to come before these Houses and explain the reason they are closing branches and walking out of rural Ireland. That would be appreciated.
Ar dtús ba mhaith liom buíochas a ghabnáil leis an Teachta Broughan for allowing Deputy Michael Collins and me to speak before him. I appreciate it.
The Minister of State has been in the job a couple of years and he published the cost of insurance report, the consideration of which went on for a very long time. The report eventually came up with 50 or 60 recommendations. What we need to do is put manners on the insurance companies and ensure they show respect for their customers, the people who carry the can. What they are doing is daylight robbery. For a long time, there were advertisements about the fellow making false claims who had his hand in my pocket and the Minister of State's pocket. The insurance companies have their hands in all our pockets and they have been getting away with it for decades.
I have been a small businessman since 1982 and in that time insurance costs have become prohibitive. Deputy Michael McGrath stated earlier that not only had prices gone mad but people were getting less cover. We are paying through the nose and getting higher excesses applied to premiums. In my business, they affect the height and depth at which we can work. After yesterday's storm, people will be crucified again. People think they are covered for everything until something happens. The huge excesses and premiums are destroying business in both urban and rural Ireland, although it has a greater impact in rural Ireland because it is crippling young people who cannot get into the jobs market.
We debated the BusConnects service for Dublin in the House yesterday. Rural areas do not have a bus or transport system. My nephew, who is 19 years old, insured his car last week. It cost him €4,800 for a car he bought for €1,400. In fact, he is not insured at all. He is being monitored and can only drive a certain number of journeys. It is another matter if he goes over that number. It is disgraceful. It is extortion and daylight robbery. After getting an apprenticeship, that poor chap must travel to work and if he cannot get there, he will lose his job.
The same applies to some people who go to college, not to mention all of the things the Government is putting on top of them, including measures taken by the Minister for Transport, Tourism and Sport, Deputy Shane Ross, for which the Government voted in favour. The L-plate driver cannot go anywhere without his or her father or mother. His or her parents may have bought the car and paid the motor insurance premium, while also working to try to keep the roof over their heads. There is no joined up thinking.
The insurance industry is a laugh. It is operating like the cartel in the beef industry or the cartel we now have in County Tipperary with Coolmore Stud which is buying up every snippet of land. It is also like the other cartels that control the country, the Minister of State, this and previous Governments. You are so in hock to it that it has you where it wants you. I would not like to say where that is, but it is. It is not listening to any of us here. This House has become totally irrelevant. We talk about the insurance industry and have received reports and had investigations, but what happened to them? The Government came up with 70 or some astronomical number of recommendations. What is wanted is five or six strong and respected recommendations which could be forcefully implemented and the implementation of which could be monitored. What is happening is daylight robbery. That is all it is. I am aware that the cost of some insurance policies has gone up by 300%. The voluntary sector is being crucified. Volunteers, including, for example, those in various GAA and sports clubs and those who have had a huge input for the ploughing association in the past three days in helping with parking and so on to help to raise funds, are the ones who will be hit. The purpose of their fundraising is mainly to meet the cost of insurance premiums which now represents half of the costs of organisations.
It sickens me that the legal industry is untouchable and considered to be the elite and the crème de la crème, but it will not fight any case. That area of the Bill needs to be stiffer with reference to the issue of retention. It must be considered in tandem with an impact analysis of the costs for those who are self-employed A business can only keep a CCTV recording for one month, but some Joe Soap might come along and make a claim against it after a month and one day. They are being so advised. I hear solicitors advertising for business. Touting for business was banned for decades and should be banned again. It is a case of no foal, no fee and let the patsies pay for it. Solicitors are encouraging people to claim and make spurious claims. It is despicable practice. They should not be allowed to pursue the no foal, no fee approach. They charge enough and just pass on the fee to the fools who are paying for insurance. The cost is passed on in higher premiums and people can go to hell or to Connacht.
