Tuesday, 9 November 2021
Ceisteanna - Questions (Resumed) - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
70. To ask the Minister for Finance the action he will take to ensure that all claim cost reductions derived from the new personal injuries guidelines are passed on to consumers in the form of reduced insurance premiums; and when legislative action will be taken to reform the duty of care. [54657/21]
On 6 March, the personal injury guidelines were adopted by the Judicial Council. They came into force on 24 April, which was more than six months ago. I raised this issue with the Minister on 31 March and I am doing so again because it is important for motorists, businesses and our community sector. The reductions in rewards under those guidelines are not being passed on to consumers in full. There is enough evidence to prove that. Some of them are being pocketed by the industry. Will the Minister end the delay and support my Bill, the Judicial Council (Amendment) Bill, which would hold this industry to account?
The adoption of the new personal injury guidelines by the Judicial Council and their subsequent commencement in April this year is a significant achievement. It was achieved eight months ahead of the schedule as originally intended.
The new guidelines should provide much greater transparency around award levels, in addition to reducing payouts for many common injuries and leading to lower legal fees by encouraging greater use of the Personal Injuries Assessment Board, PIAB, to settle claims. Accordingly, this should lead to a reduction in claims costs for insurers, shorter settlement times for claimants and, importantly, help to attract new entrants into the Irish market and encourage providers that previously exited the market to return. Work being undertaken by my Department's office to promote competition in the insurance market, in conjunction with IDA Ireland, will seek to leverage support in this area.
As the Deputy knows, consistent implementation of the guidelines by insurers, PIAB and the Judiciary will be vital in achieving an improved claims environment. These are early days in terms of assessing the impact of the guidelines. As the insurance reform agenda progresses, we will continue to seek that the industry meet its commitment to reflect savings from the guidelines and other elements of the ambitious reform agenda in the prices offered to customers. In my ongoing engagement with the sector, I have emphasised the need for insurance providers to reduce premiums and increase their risk appetite to provide cover in new areas. I am engaging with the main insurers again this month, with meetings commencing next Monday on a one-by-one basis, to assess their response to the guidelines. They have had sufficient time now to come up with a concrete response and I will be emphasising the importance, when settling claims, of their not undermining the guidelines by settling for amounts that are inconsistent with them.
Another valuable tool the Government has in holding insurers accountable to their commitments is the national claims information database, NCID, which allows us to monitor both claims costs and pricing trends. To date, the database has published two comprehensive reports on the private motor insurance sector and one on employer and public liability insurance. The reports include data on legal costs, settlement channels and all the other elements that impact on the overall cost of insurance premiums.
The Minister of State said it is early days in this process. In fact, it is more than six months since the guidelines were enforced. As we see from the information provided by PIAB, it has reduced average awards by 40%, thereby reducing the cost of claims for the insurance industry. The relevant legislation was not passed by all the parties in this House to boost the profit of insurance companies, but that is exactly what is happening. The legislation was passed to reduce insurance premiums and costs for consumers but the savings are not being passed on in full.
There has been ample time to see what is happening. We have had a study by the Alliance for Insurance Reform, which looked at hundreds of different cases and found that both businesses and community groups had seen an increase of 15% in insurance costs, on average, since the guidelines came into effect. Similarly, we are not seeing the type of reduction that should be happening in the car insurance sector. We need to call a spade a spade. Insurance companies are pocketing some of the reductions in costs that are arising as a result of the guidelines. The Minister of State can meet with their representatives over and over again and have tea and coffee with them. That is fine, but he will never know what they should be charging unless he implements the legislation I have brought forward. I ask him, hand on heart, why in God's name he is stalling that legislation. Surely we all want to do the right thing. Is it just because my name is on the Bill? Progressing it is the right thing to do for consumers and businesses.
It has been a number of months since the guidelines were introduced. I want to put it on the public record that there has been a decline in the cost of motor insurance premiums, as per the figures produced on an ongoing basis by the Central Statistics Office, CSO. The cost of insurance has reduced by at least 20% in recent years and that has continued right up to the present quarter. The early indications from PIAB show reductions of up to 40%, which will see a proportionate reduction in the overall costs making up premiums and a consequent reduction in their cost to consumers.
The other point I want to mention is there have been some increases in business and other types of insurance. In a number of particular sectors, there are local problems. This could be to do with high-risk factors or a lack of competition due to Brexit. It is only happening in a certain number of sectors. I am meeting with Insurance Ireland and the Alliance for Insurance Reform in the coming days to discuss the particular sections of industry that are experiencing this problem, which is generally not affecting the vast majority of businesses.
This is what I cannot understand. The Minister of State says he is going to take action against the industry. The Tánaiste talked about it more than a year and a half ago, before the election, saying he was giving the insurance industry six months and that was it, after which the stick would come out. We in this House did our job. Representatives of the insurance industry came before the Oireachtas committee and said they would reduce premiums across the board by 15% to 20% and, if not, they would need to be asked tough questions. We did our job and the judicial council did its job. We all accept that awards have gone down, but premiums have not. Now is the time to bring out the big stick.
There is legislation before this House that has passed Second Stage and the Minister of State is stalling it. It is ridiculous. Similar legislation is in force in Britain and my Bill is about holding the exact same companies to account. There is no way that I, the Minister of State or anybody in this House will ever know what premiums should cost unless we collect the type of information provided for in that legislation. I ask him to stop stalling the Bill. It should be before the House next week.
I also want to ask the Minister of State what he is doing on the duty of care aspect. I mentioned a company in Dundalk that is going bust. Awards are coming down but we need to deal with the duty of care. There have been promises after promises in that regard. When will we see the legislation?
I want to take this opportunity to inform the Deputy that the Department of Finance sought agreement last week from the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach that it engage in pre-legislative scrutiny of the insurance (miscellaneous provisions) Bill 2021. Tomorrow, I will ask the committee, of which the Deputy is a member, to set an early timescale for that. We want it to be done before Christmas because it will eliminate issues like the loyalty penalty for home insurers and motor insurers.
There is a request to the committee for pre-legislative scrutiny, to which it has agreed. I am asking the Deputy and his colleagues on the committee to give the matter their urgent attention in order that we can deal with it promptly. The duty of care legislation will be going through the justice committee, not the finance committee. The particular legislation to which I referred is being dealt with by the latter. I welcome the opportunity to be in the committee with the Deputy doing that pre-legislative scrutiny in the immediate days or weeks ahead.