Wednesday, 22 June 2022
Insurance Reform: Statements
I welcome the opportunity to address the Dáil on the issue of insurance reform. This is a key priority for the Government as a whole and has been a key focus of my post as the Minister of State with responsibility for insurance issues.
As all Members of this House will be keenly aware, a well-functioning insurance industry is vital for a healthy and vibrant economy. The pricing and availability of general insurance has been subject to considerable volatility in recent years, in particular for some sectors. The vast bulk of the €4.6 billion domestic insurance market employing 28,000 people across all regions generally functions well for consumers. The main sectors are private motor insurance with 2.2 million insurance policies and home insurance with 1.3 million policies. We must not take this for granted as in the very recent past we have witnessed the failure of large domestic insurance firms. This has not been cost-free, with insurance customers still paying for this through the insurance compensation fund levy, which is applied to all policies.
To put the record straight, we must acknowledge there is no single policy or legislative fix to remedy issues around the cost and availability of insurance. With only one large domestic provider, the reality is that we are heavily reliant upon international insurers that operate in Ireland on a cross-border basis. Under the EU Single Market framework for insurance - the solvency Il directive - the Government and the Central Bank of Ireland cannot interfere in such matters.
While motor insurance has improved, with premiums falling by about 16% since the formation of this Government, issues remain in relation to some businesses with high levels of footfall such as those in the hospitality, retail, tourism, voluntary and child-play sectors in terms of public and employer liability cover. Indeed, data from today's national claims information database report published by the Central Bank shows 60% of all business policies are under €1,000, while 92% are under €5,000. For this reason, the Government has continued to prioritise domestic insurance reform as identified in the programme for Government. We are delivering on this commitment through the action plan for insurance reform, an ambitious multi-initiative, whole-of-government approach that seeks to tackle key insurance issues head-on, including award levels and the cost of claims, competition, fraud, system reform and the availability and cost of insurance for policy holders.
The reform is being delivered through a Cabinet committee sub-group that includes a number of Ministers: An Tánaiste, Deputy Varadkar; Ministers Donohoe, McEntee, McGrath and O' Gorman; Minister of State, Deputy Troy; and me. Resulting from the sub-group, the Government published the action plan for insurance reform in December 2020. The action plan sets out 66 actions to bring down costs for consumers and businesses, introduce more competition into the market, prevent fraud and reduce the burden that insurance costs can have on people, businesses and community and voluntary organisations.
I will outline some of these actions and the impact they can be expected to have. The implementation of the personal injuries guidelines to replace the book of quantum was delivered in April 2021. This was made possible thanks to the Judicial Council Act 2019 and was delivered six months ahead of schedule. I acknowledge the work of the Judiciary on this issue, which represents the cornerstone of our reforms.
There is already evidence that the guidelines are having the desired effect of lowering overall award levels. This impact is clearly seen in the latest report from the Personal Injuries Assessment Board, PIAB, covering average awards made by PIAB during the first eight months of the guidelines. This shows that the total average award was more than 40% lower compared to awards under the previous book of quantum, with the same drop being seen across motor, employers' liability and public liability claims. The average PIAB award is now slightly under €14,000 compared to almost €24,000 in 2020. Significantly, 72% of awards were for under €15,000, compared to just 30% of awards in 2020 being under €15,000.
Furthermore, while legal actions have been taken against the guidelines, I welcome the two recent High Court rulings on 2 June and 17 June which stated that the guidelines are constitutional and that the PIAB had acted correctly and lawfully in assessing personal injury claims with reference to them. The judgments are, however, still subject to appeal and until settled it will naturally take time for the full impact of the guidelines to be seen.
I have spoken to the industry on a number of occasions, as has the Oireachtas, and I have consistently restated the need for it to pass on the saving from these guidelines. It has been indicated to me that pre-guidelines, some €25 out of every €100 in motor premiums related to personal injury costs. Assuming the guidelines lead to an approximately 50% reduction in these claims and their associated legal costs, it would imply a reduction to this element of the premium paid by policyholders.
Another major achievement has been the introduction of regulations by the Central Bank to ban price walking for home and motor insurance, which comes into effect next week on 1 July. The price walking ban is evidence based. Importantly, this will mean that insurers can still offer discounts for new business, thereby retaining the benefits of switching for those who prefer to change insurance provider regularly. It will also facilitate potential new market entrants who wish to attract customers, thereby supporting healthy competition. It is worth reflecting that Ireland will now be the first EU member state to introduce such a ban for insurance products.
Another development has been the establishment of the office to promote competition in the insurance market within the Department of Finance. The role of the office, which I chair, is to assist in promoting competition in the Irish insurance market and therefore reduce insurance costs and increase the availability of cover, including for businesses. The office is working closely with IDA Ireland to bring new entrants into the Irish insurance market, including in areas that have been identified as pinch-points.
In all of these engagements I have stressed the importance for insurers to expand their risk appetite into pinch-point sectors that are experiencing issues with availability and affordability of cover, particularly high-risk and high-footfall areas.
This is a priority for the office. As noted already, however, the Government cannot compel insurers to cover individuals, businesses or even certain sectors of the economy. What we can do, however, is make the Irish market one that is more attractive to enter. Implementation of the action plan by the Government is the most important step in this regard.
Group schemes allow insurers to more effectively identify and control risks through standardising risk-mitigation strategies. These offer collective bargaining and purchasing power, which single entities cannot access. Some examples of successful group schemes that have emerged recently are: Early Childhood Ireland with Arachas and Allianz, which covers crèches and afterschool facilities; Play Activity & Leisure Ireland, PALI, with Berkshire Hathaway Speciality Insurance and Arachas, for play and activity centres; Horse Sport Ireland with Allianz, which provides cover for amateur equestrian events; and the Irish Association of Adventure Tourism, Fáilte Ireland and Arachas, which are working in this area for activity-related tourism businesses.
Looking to the future, fintech also offers new possibilities. This morning, I chaired the inaugural cross-Government fintech steering group meeting. InsurTech is providing the context for Irish start-up businesses in the insurance sector to, in time, help reduce premiums and stimulate the growth of a more diverse insurance market.
Deputies will be aware that earlier today the Central Bank published its second report on employer liability, public liability and commercial property insurance, covering the period up to the end of 2020. The report provides further insights into the cost of insurance, claims settlement and profitability of the insurance market in these specific areas. I recognise that the report goes up to the end of 2020. The Central Bank is looking to publish its reports in a more timely manner in future. This is only the second such report in this area. The reports will be more up to date in future.
I, along with the industry, wish to see genuine claims settled, but we also need greater efforts to tackle bogus and exaggerated claims. I welcome that there is a greater effort being made in the courts to call out such cases. There are several other achievements under the action plan which are important to mention, some of which address fraud. This includes: the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021, which places perjury on a statutory footing for the first time; the establishment of an insurance fraud co-ordination office within the Garda National Economic Crime Bureau; and the introduction of new regulations on solicitors' advertising. All of this has been made possible through the work of the subgroup operating from the Cabinet.
Regarding the impact of ongoing reforms, motor insurance, which is compulsory for drivers, has continued to fall. The latest CSO data for May now show a reduction of just over 40% from peak prices in mid-2016. Indeed, the same data show that motor insurance fell by 10.9% in the year to May, at a time when inflation generally is running at 7.8% in the opposite direction.