People are beyond breaking point. The insurance companies need to be taught a huge lesson and brought to the table. For over two years An Garda Síochána has had a report on the issue. It tried to get industry representatives to sit down and engage in quarters one, two, three and four. The same happened this year. If the Government had any courage, the industry would be told upfront that insurance premiums could be disbanded and that the cost could be placed on cars and lorries through the price of fuel such that people would pay as they went. That would suit my neighbour who only drives when she wants to collect her pension payment once a week in her local post office. From 31 January she will have to travel to Clonmel because her local post office is closing. She might also drive to mass. If there are fast drivers, reckless drivers or commercial drivers, they would pay according to their usage of the roads. It would make sense to get rid of these dirty, rotten, stinking cartels. If one calls any insurance company, one must wait on the telephone line for 20 minutes and then key in one's date of birth and so on in order to obtain a quote. Strangely, a lot of quotes are the same.
Where is the regulator? We have more regulators in this country than GAA players, but they are useless, toothless and fruitless. People are appointed - we have had another appointed to the Housing Agency - and they are good jobs for the lads. When they are given these cushy jobs, they get comfortable and become part of the system. They are brought out to dinner and for a meal and on foreign trips, but they do not do what they are supposed to do because we are not policing them. We are not putting robust legislation in place. We do not involve people who are the makers and shakers such as the community and voluntary sector and small to big enterprises and the self-employed. It should not just be left to the cartels. We will have a wasteland in County Tipperary if we allow a cartel to buy up all of the land. We had it with Larry Goodman in the case of cattle. We had a suckler cow system and now know the state it is in, while the Government stands idly by. We will not need schools and will not have sports teams because we will not families and others living in rural areas. The Government is driving us out of business. Imagine charging a young fellow €4,800 for car insurance, having paid the cost of lessons, taken the driving test and bought a car. They are safer drivers than many of us who took the driving test 30 or 40 years ago.
Gabh mo leithscéal. From where is the Minister of State getting that information? He is getting it from the insurance companies. Can he not take away the coppers from his eyes to see that he is being robbed from the inside by the banks and the beef barons? They might not be robbing with guns, but there are always some inside the big cartels. Insurance companies are robbing us blind. They are robbing businesses, the community and voluntary sector and the ordinary young person. They are also robbing us through the cost of health policies. You name it - someone has everything until something happens and then there are 1,000 clauses. Last week my daughter locked her keys into her car and wanted to transfer her insurance from one vehicle to another. We spent three hours and made about 20 telephone calls in trying to do so. She did not want to drive a short distance without insurance. That is the way she should be encouraged. She had to teach a dance lesson some 30 miles away and was hardly able to function when she got there because of frustration.
There is the issue of not being able to engage with insurance companies. Deputy Michael Collins made reference to Axa Insurance leaving Bantry. It has also given notice that it is leaving Clonmel. Imagine telling people that they can travel 140 km. The sector has no respect for customers; it is time manners and respect were shown. In that regard, we have had successive weak Governments. First there was the collapse of the PMPA, the owners of which were close to Mr. Charles Haughey and bailed out. God rest them. Let us consider who has paid for any bailout reckless decisions since. It was the taxpayer and ordinary people. It is laughable. The recent storm will have the industry going on again about increases because of the cost of claims. I sympathise with anyone who has been injured or the families of those involved in fatalities and agree that we must be responsible and have health and safety rules, but there is now some amount of health and safety regulations imposed by insurance companies which look for any reason or disclaimer clause to not cover a person because he or she did not do this, that or the other, or because he or she did not have this or that box ticked. We must tackle the regulator because the body is dysfunctional and asleep at the wheel.
I am aware of businesses that are considered to be high risk such as Jumping Jacks and similar places where children go for parties. One company in Clonmel had an insurance policy that cost €11,000. It increased to €20,000 and then to €60,000 in three years. That is unmanageable. That level of viability or profitabiliy is not in the business.
Deputy Michael Collins has said the issue has been debated in the House for the past two years. I have been talking about it for the past 11 years and the position is getting worse. We are being ripped off far more than we were and premiums cover less and less. The merry-go-round continues. All of the cartels meet together and have the country crippled. We are caught in a bind and the permanent government does not seem to care. It is fine for them because they have pensionable jobs, but the lifeblood is being sucked from ordinary families, communities and small business people throughout the country.
