Tuesday, 21 September 2021
Ceisteanna Eile - Other Questions
7. To ask the Minister for Finance if he is satisfied that insurance premiums are being successfully reduced for motorists, businesses and other users in line with the revision of guidelines for personal injury awards; and if he will make a statement on the matter. [44813/21]
The cost of insurance is a significant burden for drivers and many businesses. We have often heard from the insurance companies that the cost of claims is a big feature in driving the cost of premiums. The Government is getting stuck in and dealing with the cost of insurance, but we need to know that it is being filtered through, that the insurance companies are acting on it and passing on the benefits such as the personal injury awards being capped, and that consumers are going to get the benefit of those kind of measures.
Seeking to secure a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for the Government. It is my intention, along with the Minister, Deputy Donohoe, to work to ensure that the commitments outlined in the programme for Government are progressed in accordance with the Action Plan for Insurance Reform. One of the key achievements of the action plan was the adoption of the new personal injuries' guidelines in April this year, which was approximately seven months ahead of the expected date. I thank all of those involved for working to bring the guidelines forward as early as possible. They provide much greater certainty regarding award levels, in addition to reducing awards for many common injuries, and should encourage greater use of the Personal Injuries Assessment Board, PIAB, to settle claims. We need to make sure that the guidelines achieve these key aims and we will monitor their implementation as part of the action plan. In that regard, it will be important that insurers respect the guidelines in direct settlements, so they do not risk undermining them from the outset.
The Deputy should rest assured that both I and the Minister have been holding the insurance industry to account in respect of commitments that it has made with regard to lowering insurance premiums arising from reduced personal injuries guidelines award levels. I have held meetings with the main insurance companies in the market. These engagements were positive, with insurers indicating that consistent implementation of the guidelines should result in lower premiums. I will meet with them again soon to review their response to the guidelines and other insurance reforms.
Separately, I note the Central Statistics Office's most recent consumer price index, CPI, data show continuing decreases in the price of motor insurance. In that regard, motor insurance prices are now 36% lower than at the peak in 2016. As such, I believe that we need to look at the price reductions in the context of the Government's overall reform strategy, as important reforms to the duty of care and reform of the PIAB will further help to improve the affordability and availability of insurance for all customers. That is now a key priority in the period ahead. I assure the Deputy that work remains ongoing across the Government to deliver these elements of the action plan.
It is positive to note the various meetings with the insurance companies because many people feel that while the Government has taken measures such as the capping of personal injury awards, insurance companies are not passing on the full benefit of that. For example, a young driver, James, taking out his first insurance policy earlier this year received a quote in April, before the cap, and again two months afterwards and bought at the same price, getting no benefit from it. The insurance companies passed on no benefit. Similarly, another person buying van insurance secured only 5% of a drop in the cost of insurance. There is a limited market where one can buy insurance products for vans. It is not clear that insurance companies are giving the full benefit and I want to make sure that they do. What measures are being taken to ensure that they give the full benefit to motorists in reduced premiums?
I thank the Deputy for highlighting the situation for motor insurance policies and for van drivers. The man or woman with the van, as the case may be, is a key priority for the Government because they are the small employers or self-employed people who are the backbone of many industries in locations throughout the country.
What I will say is that, in July, before the recess, we met with PIAB and it said the early indications of settlements at that stage were they were being implemented by the insurance companies and by PIAB in line with the new judicial guidelines that had been published towards the end of April. The rate of acceptance will depend on how many people choose to take those to court, and we will be seeking updated information on that now that they have been in operation for a couple of months.
The benefit of all of this is that it will ultimately lead to a reduced number of actions going to court and the consequent legal costs will reduce as well. That should feed further into price reductions for motorists.
Many businesses will have specialist insurance and will have only a limited number of providers available to them. Again, it is coming back to that limited market, like the man in the van, or businesses such as bouncy castles, or the example we saw on RTÉ in the leisure services. They are dealing with a very limited number of insurance companies and they are seeing increases or are not able to get services. Despite the fact these measures have been taken, insurers are not passing on the benefit, it seems. The leisure business we saw on RTÉ, for example, saw more than a trebling of its insurance policy to more than €80,000. What teeth can be brought to bear on these insurance companies to ensure they pass on the benefits they are now getting from those capped insurance claims?
Deputy Moynihan is absolutely right. We need the legislation to look at whether they are passing on the full amount of reductions. We all want the same thing here - we want money in people's pockets - but the Government needs to bring forward that legislation. Even with the changes Liberty Insurance has brought in, it is next to impossible now to compare the new quotes because it has changed its whole structure in terms of how it is issuing quotes. I renewed my insurance with Liberty Insurance just last week. The base price for a new customer, and I went in as a new customer because I am not going to get sucker-punched by them, was €300 less than a renewal quote. That is what is happening in insurance. Deputy Moynihan is 100% right. The Government needs to take out the stick. We have waited long enough. The proper reductions are not happening as a result of legislation this House has passed.
I thank both Deputies for those remarks. It proves the point that one of the main actions in the Government action plan for insurance is to promote competition. That is the office I chair. I insist that when people get their insurance premium, the first thing they must do is lift the phone and make an inquiry. Normally, we have found, when people make an inquiry, they get a reduction. If people choose not to do so, we will be encouraging them through increased competition.
Another point I would make to people who have insurance, especially on the business side, is that if they are dealing with a broker and they are having difficulty getting quotes, they should please try another broker. Some people are slow to do that. They need to move around.
In regard to the leisure services, obviously, I cannot comment on an individual case that was highlighted on RTÉ recently but we have to look at the risk and any claims that can arise in this particular industry, and that was exacerbated by Brexit. That is why I have met and am meeting with the IDA to encourage new companies to come into the country, and we have had positive news on that in recent months.