Notwithstanding the fact that the action plan has facilitated progress to date, I acknowledge that there are ongoing issues in the insurance sector. Uninsured driving is a significant issue, on which I have had a number of engagements this year. According to the Motor Insurance Bureau of Ireland, MIBI, one in every 13 private vehicles on Irish roads operates without insurance. As we speak, there are 170,000 vehicles on Irish roads that do not have adequate insurance. I find that extraordinary. MIBI estimates that this increases the cost of motor insurance by €30 to €35 per motor policy. That means the people who are paying their policies are paying an additional €30 or €35 merely to cover the cost of the claims of the uninsured drivers on the roads. I want to deal with this issue. I have had positive and productive meetings with MIBI and the Department of Transport on the matter and it is welcome that the Minister for Transport's Road Traffic and Roads Bill 2021 contains a number of provisions to identify the scale of uninsured drivers in Ireland. This momentum should be built upon and all relevant stakeholders should explore how to target those drivers who refuse to purchase motor insurance, which is a mandatory legal obligation for everyone driving a car.
I also acknowledge the issue of business interruption in the context of the Covid-19 pandemic. As Deputies will appreciate, I cannot comment on ongoing test cases. These include matters of quantum and are still before the courts. Related to this issue is that of insurers deducting the value of State supports from valid business interruption claims. With pandemic supports for businesses, the primary focus of the Government and the Oireachtas was to get money to affected businesses as quickly as possible to ensure they could continue to operate. In that regard, measures such as the Department of Social Protection's recovery of benefits scheme were not envisioned in advance as part of the Government’s urgent response to Covid-19. This is a lesson to be learned from the pandemic and I hope that for all future State schemes, this House will remember that lesson and ensure that legislation is future-proofed to cover that issue. I am aware of calls for the Government to legislate to recoup the value of the moneys withheld by insurers. This was considered as part of the preparation of the Insurance (Miscellaneous Provisions) Bill. However, there were a number of issues with this approach, including constitutional difficulties with retrospectively legislating in this manner.
While we have had notable success under the action plan so far, there remain a number of outstanding actions. Three of these are key. The first is reforming the law on occupier's liability to rebalance the duty of care. Provisions have been approved by the Government for inclusion in a Bill that will address this issue. I acknowledge the work of the Minister for Justice on this, which is a key piece of our reform agenda. It demonstrates the issue at governmental level. That is why we need that Cabinet subgroup. The Department of Justice is fundamental in many of the issues I have been referring to and the Department of Finance, the Central Bank and the Department of Enterprise, Trade and Employment also have key roles. I have already explained how it relates to road traffic and the Department of Transport. It is a cross-Government approach. Reform of the duty of care is a key ask of both insurance reform campaigners, such as the Alliance for Insurance Reform, whose efforts I would also like to acknowledge today, and the insurance industry.
The next key action is to reform the Personal Injuries Assessment Board, PIAB. This is being managed by my party colleague, the Minister of State, Deputy Troy. We will bring forward a series of reforms including on mediation, retaining information, and the disclosure of information to An Garda Síochána, to reduce fraud, as well as tighten the Court's discretion regarding costs in litigation. I have met with the Garda Commissioner to discuss these matters. Drafting of this Bill is at an advanced stage. The Bill is on the priority list for publication during the summer session.
The further key action is enhancing the enforcement powers of the Competition and Consumer Protection Commission, CCPC, through the Competition Amendment Bill, which is currently before the Oireachtas. In addition, I am pleased that the Government's Insurance (Miscellaneous Provisions) Bill completed all Stages in the Oireachtas yesterday. It represents another important step on the journey towards greater transparency and openness in our insurance market. I would like to thank all Members of the Oireachtas for their input and assistance in getting the Bill through the Oireachtas in a prompt manner. I will continue to meet the chief executives of all major insurance companies operating here to ensure they honour their commitment to pass on the benefits of our reform agenda to policyholders by way of reduced premiums and increased insurance availability.
I again emphasise the importance of insurance reform to this Government. Under the action plan, a significant amount has already been achieved and the data on insurance costs, from both the CSO and the Central Bank’s national claims information database, speak to this. It is now important that we in Government, and in this House, redouble our efforts to ensure that key items of legislation, particularly those linked to the duty of care and PIAB reform, are progressed as speedily as possible through these Houses.
I am optimistic that delivery of these key reforms will increase both the affordability and availability of insurance products, to the benefit of consumers, businesses and community groups. I look forward to a constructive and informed debate. I thank all Deputies present for their attention.
I thank the Acting Chair for the opportunity to address the House on the actions my Department has taken, as well as my forthcoming plans, in respect of insurance reform. Insurance reform is a key priority for this Government, as we clearly heard from the Minister of State. It is reflected in the programme for Government, the Government’s action plan for insurance reform, and in my justice plan 2022. This is a whole-of-government effort. My Department has responsibility or part responsibility for 34 of the 66 actions contained in the action plan.
I am pleased to inform the House that of those 34 actions, 26 are now complete. These include important reforms such as the introduction of the personal injuries guidelines, the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021 and the establishment of the insurance fraud co-ordination office, opened by An Garda Síochána in July last year. Last month, I received Government approval to reform duty-of-care legislation, a key insurance reform measure and an important part of the Government's overall action plan. I propose to amend a number of sections of the Occupiers’ Liability Act 1995 in line with the Government’s policy objectives of restricting the liability of occupiers. I believe these proposals strike the correct balance between ensuring businesses, community groups and organisers of events will fulfil their duty-of-care responsibility while acknowledging the importance of personal responsibility on the part of visitors, recreational users and trespassers.
The proposed amendments, which build on a review paper prepared by my Department in February 2021 and subsequently published, contain four key developments. They will insert into primary law a number of recent court decisions that rebalance the duty of care owed by occupiers to visitors and recreational users; change the standard of care such that when the occupier of a property has acted with reckless disregard to a visitor, the standard of reckless disregard rather than that of reasonable grounds should apply in respect of any consideration of liability; limit the circumstances in which a court can impose a liability on the occupier for a premises where a person has entered that premises for the purpose of committing an offence; and allow for a broader range of scenarios where it can be shown a visitor has voluntarily assumed a risk resulting in harm. The Office of the Parliamentary Counsel, working with my Department, is proceeding to draft the proposed legislation, which will be placed before the Oireachtas for enactment as part of the upcoming courts and civil law (miscellaneous provisions) Bill 2022.
The Judicial Council personal injuries guidelines, which I referred to earlier, came into effect in April 2021. They were adopted to promote consistency and fairness in the awards of damages in personal injury cases. The new guidelines replaced the book of quantum and have materially reduced the award levels for many categories of common injuries, particularly soft-tissue injuries. This represents a significant step in meeting our commitment to making insurance more affordable for consumers, businesses and community groups. One of my Department’s actions in the Action Plan for Insurance Reform was to report on the early impact of the guidelines by the end of 2021. We sought data to complete this action from relevant stakeholders, namely, the Central Bank, the Courts Service, the Personal Injuries Assessment Board, PIAB, and the insurance sector. PIAB provided data indicating award levels had at that time reduced by around 40% since the introduction of the guidelines, while Insurance Ireland indicated its members had experienced reductions in award levels in line with PIAB figures, again at about 40%. It proved too early, however, to gauge the full impact of the guidelines, given concrete data from the national claims information database were not available and cases at that point were not coming through the courts under the guidelines.