Why are we not being allowed to bring in insurance companies from outside Ireland? People cannot obtain quotes or they are restrictive. If a person is involved in an accident or something happens, God help him or her, as the penalty will continue forever. Three levies have been imposed on premiums during the years because of company collapses and they have never been removed. After a certain amount of time one would expect the cost to be cleared.
That is news to me. They are still being piled on. It is blatantly obvious to me that if the Minister of State had any interest in the job, he would not come up with 58 or 70 recommendations. Two, three or four are required to show respect and offer support, rather than have cosy cartels milking and bleeding people dry and rubbing butter into a fat sow and I will not say where. It is laughable. People meet me on the street and they are so frustrated. We have lines of people lobbying on the issue. We have the Irish Small and Medium Enterprise Association railing against it, but nobody is listening.
I thank the Acting Chairman for giving me the opportunity to speak about this important legislation, the Central Bank (National Claims Information Database) Bill 2018 which will provide for implementation of recommendation No. 11 in the report on the cost of motor insurance by the cost of insurance working group which reported in January 2017. It is, however, disappointing that it has taken so long to implement it. We are now coming to the end of 2018-----
Will the Minister of State explain how it has taken almost two years to bring forward this legislation to establish the database?There is a huge lack of transparency, which is the key factor, in respect of which we have felt down during the years.
Today, we rightly listened to criticism of the insurance industry and its impact on households, businesses and drivers. The cost of insurance working group was set up in 2016 and has been running throughout this Government's lifetime.
The Minister of State mentioned that there was no silver bullet for this issue, but perhaps we should aim fundamental reforms at two areas. The Bill gives an indication of that in terms of the insurance industry, given the astonishing increase in premiums even during the austerity period. The other area is the legal system and profession. In the discussions around the working group, the Government's legislation and so on, the insurance industry blamed the legal profession - the book of quantum and the cost of barristers and solicitors - and vice versa. In terms of legal costs, we have seen the relentless rise in personal injury awards in the Circuit Court and the High Court since 2009. There is unquestionably an issue in that regard.
One of the key failures of this and the previous Governments in the ten wasted years since 2008 has been the lack of a serious effort, despite the Europe Union. We did so many things that our EU colleagues wanted us to do - crucified mortgage holders, set up NAMA and so on - but we never touched the legal profession. Neither the Bill of the Minister, Deputy Shane Ross, nor any other Bill will give us a legal system that reflects the reality of people's lives, incomes etc. The Law Society of Ireland and King's Inns, the two famous guilds that control education for and entry into the profession, can say what they like, but it is beyond a shadow of a doubt that there is a problem.
The IMF showed us that our insurance premiums on a per capita basis were four times the EU average just a few years ago. We were spending on average $12,000 per year compared with $3,000 in other European countries. We saw increases of 70% in the price of private car insurance between January 2014 and July 2016. All citizens are shocked to see some of the prices being asked for whenever our renewal dates arrive.
Every Deputy has been contacted time and again by all kinds of hard-pressed constituents, including young, careful drivers who follow the rules and are still being crucified by €1,000 plus. We have also been contacted by distressed taxi drivers, who are in the public transport mould. Due to changes in their training and so on, they have had to come up with vast sums of money. We have seen a slight decrease in prices in recent figures, but the working group was established because a problem existed and, like Deputy Mattie McGrath stated, many people would not accept the insurance industry's assertion that claims were accounting for 50% to 65% of premiums. We did not have the data. For that reason, I welcome the Bill in general.
Recommendation No. 12 on the quarterly publication by the working group of key aggregated metrics on claims, costs and trends was supposed to have been implemented by the second quarter of 2017. It was stalled due to the lack of consistent information across the cartel of large companies among insurance providers. A subgroup of the working group produced the first motor insurance key information report in July 2017 and a second report this summer.
I agree with the proposal in recommendation No. 13 to consider the feasibility of a claim-by-claim register. We should have all of the data available if we are to be able to examine the industry and what we can do to make it the kind of industry we want. The working group decided that a claim-by-claim register would not be feasible in the short to medium term, but it is something we should be working towards. Perhaps we should introduce legislation that requires the whole of the insurance industry to capture and anonymise these data so that we can utilise the information gathered. During the public consultation process, the Irish SME Association, ISME, suggested the raw data claims should be gathered and consolidated into aggregate levels.
