Dáil debates

Tuesday, 15 June 2021

Ceisteanna Eile - Other Questions

Insurance Industry

8:55 pm

Photo of Rose Conway-WalshRose Conway-Walsh (Mayo, Sinn Fein)
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66. To ask the Minister for Finance if his attention has been drawn to the fact that businesses are seeing large increases in insurance premiums for attempting to claim business interruption support; and if he will make a statement on the matter. [31789/21]

Photo of Rose Conway-WalshRose Conway-Walsh (Mayo, Sinn Fein)
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Businesses are seeing large increases in insurance premiums for attempting to claim business interruption support. I have been contacted by a number of business owners who have been quoted huge increases in their insurance premiums even though they have made no claims other than those for business interruption as a result of Covid. Are insurance companies increasing premiums for businesses that attempt to claim for business disruption? How widespread is this problem and what steps are being taken to protect vulnerable businesses?

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy for her question. As she will be aware, I am not in a position, nor indeed is the Central Bank, to intervene in the provision or pricing of insurance. This position is reinforced by the EU framework for insurance, called the Solvency II Directive. Consequently, companies cannot be directed as to how they price their policies or what terms and conditions they apply in relation to cover.

It is my understanding that past claims history is one of the rating factors that insurers generally will use in making their individual decisions on whether to offer insurance, and what terms to apply. However, I am firmly of the view that insurers need to take a longer-term perspective as regards their customers, particularly businesses that have been adversely affected by the pandemic and may have had to make a claim against their business interruption policies. If insurers have experienced an overall reduction in claims costs during the pandemic period and expect savings to be made as a result of lower award levels arising from the personal injuries guidelines, they need to pass these savings on to consumers and in particular, businesses that may have been closed for much of the period. This is particularly important as businesses start to reopen their doors and we work to restart the economy over the coming months. The Minister of State, Deputy Fleming, who has responsibility for insurance, recently met with individual insurers to press the need for premium reductions in this regard. The Minister of State is taking this agenda and this issue very seriously.

I know he intends to meet the providers later in the year to continue to monitor progress in this area and the impact of the overall reform agenda on both premium levels and risk appetites of insurers.

9:05 pm

Photo of Rose Conway-WalshRose Conway-Walsh (Mayo, Sinn Fein)
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I can give the Minister an example of why the insurance companies are completely ignoring both him and the Minister of State. A business local to Belmullet has seen its insurance premium go from €1,233 in 2020 to in excess of €4,000 in 2021. This is a small business with a small turnover. Those kinds of extortionate increases would be crippling at the best of times but to try to find that kind of money after seeing such long periods of closure is impossible for many. Insurance companies have not yet paid the business disruption claims and they are punishing customers for even making a claim. We could potentially see a position where a business might see major hikes in premiums for making a claim that may or may not be successful. Even if the claim is successful, the business should not be punished for making a claim. This is the reality and it must be addressed.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy. The Minister of State, Deputy Fleming, and I are very much aware of that reality and the challenge many small businesses face with the rising cost of insurance. It is the reason this and the previous Government have had such a focus on this matter. It is the reason the Minister of State has worked previously with the former Minister for Justice, Deputy McEntee, and the current Minister for Justice, Deputy Humphreys, on the implementation of guidance for claims settled in court precisely to create an environment in which we are seeing more reasonable claims. That can lead to a change in the premiums that both the Deputy and this Government want to see.

There are many different elements within our action plan for insurance reform that are being delivered. So far, for example, we have made progress on the implementation of personal injuries guidelines and set up an office to promote competition. There is also work under way on the role of the Personal Injuries Assessment Board. There are many different elements on the way because we want to address the affordability of premiums and meet the needs of businesses that the Deputy raised.

Photo of Rose Conway-WalshRose Conway-Walsh (Mayo, Sinn Fein)
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I appreciate what the Minister is saying but it is of no use to the business in Belmullet that has seen the price of insurance increase by so much. It is already a scandal that insurance companies are trying to escape paying for business disruption, despite it being exactly the type of protection people in business pay for. We have seen the industry resist passing on any savings to people's motor insurance resulting from the lockdown, and we have seen insurance companies trying to deduct State supports from insurance claims. That is an outlandish attempt to turn business supports into insurance industry subsidies.

There is clearly a view in the insurance industry that they can get away with what they want. This attitude has been encouraged by successive governments that have failed to hold that insurance industry to account. The Government must give a message to the business in Belmullet that has seen its insurance costs increase because it even made a claim, never mind whether it was successful.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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This is about the regulation of a sector through an independent regulator with the power to hold firms to account where there are practices not in keeping with regulation or where there is a breach of law. I accept the point that the general matters I refer to may not be of solace to the specific company referred to by the Deputy, but it is the implementation of these policies by the Minister of State, Deputy Fleming, along with the Tánaiste, me and other Ministers that will make a difference in the coming months and beyond. That is particularly true of the work done by the Minister for Justice and the Minister of State, Deputy Fleming, on personal injuries guidelines that only came into effect on 24 April. That is a very important moment in how we deliver the reform agenda this Government is committed to.

As I indicated in my previous reply to the Deputy, the Minister of State, Deputy Fleming, has already met representatives of the insurance sector on this very matter. I know he and I will continue to meet them about this matter to ensure we can do all we can to see these changes beginning to be reflected in the premiums faced by businesses like the one referred to by the Deputy.

Question No. 60 replied to with Written Answers.