Notwithstanding the challenges in accessing relevant timely data, I presented a report on the initial effect of the guidelines to the subgroup on insurance reform at its meeting in February. The report was published in March as an appendix to the second implementation report on the Action Plan for Insurance Reform. Furthermore, I welcomed the publication of the report on personal injuries award values by PIAB in April, which showed awards for personal injuries had dropped by 42% year on year between April and December of last year. In addition, average general damages awards had fallen from €21,850 to €11,583, or by almost half.
In that context, the guidelines have had a clear and significant initial impact since their introduction, although many older legacy claims are still being assessed under the old book of quantum, meaning the full impact may take some time to be seen. My Department will, of course, provide whatever relevant information it holds to any further assessment of the impact of the guidelines. It is important to stress that the success of the guidelines will be dependent on buy-in from all stakeholders, including insurers, businesses and community groups. If they are to succeed, it will be vital for stakeholders to ensure the award levels set out are adhered to irrespective of how the claims are settled. A level of certainty regarding award levels will, I believe, lead to greater consistency in insurance premiums. The Government will closely examine the impact of reduced awards under the guidelines to ensure these reductions are reflected in reduced premiums for customers. Under the Action Plan on Insurance Reform, my Department has been tasked with ascertaining and setting out the measures necessary to implement pre-action protocols for personal injury cases and is engaging with the Attorney General on the matter.
The discount rate is the rate used by the courts to determine the size of an award necessary to compensate a person for damages in respect of future financial loss, typically in personal injury cases with serious long-term implications for the person concerned. Following a public consultation and an analysis of the submissions received, my officials submitted a number of options to me in respect of the manner in which the discount rate should be determined. Arising from that report, I have decided to address the issue by establishing an expert group to provide advice to me on an appropriate discount rate. On receipt of its recommendations, it is my intention to use my power as Minister, under section 24 of the Civil Liability and Courts Act, to set the discount rate. Work is under way on establishing the expert group and I look forward to receiving its advice in due course.
My Department has significantly increased resourcing to the Garda National Economic Crime Bureau, GNECB. This saw the number of staff increase from 95 at the end of 2020 to a total of 127 at the end of 2021, allowing for the opening of the insurance fraud co-ordination office last July. The establishment of this office will improve co-operation and co-ordination with the insurance industry, bring consistency to the handling and investigation of insurance fraud referrals from the insurance industry and improve on subsequent referrals to the Director of Public Prosecutions, DPP, for prosecution. The GNECB has proactively shared its guidelines on investigating insurance fraud with all divisions on the internal Garda portal and is also providing training and support to all Garda divisions on how to investigate fraud. It has put in place reporting mechanisms between An Garda Síochána and the insurance industry and drafted memorandums of understanding in association with Insurance Ireland and the Alliance for Insurance Reform which are awaiting formal sign-off by An Garda Síochána and once approved will be rolled out.
A new insurance claim fraud category has been included on the Garda PULSE system since November 2018 to enable the production of statistics on fraudulent claims, something that was not really the case previously. However, a large degree of manual examination of cases was still required by Garda analysts to extract suspected bogus insurance claims cases specifically, given the insurance fraud category on the PULSE system captures a broader range of insurance-related cases. The establishment of the insurance fraud co-ordination office and the implementation of procedures in the memorandums of understanding with the insurance industry will improve referrals and the collation, classification and veracity of the data. It will ensure the central collation of all complaints of insurance fraud directly from insurance companies, as well as the assessment, classification and logging of all cases on PULSE for statistical purposes, before routing them to the relevant divisional resources countrywide for timely investigation.
The Criminal Justice (Perjury and Related Offences) Act 2021 provides a clear, statutory definition of perjury and should enable the offence and related offences to be more easily prosecuted before the courts. The Act establishes a statutory criminal offence for perjury. It provides for statutory perjury-related offences including false statements under oath, false statutory declarations and false declarations, and for penalties of up to 12 months for conviction on a summary offence and up to ten years for conviction on indictment. It will also have a significant deterrent effect on those who might consider making false or fraudulent claims and sends a clear message to people who would abuse court time in this manner. Having examined changes to reduce insurance fraud, including penalties for insurance fraud in consultation with relevant agencies, my Department is of the view that no further legislative penalties are required at this time although, as with anything, we will keep that under review. Enforcement as opposed to additional penalties is what is required to ensure the current legislative provisions will be utilised as intended.
Overall, I am pleased to see the progress the Government has made in implementing the ambitious Action Plan for Insurance Reform since its publication in December 2020. I am also delighted to be able to report significant progress within my Department on relevant reform measures contained both in the action plan and in my justice plan for 2022. I acknowledge the significant work of my colleagues, the Ministers of State, Deputies Fleming and Troy, the Tánaiste, the Minister for Finance and advocates who have been working in this area, not least the Alliance for Insurance Reform.
I welcome the opportunity to speak to the issue of insurance reform, an important matter. This is a timely discussion, two and a half years after the Government launched its Action Plan on Insurance Reform in December 2020. Although insurance often seems like a boring or dry topic, it is crucial to the functioning of a modern economy because it allows business to transfer risk, without which many would be unable to access funding and credit. It also allows for risk to be priced, enabling firms to allocate resources to reduce risk to the benefit of consumers. When there is weak availability of insurance cover, businesses and the wider economy suffer.
The National Competitiveness and Productivity Council has repeatedly warned that business costs such as insurance pose a risk to the competitiveness of our economy and the ability of businesses to thrive and grow and that risk remains.
Insurance is also crucial for citizens, however. It protects them from financial loss should unexpected circumstances come to pass such as illness, home damage or accidents on the road or elsewhere. Indeed, insurance cover is a legal requirement for anyone who wishes to drive in the State. That is why a properly functioning insurance market that provides affordable cover is so important.
Many of us will be aware that the insurance market follows underwriting cycles; periods when cover is readily available at good prices, or soft markets, and periods when coverage is limited and prices are high, or hard markets. There is no doubt that the Irish insurance market follows these cycles like every other insurance market. We know now there is much more to price dynamics in the Irish insurance market than just this, however. The national claims information database, NCID, published by the Central Bank of Ireland has offered valuable and granular data on price trends, claims costs, settlement channels and profitability within the insurance sector and the numbers are very clear. In the past decade, for example, the price of motor insurance rose by 25% while the average cost of claims for every policy fell by 29%. For several years, the insurance industry told a different story, which I will come to later. Motor insurance premiums remain too high, however, and we must see sustained reduction in prices over the coming years.
Liability insurance for small businesses, voluntary groups and community organisations remains in a state of crisis. The Central Bank of Ireland today published its second report on employer liability, public liability and commercial property insurance, which provides important insights for us all. Between 2013 and 2020, premiums for the employer liability component of policy packages increased by 44% while premiums for the public liability component rose by 25%. Not every sector is affected equally. Since 2009, premiums in the arts, entertainment and recreation sector have more than doubled; a level of increase that many simply cannot bear. In the same period, the number of claims fell by more than 25%. Premiums are doubling and claims are coming down by 25% while the number of claims on the public liability side fell by 47%.