Reasons were given for not progressing with recommendation No. 13, including the potential cost, a barrier to information gathering and the sensitivity of the data. On that last reason, every Deputy has been wrestling with our new GDPR legislation since 25 May. Throughout our careers in the House, each of us has always tried to protect our constituents' data, but we are now working under very strict guidelines. The Oireachtas staff have kindly set those out for us, provided us with consent forms and so forth. To some extent, the reason of sensitivity of data is understandable.
As the Minister of State knows, I have throughout my Dáil career drawn attention to the disgraceful and appalling level of casualties, both deaths and serious injuries, on our roads. As mentioned during our 24 or 30-hour debate on the Road Traffic (Amendment) Act 2018, many issues are involved, including the question of uninsured drivers, insurance fraud, automatic number plate recognition, stronger co-operation between the insurance industry and the Garda, the use of technology etc. All of these issues must be addressed. The next Bill that the Minister, Deputy Shane Ross, will introduce relates to speed limits, speeding and so on. It will be past timely. All of these are issues that the House has been lethargic in addressing, as we saw in the dreadful dragging of heels on the 2018 Act. We have not been prepared to go for the Vision Zero approach taken by Sweden and a number of other exemplars in Europe. Under such an approach, insurance premiums would by definition be much lower because the appalling casualty rate would be much lower.
Recommendation No. 30 was to expedite the development of the master licence record, about which I have asked the Taoiseach and Minister many times. The master licence record would enable us to collate all data on drivers across various databases. Outstanding road safety activists like Ms Susan Gray of Promoting Awareness, Responsibility and Care on our roads, PARC, have been calling for the master licence record for many years. Many other countries have one but we do not. It would provide easy access to see whether someone has broken a traffic or parking law.
In the past decade or so since its formation, the PSNI seems to have taken a more cutting edge approach in its application of legislation from Stormont and Westminster than we have in respect of our legislation. I hope that our new Garda Commissioner, Mr. Harris, will make this a clear priority in order that we can see a fundamental reduction in the number of deaths on the roads and a decline in insurance premia.
We have been calling for the roll-out of hand-held roadside devices to allow every garda to access all necessary driver information during road checks. Our Northern Ireland policing colleagues have access to such information, yet gardaí do not.
Recommendation No. 32 is to require the insurance industry to promote compliance with road safety legislation. It is incredible that such a recommendation is necessary. The insurance industry should be leading on this and demanding tighter and transparent road safety law.
The Bill will amend the Second Schedule of the Central Bank Act 1942 and section 22 of the Central Bank (Supervision and Enforcement) Act 2013. It is hoped we will have the database. The Minister of State might explain whether it will be operational in 2019. Clearly, we need it.
The subgroup, which was set up following the working group's report, included representatives from the Society of Actuaries in Ireland, the Central Statistics Office, the Personal Injuries Assessment Board, PIAB, the Central Bank and the State Claims Agency and was chaired by the Department of Finance. The six groups that made submissions during the public consultation process welcomed the genesis of the Bill, but an issue arose for some. The Minister of State might address it in his response. Why will it be the Central Bank where all of these data are located? Was a strong case not put for the PIAB?
Deputy Peadar Tóibín referred to the system in place in New Zealand, with which we have been familiar for a number of years. It led the way in dealing with personal injuries and trying to have a more transparent system. One wonders if it is something at which we should look again. In many ways, New Zealand has been the exemplar. It is an area to which we could look to dramatically improve our insurance and legal systems.
Section 3 has been worded in such a way as to allow the database to be extended to include other non-life insurance products. That is very welcome.
Sections 5 and 11 provide for expenses to be paid from moneys from the Oireachtas, not from the Central Bank's own funds. It is expected that these moneys will be recouped through levies imposed on the industry.
Subsections (6) and (7) of section 8 provide for the publication of a report at least once a year to include information on the relationship between premiums and costs. I welcome this provision.
I mentioned the publication of the second and final report of the Personal Injuries Commission. It found that the awards for whiplash were almost four and a half times higher than those in the United Kingdom. The Law Society of Ireland maintains that lower compensation payouts would not necessarily lead to lower premiums. The reality is that the insurance and legal industries have been gouging us during the years. I know that the Minister of State appeared recently on "Prime Time" in that regard. He seems to be suggesting that in the area of fraud, for example, it is primarily the responsibility of law enforcement agencies. We have overall responsibility to ensure, first and foremost, that they have the tools at their disposal. I know that the Minister of State is trying to put one tool in place today. We have the facts. I know that Mr. Justice Nicholas Kearns, in presenting the findings of the Personal Injuries Commission, stated he estimated that the cost of fraudulent claims could be between €50 million and €200 million per year, which is an unbelievable figure.
There is a sense of urgency about this legislation. The extraordinary role of the legal profession in setting its own fees and the influence it has on the book of quantum, also referred to in the programme, show that it escaped the rigours faced by every single profession and trade in the economy from 2008. It is the one profession which was not addressed. The book of quantum system seems to be badly outdated. It was an issue when I first entered this House. It enconpasses legal costs, legal fees, the basis of awards and how they are made. I remember asking the Comptroller and Auditor General to look at those issues. Clearly, we have not looked at introducing the necessary reforms. We need to deal with that issue, as well as addressing the issue of transparency in the insurance industry. It seems already inflated awards will continue and ultimately be paid for by the whole community through taxation. That is a key element of what the Government should have been doing in the past eight years following the verdict given by the people. In the coming months or next year, when a verdict has to be given, how the Government has managed the legal profession will be taken into consideration. I hope we will take action in that regard in the future, as well as driving the insurance industry towards becoming fully transparent and being able to give us the reasonable service we need.
With those caveats, I broadly welcome the Bill.
As my colleague, Deputy Michael McGrath indicated, my party will support the Bill which we welcome. He has alluded to the fact that there was no pre-legislative scrutiny to facilitate its timely passage. A few minutes ago a colleague raised the issue and commented that the Government was doing nothing. That is incorrect. A more fair and reasonable question to ask is whether it is doing enough in a timely fashion. That question has to be posed in the context of the actions, recommendations and associated timelines outlined in the working group's report. If one analyses the issue, we have slipped behind the timelines, which is regrettable. Some actions have been delivered on. I will allude to a couple, but some have not been delivered on. I understand the intention was that when the working group reported, this legislation would be enacted last year and operational by now. Will we even have the legislation completed by the end of 2018? It is not the case that the Government has not done anything but whether it has done enough in a timely fashion. The working group and its recommendations with associated timelines are the benchmark. The Bill is important, but it is not enough in its own right. It is but one component, one brick in a block to address the issue. It will enable the Central Bank to gather and publish the data, which is important, bearing in mind that more than 70% of claims are settled outside the Personal Injuries Assessment Board.
Whether it is 70% or 80%, the vast majority of cases are settled outside the board and transparency is needed. We might say it is needed to encourage other companies to enter the insurance market. The data on their own will not be sufficient for other companies. They will want to look at costs, profit margins and so on which are associated. The Bill affords us an opportunity to make the data transparent. I am often conscious that the Government rightly states the Central Statistics Office's figures for last year show a decrease in motor premiums. I think the figure the Minister of State quotes is 11%.
While progress has been made, we have not come back to a level that would accord with normal increases. Even if one looks at where we are today compared to 2012, the rate of increase is abnormal compared to the cost of living in general. That is a fair point to make.
Before I refer to the provisions included in the Bill, many of us, as public representatives, receive complaints from individuals. The reason the Minister of State has heard colleagues talk about the cost of motor insurance is so many people have motor insurance policies. Businesses, including small businesses, are also experiencing severe difficulties and not without victims and other casualties. The only way a business can survive is by passing on the cost; therefore, all of us as consumers pay one way or the other. If a business cannot bear the cost of its insurance policy and cannot pass it on, it will fold. If it survives and can pass it on, as consumers we will all pay.