Importantly, today's report highlights claim settlement channels and their costs. It found once again, as it has in recent reports, that settlements through the courts take longer with much higher legal costs than those through the Personal Injuries Assessment Board, PIAB. Where a claim is settled through the PIAB, legal costs make up approximately 2% of the overall costs. Through the courts, legal costs take up one third of all costs. Settlements through the courts may not always lead to better outcomes for claimants but it is definitely a moneymaker for the legal industry and that much is clear. Work must be done to explore reforms that would reduce legal costs and, crucially, strengthen the role of the PIAB.
One of the biggest changes to take place in insurance in recent years has been the adoption of the personal injuries guidelines in April of last year. These guidelines significantly reduce the level of awards for different types of personal injury. They were adopted as a result of the Judicial Council Act 2019, which was supported by my party. We supported these provisions for one reason only, which was that reduced claims through these new guidelines would lead to reduced premiums for consumers. Since the guidelines came into effect, personal injury awards through the PIAB have fallen by 42% and recent High Court decisions will ensure these guidelines are applied in the courts. It is clear that these guidelines are reducing the costs of claims for insurers. It is also clear that this is not being passed on euro for euro to the customers, which is simply unacceptable. This Dáil did not pass the Judicial Council Act 2019 to provide a windfall for insurers. Therefore, how can we ensure that insurers do the right thing? How can we ensure that they pass all these savings euro for euro to their customers? We do that through supporting the Judicial Council (Amendment) Bill 2021 that I introduced last year. This legislation would require insurers to send audited reports on an annual basis to the Central Bank of Ireland. They would be required to outline how and if they have passed these savings on to their customers in the form of lower premiums. Similar legislation was applied in Britain, where many insurers in the Irish market also operate. For reasons I cannot understand even to this day, the Government is opposing this legislation, which is currently before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Neither the Dáil nor the Central Bank has a tool like this. The NCID does not provide the information that this legislation would provide for, which the Central Bank has confirmed. This legislation would exert pressure and increase transparency, ensuring that insurers pass on these savings to their customers. We cannot allow the insurance industry to pocket these savings during a cost-of-living crisis where every euro matters to motorists, small businesses, community groups and those struggling with high business costs.
The question of insurance pricing has been debated in this Chamber and outside for some time. For years, the industry peddled several myths to explain away high insurance prices. Many of those myths were regurgitated in this House by Government spokespersons. One claim made by the industry was that 20% of insurance claims were fraudulent yet information I received from the Department of Justice showed that the entire industry reported only 63 incidents of fraud in the motor insurance sector to the Garda in 2019, which is 0.5% of claims made that year. In 2020, only 48 instances of fraud were reported. We now know that one cause of high insurance prices is blatant price gouging by the industry. I wrote to the Central Bank of Ireland in 2019. I subsequently met with the Governor and requested that he, the Central Bank and the regulator investigate and ban the practice of dual pricing and price walking. This is where insurance companies target loyal customers and charge them artificially high prices in the expectation that these customers will not shop around. This is price discrimination, which is known to harm vulnerable groups and the elderly. Customers have wondered year after year why the price does not budge when they get their renewal or even increases despite them having made no claims in the previous year. We now know the answer is price gouging by the insurance industry.
Following my request, the Central Bank of Ireland carried out a review of the practice and it will be banned from 1 July. This is a big win for consumers. However, we must monitor the new rules and ensure that they are effective. I have my own concerns regarding the ban kicking in for second renewals and not for the first renewal quote. I believe this could provide scope for insurers to dodge the ban by loading the price hike on to the first year renewals. I communicated these concerns to the Central Bank and we must keep it under review.
Of course, further reforms are required. As I mentioned earlier specifically with regard to business insurance, the issue of claims must be dealt with. In this space, there is a clear need to rebalance the duty of care. A Government commitment was made in the action plan for insurance reform to have proposals brought before Cabinet by June of 2021. The deadline was missed by several months, indicating a lack of urgency within this Government. I welcome the fact there are no proposed changes, however. The Government now must move quickly to bring legislation before the Oireachtas that is effective in rebalancing the duty of care.
Finally, I wish to mention two other issues, the first of which is the Consumer Insurance Contracts Act 2019 that I introduced in the Dáil in 2017, with all those provisions now effective since September of last year. This legislation brought a radical overhaul of insurance law to increase transparency and shift the balance in favour of consumers.
To conclude, I believe many of the myths and excuses peddled by the insurance industry for many years no longer hold sway. While much work has been done to drive forward reform, much work remains to be done and actions taken by the Government are too often progressing at a snail's pace, sometimes blocking reforms such as my legislation that are so urgently needed. Consumers cannot wait for reform and affordable insurance. They need it now, especially given the fact that we see interest rates increasing in terms of the international markets, including Government bonds. This will mean that insurance companies will make sizeable profits in the year ahead as their investment portfolios start to reap benefits for them. These matters and the other reforms we talk about scream loudly to the fact that they need to stop gouging their customers. They need to reduce premiums for motorists, businesses, communities and others in society urgently.
I welcome this opportunity to discuss insurance reform again. The cost of living has spiked as a result of high energy prices and supply chain issues, but many have been struggling under the high costs long before the recent wave of inflation. The Minister of State will be aware of all the times we discussed this in the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach going back years. Soaring insurance costs have been putting people, drivers, businesses and community groups under severe pressure for years. The Government has dragged its feet every step of the way. The Minister of State outlined measures, which I welcome, but it must be acknowledged that if it were not for Deputy Pearse Doherty, people would be paying even higher amounts than they are paying now for their insurance.
However, that journey must continue. The reforms that have been made to date have been welcome but they have mainly been to the benefit of the insurance companies rather than of the consumers, those who matter most. The consumers are continuously fleeced with insurance. We have to remember that many people who have had genuine accidents do not claim because they are afraid that their premiums will escalate. Businesses that have incidents for which they would be fully entitled to claim do not do so because, again, they are afraid that their insurance premiums will escalate. That has to stop. One has to ask in that case: what are they paying insurance for?
Despite promises in election manifestos and the programme for Government, we still only have a general scheme on reforming the duty of care. There must be more urgency. We know that small businesses, sporting organisations and community groups continue to close or to struggle due to the lack of affordable insurance. We need only look around our localities to see the trans-generational businesses that have been forced to close down due to extortionate insurance costs. These are businesses that have survived recessions and many challenges over the years, yet we have enabled insurance companies to close them down. Premiums are often multiplied without any basis whatsoever. When profitable, established businesses struggle with the cost of insurance, so do sporting organisations and community groups, but what chance do they have? It is a major threat to our communities, small towns and, indeed, our bigger towns as well as to jobs and the economy. Recent research by the Alliance for Insurance Reform showed that 42% of organisations state that the cost of insurance premiums is threatening their future and 90% state that the Government is not doing enough. When 90% state that the Government is not doing enough, we need to listen and see what more needs to be done.