I have a couple of comments to make on the working group on the cost of motor insurance, but, as I have said in the House before, while the global figures indicate that there are decreases, it appears to me that there are certain groups and classes of people who are being targeted. Initially, it seemed that young drivers were paying a premium, but I have noticed in my area that there are now additional groups. Older drivers are facing increases at an earlier age. People who have changed their address to within a couple of miles of where they used to live have seen increases in premiums. Owners of ten year old cars or older have also experienced increases in premiums. It is fair to say that in the modern era where cars are relatively well maintained and subject to the NCT on a regular basis, a ten year old car should not be seen as a liability.
I was chatting to someone because I have a son who is of an age at which he is looking for his first car.
He has passed his test and he is insured. There is something wrong when the cost of the insurance is likely to be more than the cost of the car. Would we not be better ensuring that the car was a better quality and more roadworthy? However, the reality for many first-time drivers and young people who want their own car rather than just being a named driver on their parent's car, is that the insurance premium is likely to be more than the cost of the car. I think we need to examine that because something is fundamentally wrong and needs to be reversed. I am aware there are all sorts of technologies that can be used to monitor the speed and driving patterns but as a general rule we need to address that.
I indicated that a number of the actions that were agreed by the working group have not been progressed as quickly as possible, which is regrettable. Rather than taking individual actions, the only way we are going to make progress is by executing all of those actions together. While today we are talking about a database that would be useful for potential insurers coming into the market, we previously talked about a database of uninsured drivers that could be accessed by the Garda. There is a cost associated with that. However, we have not made the level of progress on those areas that we had anticipated. I am not in favour of dealing with one aspect over another. A renewed urgency is required to implement all of the actions.
I am conscious that the Minister of State inherited the programme and that he did not develop it but he is responsible for its execution. I often wonder why one particular recommendation has not been enacted, namely, that consumers would be informed as to the reason or reasons for a significant increase in premium. It is probably the single biggest concern that arises. In some cases people get increases of €200 or more on the previous year, especially at a time when we in this House are talking about the two-year effect or the 2017 effect of premium reductions. Something is wrong if somebody gets a significant increase on last year's premium for the same vehicle without having had an accident. People need to be given an explanation as to why that is. I know many people shop around and often, having shopped around, come back to their own insurer and get a reduction but that is not good enough. It is sharp practice to say the least.
It is also important that policyholders are informed of claims made against them before a settlement is reached. I am sure the Minister of State has heard of cases where it arises that settlements are made but the insured party is not aware a claim had been made.
Fraud prevention is an issue that was supposed to be dealt with last year. There has been much talk about it and proposals as to how it would be funded but it has not happened as quickly as we would have liked.
While I acknowledge the work behind the Bill and welcome and support it, I specifically wanted to refer to the fact that if the other actions are not advanced in a timely fashion we will not achieve the desired impact, which would be regrettable. I have used the opportunity, perhaps not correctly, to review some of the actions in the recommendations of the working group. I am aware the sixth review has taken place but apart from that it is important that meaningful efforts are made to fast-track the actions that have slipped behind their schedule date.
I do not wish to delay the legislation because my colleague, Deputy Michael McGrath, would be quite annoyed. We are supportive of it but if it is to have the expected effect then the other elements of the action plan must be delivered also.
I have a speech prepared but it will not touch on many of the issues that have been raised so I will try to address them as best I can.
Deputy Curran's question as to whether we are doing enough is a fair one. The first report was in January 2017 and followed a period of consultation and analysis, approximately 19 months ago. We are now in the heavy-lifting phase. I welcome support from whatever sector, within this House or outside it, including from Insurance Ireland, to help us try to implement any measures we have not yet taken.
Deputy Curran's criticism is fair. We had expected to implement this measure by the end of quarter 2 in 2018 and we have not. We will have it operational at the start of quarter 1 in 2019. The work we have been doing to compile and publish the Bill and to get it through the Houses has been done in parallel with the working group and the Central Bank of Ireland in order that we can start on 1 January 2019. Have we missed two quarters? Yes, but this is extensive legislation and it is complicated and also involves trying to establish the group within the Central Bank.
In terms of the data from the Central Statistics Office, CSO, the decrease since the peak was two years ago in the summer of 2016, which was a decrease of 21%. It is the same CSO data regarding the increase from the low point, which was probably too low. A price war took place between insurance companies which involved undercutting and, in effect, they did damage to the sector. In some cases car insurance was less than the cost of replacing a windscreen. That was never sustainable and there has been a resultant cost. We lost approximately 40% of the companies that were in the market because the market was not profitable.
I have not heard anything about address changes previously but it is something we can examine. In terms of significant premium increases, we have looked at the issue in detail and we are satisfied that if every person who receives an increase gets a detailed explanation then all motor insurance premiums will increase. We think individualising the issue to that level would bring about a significant increase.
No, it does not indicate it is a big problem. What we are doing is ensuring that last year's premium is shown on the same page as the new premium if a company proposes to increase it. It will be evident that a premium has increased by X, Y or Z and there is not a cost attached to applying that. People can then shop around. We are also increasing the period of time for which people have cover so that they can have the opportunity to shop around more. We have looked at all of those issues, kicked them about and gone through them in serious detail to ensure that what we do will not increase premia but will decrease them.
Whether people want to hear it or not, it is the insurance company that settles the claim not the individual who holds the insurance policy. The matter is against the company not the policyholder. We are not satisfied with people finding out there was a claim when their policy is being renewed.
I support the establishment of the insurance fraud section in An Garda Síochána. One could ask whether it should have been established earlier. Perhaps it should, but in my view it was unlikely that an interim Garda Commissioner would establish it and set a precedent whereby the private sector would pay the salary of a garda. I have highlighted the fact that I think an issue arises in that regard. It is not the same as the Garda being hired to police a football match or other sporting occasion. It would involve the salaries of gardaí being paid for by a sector in order to progress criminal sanctions against individuals. The sanctions are pretty severe and involve a fine of €100,000 or a prison sentence. I said publically on a number of occasions that I do not believe that is the correct course of action to take. The money should go into the Exchequer and the Exchequer should pay the gardaí. The police force is independent and it would not sit well for the salaries of individual members to be paid by the private sector.
I will work backwards as best I can in responding to the contributions that have been made. The ignorance of Deputy Mattie McGrath on this matter is astonishing. We hear the same speech about everything, for example, post offices, insurance or anything else.
It is the same speech with the same buzzwords. If he had come to the AV room when I spent two hours several months ago going through these measures in detail with Members of the Oireachtas I could have informed him of what we are doing. Instead, he came to the House shouting about nothing being done and that rural Ireland is dead. He uses the same lines on every occasion. Once he has said his piece, he runs out the door. He has again left the Chamber. On two or three occasions I have asked him to await the response to his questions. I do not know where he is. He is probably halfway down the motorway by now. Maybe he will look at the response at some stage in the future.
On the closure of offices as raised by Deputy Michael Collins, the Department of Finance has no role in the internal decisions of commercial entities. The closure of the Axa office in west Cork is unfortunate but I am certain there are brokers in towns and villages throughout west Cork who act as very capable intermediaries between customers and insurance companies. Although Axa may choose not to sell its products directly to the public, brokers act as intermediaries and do a very fine job around the country.
On the issues highlighted by Deputy Tóibín, I accept we are late in tackling this issue but we will be ready to start in quarter 1 of 2019. On the role of the Central Bank of Ireland, consumer protection will not be affected by the collection of data and compilation of information. Members have queried whether the Central Bank is the correct body to compile such information. This is a compilation exercise. It is not a question of objectivity or selecting information. The Central Bank will compile the numbers and information and pass it on. Deputy Tóibín was unaware that the cost benefit analysis was concluded by Insurance Ireland. It has been agreed with Insurance Ireland that €1 million will be made available for the establishment of an insurance fraud section within the Garda National Economic Crime Bureau. I have a concern regarding how that will be funded. I do not often agree with Sinn Féin but our positions are aligned on that issue.
Tackling fraud in insurance in Ireland is crucial. Everybody wants to discuss staged fraud, which involves a person setting up an accident and putting in a claim. That is a big issue but a far greater one is the exaggeration of claims, which involves people who have been injured in a genuine accident of some sort seeking excessive damages. The number of whiplash claims in this country is a significant issue. Some 80% of claims relate to soft tissue injuries or whiplash. The Personal Injuries Commission report launched this week states that the rate of whiplash claims in Ireland is 4.4 times higher than in the United Kingdom. That is causing significant difficulty. Those who are injured should be appropriately compensated but the level of claims in Ireland is out of kilter with those almost everywhere else.