Many Members will have visited Delphi Adventure Centre over the years. This is one business that is crippled by insurance costs, with a 300% increase since 2019 and an excess of up to €20,000, despite having an excellent safety record. When businesses see the percentages quoted in this House and the illusion that the prices are coming down, they cannot reconcile that with the bills they are faced with. If the Government wants the State to recover from all the current challenges for our SMEs and community and voluntary organisations, it has to get insurance reform resolved. That means it must get insurance companies to pass on the benefits to customers. The sticking point is clear to everybody. The companies are not passing it on in the way they need to. They are still price gouging and accumulating huge profits. Data from the Personal Injuries Assessment Board show the average value of awards falling by 42% in 2021 since the introduction of the new guidelines, yet liability premiums continued to increase by 16%.
I recently conducted a survey of apprentices across the country on the cost-of-living pressures they face. Despite rent soaring and fuel costs, car insurance continued to stand out as one of the biggest issues for young people attempting to get a trade. We desperately need these trades. In a rural constituency such as Mayo, where people have no alternative, car insurance is not an optional extra but an integral part of employment, self-employment and educational attainment. People are experiencing it all over the country. Even in Dublin, electricians from Dublin responded to the survey by saying that they cannot afford a car with the current insurance prices so they have to carry a 25 kg toolbag on public transport for several hours a day. Some do not even have that option. A pipe fitter from Offaly was one respondent. He is 19 years old and he said insurance costs are too much so he has to pay somebody to bring him to his job and bring him home. There are no bus routes, so driving is the only option.
We need to listen to them and we have to do more. We have to do more for the apprentices, young drivers and businesses across the board. Little reductions here and there are not having the impact that we require. Since 2009 the cost of insurance has gone up by 25% despite the average claims costs falling by 29%. For years the insurance industry has got away with stating it is because claims are too high, too many people are claiming and the like. It has been exposed continually. That is why the Government must stand up to the insurance companies once and for all and provide proper reform of the legislation. I will leave the Minister of State with one question. Why is the Government opposing the Judicial Council (Amendment) Bill 2021? That would do exactly what is necessary here. People need an explanation for that. We must do far more to stand up to the insurance companies. They are running rings around us. They have done that for years in terms of the lack of transparency of data across the board and basically closing the market. They have had it their way for too long. We have to stand up to them and show them who is boss.
When I see the Government coming back with new proposals I am reminded of Jack's mother when he came back from the market with three magic beans after selling the family's cow. This is the thing that is going to solve all our problems with the insurance industry. I worked in the courts for a few years. There was a judge from Athlone who used to say, when he thought that somebody was spoofing or not telling the truth: "When you are in a hole, stop digging". However, what happens with the insurance companies is that the Government seems to tell them: "Keep talking, we want to hear it".
For 40 years, since insurance was made mandatory, the insurance industry has made promises. It stated that if senior counsel were removed from cases, premiums would go down; if juries were removed from courts, premiums would go down; if the PIAB was introduced, premiums would go down and if the guidelines were introduced, premiums would go down. It was interesting to hear the Minister of State say, with regard to claims, that the cost of premiums reduced by 10.9%. However, that was after lockdown. As some of my colleagues said, the cost of premiums has gone up over the last decade while the number of claims has reduced by 25%. I do not believe a word the insurance industry says. I would listen more to some of the people I have represented in court than to some of the representatives of the insurance industry.
It is worth going through some of the various initiatives the Government is taking which are supposed to reduce premiums. I do not believe they ever will. Action has long been required but there is little doubt that over the last almost 50 years, particularly since 1976, the Government has failed in its attempts to bring the industry to heel. With regard to personal injury awards, a long and detailed process was undertaken by the Government. An action plan for insurance reform was the result, with 66 actions. They included reform of PIAB and reducing recourse to litigation. When dealing with insurance companies, and I dealt with many of them over the years, they often speak about material damage. Without having consulted with their clients who had taken out the insurance policy, companies decided to settle claims anyway regardless of what one said. It is easier, more efficient and cheaper for them to settle the claim despite what the client says. They do not care about the consumer or about people in general.
The implementation report of the action plan published in March has confirmed that the measures have had their intended effect. It states:
Average awards for motor insurance dropped from €22,158 in 2020 to €12,592 – a drop of 43%. [A drop of nearly half, as the Minister, Deputy McEntee, said.] Public Liability awards fell from €26,000 in 2020 to €14,776 at the end of October – again a drop of 43%. A similar reduction of 43% was experienced in the employer liability category – from €30,576 to €17,441.
However, did we see a similar drop in insurance premiums? No, and we never will. Some lawyers warned that the insurance industry would continue to set premiums as it wished despite the reduction in awards, and they were right. The insurance industry proceeded to do exactly that. It pockets the difference and drives up its profits. The amazing thing during lockdown was that the number of claims collapsed due to lockdown. What has happened since then? There is a paltry 10% reduction. When people pointed to the reduction in the amount of claims, the industry had another excuse. It stated it had to wait for the ones in the system to come through. That is rubbish. It is very telling that the Government proceeded down this path despite the industry and lobbyists offering no guarantee at all that the premiums would be reduced. They came back with other excuses. Saying they may do it over time is as much as the Government is going to get. They were not red-faced, unlike poor old Jack when he came back from the market.
Civil law reforms are now coming in. I notice that the Government is taking the majority decision regarding litigation costs. The majority of the group that was set up said that it would be more fair and more consumer-friendly than the minority view, but because the insurance companies say it is the fault of the lawyers and everybody else - it is never their fault - that decision has been taken. It will not work.
The action plan will set out other reforms. Perjury is now a statutory offence. Perjury and false and exaggerated claims have all been highlighted over the years, not by consumers but by the insurance industry. The number of fraudulent claims is massively exaggerated. Everybody knows that. We have all heard the scare stories of the shenanigans but it is tiny minority of overall claimants. Insurance companies poured massive resources into catching fraudulent claimants, including the use of private investigators. However, they already use private investigators when there is a genuine claim. Where people were passengers in cars and were very seriously injured, they engage insurance investigators, people who traditionally have great access to information coming from various sources through their contacts, all in an attempt to denigrate the genuine claimants as well as the other ones. There is a specialised Garda unit, and it is my understanding that there is a significant difference between the insurance industry's estimates of the number of uninsured drivers and how many are out there in the Garda's direct experience. I am aware of that from speaking to members of the Garda myself. All that is to say that there is very much the means and will to catch fraudulent claims, but we do not see a decrease in premiums. The industry has to be dragged kicking and screaming time and again into reform.
Particular groups are facing a lack of options within the market and the office to promote competition in the insurance market needs to examine all the options to assist them, including subvention. The ultimate solution may perhaps even be direct State involvement in insurance.
I bow to Deputy Daly's greater wisdom as a former officer of the courts, if that is the best way to describe him, as a practising solicitor dealing with some of these cases over the years. We do not necessarily need to read court reports or even Government reports on the insurance sector, as price gouging is legendary at this stage. Deputy Daly quoted a fairy tale some moments ago, but price gouging in the insurance industry is no fairy tale. To use fairy-tale analogy, if I am not labouring the point, it could be said that the Government's approach here involves a lot of huffing and puffing but it does not seem that it is prepared to blow the insurance sector's house down. In spite of all the huffing and puffing, there is very little difference. There is an absolute lack of trust in the insurance sector in this country. That is because of people's hard, bruising experience in recent years. Long before the cost-of-living crisis, we had price gouging by a lot of operators in the market. We know that pensioners and very vulnerable consumers across the country were punished by the so-called loyalty penalty when it comes to motor insurance and, to a degree, home insurance as well. Remarkably, commuters saw increases in their car insurance premiums in recent years when some people's cars were effectively parked for six months or a year in their driveway. We know that accident and claim levels reduced. Scandalously, as the Minister of State knows only too well, local businesses across the country had to fight tooth and nail to receive the business interruption insurance cover for legitimate claims they made. They had to argue line by line with the insurance sector through the courts system to get payments for business interruption claims they were entitled to have in the first place. We still have rising prices. The sector, which has behaved scandalously over the years, is still broken, and I do not believe that it will be kept in check by the Government, given the reforms it has announced to date.
We accept that in some respects, elements of the insurance industry have reduced premiums for a variety of reasons, but they simply do not go far enough. Inevitably, we will see in the coming period the cost of living being used as a cover for insurance companies to increase premiums over and above where they ought to be in the market. The cost of living is the excuse for everything currently. The head of Insurance Ireland told the Oireachtas committee last month that it was "unquestionable" that rising costs would feed into higher insurance. It does not have to be the way. The Government and the regulator ought to question that and hold the sector to account on such statements. There should be no inevitability that insurance premiums will rise, given some of the interventions that were made and some of the reforms that have been introduced in good faith, in fairness to the Government and the previous Government, to try to ensure there is a more consumer-led approach to obtaining insurance cover and to addressing the excessive cost of premiums in this country.
It has been mentioned by previous speakers that we have seen sectors as diverse as hospitality, agricultural shows and festivals and leisure and childcare centres say they have seen very substantial increases in insurance premiums recently, even though we are being told time and again that premiums are coming down. I will use one example to illustrate the point. I use this example because the individual concerned has gone public about it, such was his horror at the recent quote he got from his insurance company. It is a guy called William Sullivan. He operates a business on the Louth-Meath border. He is located in the Meath East constituency, not in my constituency. I visit his business regularly. It is the Irish Military Museum and Park. It gets thousands of visitors every year. He is a collector of significant military memorabilia, and the museum is a very popular destination for people across the country and elsewhere. When he started his business eight years ago, his insurance premiums were €8,500 a year. This year, it is €28,000. It is quite extraordinary. We have a problem in this country with a two-tier economy. We have foreign direct investment striding ahead. The jobs provided are very good and they make a significant contribution to Exchequer revenues and supporting the State. Then we have the domestic locally traded sector, which is in real difficulty. Without significant reform of the insurance sector, we will put those businesses and indigenous Irish jobs at real risk.
In the brief time available to me, I want to make a couple of short remarks about some missed opportunities that the Minister of State should consider. There is a market failure in the insurance sector. I do not believe that the extent of reforms introduced to date will address that. Fundamentally, we are just tinkering around the edges. I have said this time and again. The Labour Party has proposed a range of different interventions that are the norm in European Union countries to ensure that the market failure is addressed. For example, we have called on local authorities and education and training boards to use their ownership of the Irish Public Bodies Insurance, which is mutual insurance, to extend cover to community events and festivals. There is nothing stopping it from doing that.
I would like if the Minister of State could clarify the status of the personal injuries resolution board Bill. That will make a big contribution to the reduction of premiums and costs and provide an opportunity for business to manage better in this very difficult set of circumstances. I will now hand over to my colleague, Deputy Sherlock.
I thank Deputy Nash for sharing his time. I wish to refer to flood alleviation works and the challenges people face when they seek to purchase insurance in areas where Office of Public Works, OPW, flood mitigation projects have already been completed. I specifically refer to the Munster Blackwater in towns like Fermoy and Mallow, as well as places in Cork city where we do not yet have full OPW schemes under way, where there is a massive difficulty on the part of businesses and residents to acquire insurance. When the Minister for Public Expenditure and Reform, Deputy Michael McGrath, was in opposition, he put forward the Flood Insurance Bill 2016. The purpose of the Bill was to ensure that people who work, reside or have businesses in areas where flood relief schemes were implemented would be able to get insurance cover.
I understand that Bill died when the last mandate ended. I make no apologies in saying I will now bring that Bill forward, line for line, in my name. We will put it to the test and, it is to be hoped, if a member of Fianna Fáil does not put forward the same Bill in the intervening period, in which case I would be very happy to yield, I will put forward that Bill on behalf of the Labour Party to test the theory that Fianna Fáil will be serious about ensuring that people who live in areas where flood alleviation works have been carried out will be able to get that cover.
While I am speaking about flood alleviation works and the OPW, that scheme in Fermoy cost €30 million. It was a fine scheme. An incident took place there on 21 February last year, when a small number of premises were adversely affected and were flooded. The owners of those premises have yet to receive any kind of compensation or report in respect of what took place there. This is relevant to the insurance issue because when incidents like this occur, where relief works do not work completely and there is a breakdown somewhere, and where we do not have sight of the report in respect of Fermoy, it feeds into the narrative from the insurance companies that they do not have to cover these towns where works have been carried out. It strengthens their hand. I am hopeful, in putting forward the Flood Insurance Bill that, as I said, a member of Fianna Fáil or the Government will come forward and now promulgate this Bill, which was initiated by the Minister for Public Expenditure and Reform, Deputy Michael McGrath. If they do so, I will happily withdraw my Bill. We will test the Government on that to see if it is serious about providing flood insurance cover in those areas.
I thank the Minister of State for being in the Chamber for this important debate. In the winter of 2009, I had not been long re-elected to Clare County Council. As the Minister of State knows, the role of an elected member varies from day to day, but in the winter of 2009 I found myself falling into line with other residents, homeowners, farmers and business people in my community, sandbagging and piling up sandbags against homes in the community that were at risk of flooding. The River Shannon, as it has a propensity to do, burst its banks and the river waters, and all the creatures that live in the river, including ducks and fish, flowed down driveways and into fields where we had never seen flooding before. People told us that was a 100-year event and we probably would not see it again in our lifetimes. It happened again two years later, four years later and in 2019, which was the last time it occurred. Global warming has definitely made flooding a real issue.
However, if we go back to 2009 and the chaos and catastrophe that flooding is, only two houses in my locality flooded. Yet, at this very moment, in excess of 1,000 houses cannot get flood cover. There is something fundamentally wrong with that. People are being put to the pin of their collar in many walks of life at present but to also be denied flood cover devalues their properties and, in many instances, is causing the sale of houses to fall through. It might be asked why. The reason is when a house is up for sale, and the bank and solicitor have to scrutinise that property, they very quickly establish people in this locality cannot get flood cover and, therefore, they will not lend for this mortgage, an individual cannot buy and the sale falls through. This is happening repeatedly in places such as Westbury, Shannon Banks, Carraig Midhe, Cloonlara and Shannon town, which is the second largest town in County Clare. That is just in my own county. It is happening nationwide.