I have been critical of Deputy Mattie McGrath but I acknowledge that Deputy Tommy Broughan has had a long-standing interest in the area of insurance and the level of road deaths. Between 150 and 200 people have been killed on our roads each year for the past five years. Up to 200 families annually have been badly affected by people's driving behaviour and, in particular, the drink-driving habit of many Irish motorists. A huge percentage of road traffic fatalities involve a driver who had been drinking. That is unacceptable. It severely damages families, parents and children every year. So far this year, 110 people been killed on our roads. Those figures are far too high.
The criticism made by Deputy Broughan in terms of this process having been concluded by now is fair. However, if there are high awards in a jurisdiction, there will be high premiums. There is no way around that. The vast majority of a premium goes towards payment of awards.
Much criticism has been made of the insurance industry. Some of that criticism is fair and valid. The industry has not done itself many favours. It has been quite secretive and difficult to deal with.
On the New Zealand model, European law is European law. In this jurisdiction, the Constitution gives people the right of access to the courts.
Deputy Broughan raised the issue of the book of quantum, which is a look-back on awards over the past three years rather than an objective view of what the award should be for a particular injury. The second and final report of the Personal Injuries Commission under Mr. Justice Kearns is very clear. The Judicial Council Bill 2017 brought forward by my colleague, the Minister for Justice and Equality, Deputy Flanagan, will be hugely helpful in this regard. Mr. Justice Kearns, a former president of the High Court, believes that there needs to be a recalibration of the book of quantum by the Irish judicial council. The level of awards in Ireland is among the highest in the world. It is unclear whether awards are higher here or in the United States. The level of awards must be recalibrated. We have reached this stage because of the level of awards by the Judiciary over many years. How have we reached this point? Nobody said stop. A start was made on tackling the issue by the former Minister for Finance, Deputy Michael Noonan. The former Minister of State at the Department of Finance and current Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, then instigated the cost of insurance working group, which commenced its work in 2016 and concluded its first report in January 2017. This is part of the process of recognising that awards are too high and there is too much insurance fraud and criminal levels of exaggeration and that that must cease.
Sinn Féin Members have proposed a separate offence of insurance fraud. The Civil Liability and Courts Act 2004 provides for a maximum penalty of a €100,000 fine and-or ten years imprisonment for those found guilty of insurance fraud. Additional sanctions are not required as sufficiently strong deterrents are provided for. As referenced by Deputy Curran, we must ensure that the Garda investigate any matter involving the judge in a civil insurance claim having suspicion of exaggeration of claim. We must ensure that the correct and appropriate pathway is in place to facilitate that. Such matter would then be sent to the DPP for possible prosecution in the criminal courts. That matter has been addressed and more is being done in that regard. We are satisfied that pathway is now in place and that the sanction is sufficient. We do not believe additional sanction is required.
Criticism was levelled in terms of the process being too slow. I accept that as a fair and valid criticism but none of this is easy or quick. I thank the Members of the Oireachtas who facilitated the passage of the Insurance (Amendment) Act. I hope we can facilitate the passage of this Bill through the Houses as quickly as possible. We have also brought forward the Personal Injuries Assessment Board (Amendment) Bill and the Judicial Council Bill. We intend to move amendments on Committee Stage of this Bill which will alter sections 4 and 18 of the Civil Liability and Courts Act which we will have to alter. We will be addressing the matters highlighted by Mr. Justice Nicholas Kearns in the second and final report of the Personal Injuries Commission. We have the driver licence master plan legislation. We are now at the heavy lifting stage. I will be very thankful to Members who facilitate the adoption of these measures. The Ceann Comhairle was present for the passage of the Insurance (Amendment) Act.
That was facilitated by all Members of the House and if this measure can be facilitated with the same level of co-operation, I will be very grateful. We will for certain have this legislation passed by both Houses and be able to start this process on 1 January 2019.