It all comes to the principle of risk equalisation, a principle that works so well in the realm of health for VHI Healthcare and other private health insurance providers. There is risk equalisation for the likes of VHI Healthcare so a smoker pays something similar to a non-smoker, a person who is overweight pays something similar to a person who is slim, and a person who is elderly pays something similar to a person who is young. It is risk equalisation to benefit all and to ensure that the widest possible catchment of people can have private health insurance. That works fine in the realm of health. That same principle of insurance does not work fine when it comes to houses.
If we think of Shannon Banks, where a tiny part of that community flooded in 2009, by any stretch of the imagination, if we look at the topography locally and the land levels, there is no way, even in the worst flood events, that the water would rise a further 30 ft and threaten homes in a neighbouring housing estate. Yet, the insurance industry has decided that is the case. It is a way of gouging out higher premiums for homeowners. It is causing major instability in the market when people try to sell and buy houses. It is a destabilising factor in itself before we ever get to the difficulties people encounter in trying to obtain mortgages and finding a house to buy. I ask that the principle of risk equalisation, good as it is in private health insurance, be dismantled and removed from the whole realm of property insurance. It has no relevance whatsoever to it and is very damaging.
Insurance for public events also needs to be looked at. So many are at risk of falling by the wayside. Tomorrow is 23 June. I am sure the Minister of State knows the song "Spancil Hill". I hope to get home for some of the Spancilhill Fair that will again take place tomorrow. It is a fabulous institution in County Clare. People from all over Ireland will come there. It is one of the oldest horse fairs in Europe. It is said that horses bought at Spancilhill were brought to fight in Napoleon's army. That is how far back that fair goes. However, it was not the Napoleonic wars that nearly ended that fair. It was lack of insurance and the insurance sector stating it could not insure the fair any more. It almost collapsed the fair after hundreds of year, a fair that survived famine, civil war and everything in between. It was the insurance sector that nearly toppled this fair. Clare County Council stepped in but the Minister of State, and the Government overall, have got to look at a mechanism for ensuring that these age-old cultural events continue to receive insurance cover in order that they can be run without too much ado.
The book of quantum is still something that should be of significant concern to everyone in this House. Some people are deserving of the compensation they get because some accidents are very real and life-changing and, as such, people deserve to be compensated. Some other people, however, if they idiotically decide to take a tumble in the toilets of their local chipper at 2 a.m. or 3 a.m., will take that restaurant owner through the wringer and will even sink the business to get compensation. That exploitation of insurance also needs to be looked at.
I will finally raise the issue of trespassing. Just last month, the Cabinet agreed a tightening up of insurance and will look at the whole realm of people filing insurance claims for being on a premises they never had authorisation to be on in the first place. Trespassing is still very real in Ireland and farmers feel it an awful lot. I recently saw a letter from someone not too far from me who wrote to a landowner to say this privately owned parcel of land, which has been in private ownership for generations, is for the enjoyment of all and not the gratification of one family. Good Jesus, this is private property, which is there for a farmer or landowner to use. If people want to hike in places and walk across land, they can do so with consent from a landowner but trespassing without someone's consent is legally wrong and should also be wrong from an insurance perspective. They are interfacing with cattle, livestock and electric fences. There could be bog holes, watercourses and whatnot. If someone is to take any risk to be on someone's land without authorisation, they need to be prepared to face the consequences, if any.
I also read the new proposals the Government is devising will make it more restrictive for burglars to file insurance claims, when they are injured in the course of carrying out their profession of burgling someone. We do not want "restrictive"; we want an outright ban. If people are illegally on one's premises with the intent of breaking and entering, robbing and stealing, and stripping an individual of wealth and assets, they should have no recourse if they fall through a Perspex roof, if they cut their leg climbing through a window or if they sustain any accident or injury while on that property. If people break the law and break into someone's property, by God, they have no right whatsoever to come to the courts system months later and scam the insurance system all over.
I have nearly finished.
Regarding the motor industry, we have considered penalty points and a raft of measures have been introduced in recent years to try to make road safety more of a priority. The cameras that some people have fitted to their cars are useful, as I saw when sitting in traffic one day. A guy walking across a pedestrian crossing tumbled onto a bonnet and claimed he had been injured. I would say he had so much drink consumed that he did not even know that he had left the high stool. Regardless, he believed he had been injured, and this type of situation is happening day in and day out. Cameras are a sure way of differentiating between the genuine case and the fraud. They are not expensive. I have one myself and it cost €100 or €120. Perhaps it should be a requirement that new vehicles be fitted with front- and rear-facing cameras before leaving the garage forecourt in order that a cache of evidence can be gathered that whittles out the fraudulent from the genuine.
I welcome the opportunity to contribute. Recently, the Alliance for Insurance Reform appeared before the Joint Committee on Enterprise, Trade, and Employment. The picture it painted of the insurance market for small businesses was bleak and stark. The alliance represents small businesses, community groups and so on. The Minister of State will be familiar with the type of thing I am talking about from his own community. The alliance told us that, despite the new personal injuries guidelines entering into force in 2021, liability premiums had continued to increase by 16% in its members' experience. We were grateful for their evidence that day. The alliance carried out a survey of members, with 42% of respondents saying that insurance costs were threatening the future of their organisations. This figure is up from 26% in 2018. The time between surveys was not that long, but the increase was stark. To put a bit of shape on these statistics, when the alliance says that the costs are threatening the future of its members' organisations, it is a direct message that is heard by the workers employed by those organisations, who hear it as a threat to jobs. This is destabilising for workers, and planning becomes difficult if you believe you are on such uncertain terms.
While there has been movement on insurance reform since 2018, those who need to be supported and protected the most say that they are not feeling any benefit. Of the members who responded to the survey, the Alliance for Insurance Reform found that 90% believed that the Government was not doing enough to address insurance costs. These are the people who are on the business end of what the Government trumpets as reforms. Reform has to mean something to businesses and business owners. It has to mean decreasing insurance costs.
The new personal injury guidelines came into effect in April 2021, significantly reducing the level of damages for personal injuries. Data from PIAB show that the average value of awards fell by 42% in 2021 since the introduction of the new guidelines. That is welcome but as pointed out by my colleague, Deputy Doherty, this reduction in awards provides a significant saving for the insurance industry. The purpose of the guidelines, however, was to reduce insurance premiums, not to provide a windfall to the insurance industry. The Minister of State will be aware that the insurance industry has done relatively well recently. If it is not passing the reduction on, it will do even better, but that is not the reduction's purpose. It has to be passed on.
It is important that we see effective insurance reform, and the speed of reform should be at the forefront of the work carried out by the Government. That reform is happening is not enough on its own. It has to happen in a timely manner. It is also important that we see a multidepartmental approach to tackling issues relating to the insurance sector, and I hope that the Departments of Finance and Enterprise, Trade and Employment can work together efficiently and effectively to deliver the reforms that are necessary to secure the future of SMEs, community groups and voluntary organisations.
At a meeting of the Joint Committee on Enterprise, Trade and Employment some weeks ago, we discussed the general scheme of the personal injuries resolution board Bill. The Bill's policy objective is to amend the legislation to facilitate an increase in the number of personal injury claims that may be resolved through the board. Tackling issues within the insurance sector across the board and in tandem is what individuals and businesses want and what is needed. We need a sea change in the insurance market, not tinkering around the edges. The public and businesses are crying out for effective, efficient and expedient insurance reform from the Government, and it is up to the Ministers for Finance and Enterprise, Trade, and Employment to ensure that it is delivered.
It is just under two months since the House last debated reform of the insurance sector. In that time, the situation has grown worse. The Insurance (Miscellaneous Provisions) Bill 2022, which was discussed at the time, is a step in the right direction, but it does not represent the radical reform needed to address the cost of insurance. The fundamental issue is cost. We must not forget that affordable insurance is fundamental to the long-term interests of our country. High insurance premiums add significantly to the cost base of the economy. The higher they go, the higher they push up other prices. In the midst of a cost-of-living crisis, that is the last thing the country needs.
No one is any doubt on this topic. The debate on insurance reform is well rehearsed. Time and again, we stand up and agree that premiums are too high and the Minister of State says that reform is under way. However, anything that even sniffs of real reform is often delayed or derailed. In many ways, we are expected to applaud the minor measures that are taken. As a country, we tend not to do radical - I do not just mean in insurance terms - even when radical is something that we need. This is why the insurance market remains dysfunctional, with extremely high insurance costs by international standards. We are complete outliers. When Mr. Peter Boland from the Alliance for Insurance Reform appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, he stated that his members were "met with disbelief - and, in some cases, laughter" from European counterparts over the extent to which insurance remains such an issue in Ireland.
While an action plan for insurance reform has been published, the pace of change has been painfully slow and resistance to meaningful reform seems to be growing. The second implementation report on the action plan, published last March, provided no updated timelines. Without target dates, those actions are little more than aspirations. We all accept that Covid and inflation have impeded progress, but insurance reform has been on the political agenda for years. These unforeseen events have only accelerated the need for reform and they should not be used as barriers.
Policyholders are struggling more and more. A recent survey by the Alliance for Insurance Reform found that 42% of organisations believed that insurance premiums were threatening their future while 90% said that the Government was not doing enough to address the issue. Even the new guidelines used by the Judiciary to decide the quantum of awards for personal injuries have not had the desired effect. While they have had an impact on the cost of motor insurance, which has decreased by 12.1% in the year to the end of March, their impact has been minimal in other areas. CSO inflation data show that home insurance only dropped by 0.5% over the same period and was actually up 3.5% during the month of March, while public liability premiums increased by a whopping 16%.
If the Government wants to protect communities, charities, voluntary organisations and SMEs, then it must address the threat caused by insurance companies exiting an already uncompetitive public liability insurance market. Competition in this market is urgently needed and efforts to attract more market entrants need to be ramped up to drive down costs. Without competition, already struggling businesses will fail, local services will cease operating and communities and voluntary groups will be unable to hold events. In many cases, what makes our communities unique is how the events they hold reflect them. We have been discussing this issue for decades. Too often, events are not held because of the insurance implications.
Since the new guidelines were introduced in April 2021, damages across motor, employer and public liability fell by 47%.
However, insurers did not pass on these savings to their public liability insurance policyholders. While I appreciate that the rise in the number of claimants going to court has undoubtedly hampered efforts, the Government should not be found wanting. An awful lot more needs to be done. I understand that some claimants genuinely feel it is better to go to court, but much of this spike is motivated by the profits legal professionals can garner from dragging claims through the courts. This is why speedy passage of the Personal Injuries Resolution Board Bill 2022 is so needed. However, from reading the general scheme, even this welcome Bill needs to be much strengthened. In particular, meaningfully increasing the number of personal injury claims which can be settled through the Personal Injuries Assessment Board is needed. I hope that the Minister will listen to some of the concerns raised during pre-legislative scrutiny and strengthen its provisions to enable the Personal Injuries Assessment Board to adjudicate on such cases.
Another area in need of reform is duty of care. It has been over a year since the Department of Justice conducted a review of the current legislation and examined duty of care provisions in other countries. The Government’s action plan committed to making proposals to Cabinet to rebalance the duty of care by June 2021, but this deadline was missed. These changes were only approved by Cabinet last month. The current absolutist approach to duty of care obligations places a heavy burden on organisations, regardless of how people act on their premises. For communities, charities, SMEs and event organisers this is an extremely pressing issue but this Government does not seem to share this sense of urgency. One would be forgiven for forgetting that Fine Gael prides itself on being the party of business, given that it has been in power for 11 years and is yet to address this long-running burden on many businesses.
Another long-running burden is the cost of childcare. We are led to believe that it will be a priority for budget 2023 and I hope it is. With the national average price for childcare now hitting €800 per month, and €1,276 per month in Dublin, I sincerely hope that the Government does not renege on that commitment. To cut the cost of childcare, interventions from every angle are needed, including insurance costs. If you reduce the cost of premiums experienced by crèches and Montessori schools, that benefit can be passed on to families. Now more than ever, this saving is desperately needed by struggling families.
The Social Democrats has long argued for the State to do more to promote the concept of co-operative or group insurance. Strong models already exist in areas such as the social housing sector and far more businesses and sport and community groups could enjoy stable and affordable insurance cover if this was promoted. These are the kind of creative solutions that the Government should be pursuing. Simply tinkering around the edges is unsustainable and indefensible. The customer must be at the centre of insurance policymaking, not the industry. Lest we forget, it is customers who have carried the burden of high premiums, while insurers profiteered. Insurance reform cannot be sidelined any longer because everyone except the vested interests loses under the current system.
I want to reiterate the point that was made by some others about flood insurance and the experience with it. I have also had people in my constituency contact me about not being able to sell their homes or about having gone sale agreed before the sale fell through when they realised there was an issue with flood insurance. Some of these were houses that never flooded but where there was a general issue around river catchments. This is a significant impediment. The other thing is that the OPW has done significant work, work which has held up under serious pressure, but we are slow to see a change from the insurance companies. I have had situations where there is no prospect of an area being flooded because it is up on an incline and yet people have struggled to get flood insurance in that kind of scenario. That needs to be tackled from the point of view of people being able to get flood insurance and because of the impacts it has on people if they want to sell as it can be the ultimate impediment.
I am not sure if I will use all of my 13 minutes but I will give it my best shot. I commend the Ministers of State, Deputies Fleming and Troy, for the work they have done. From listening to other Members I understand that the pace of change might be a bit arduous and slow at times but neither Minister of State can be accused of inaction on this. They are to be commended for the action plan on insurance that they undertook. Over 80% of the recommendations contained in that report are implemented at this stage, which is a good start, and I urge for that to be completed as quickly as possible. Many people get frustrated and in my private discussions with the Minister of State over the years I have expressed frustration at the price of motor and house insurance. However, even I have to concede that in the last year in particular premiums have reduced slightly. A survey was done which showed that on average motor insurance premiums are down by 10%, which is even reflected in what I have found in my insurance renewal premiums.
Second, on the actions of the new personal injuries guidelines, claims are down by about 40% according to the Personal Injuries Assessment Board. The awards and general damages for minor injuries are down by about 47% so there is clearly activity there. I concur with other Members that this needs to be passed on by the industry at a greater pace.
Third, I would like to bring up the area of competition. There is a distinct lack of competition in Ireland, not just in banking but also in the insurance sector. That is having a knock-on effect in overall pricing and premiums. I understand that the Minister of State is chairing a committee encouraging new insurance companies into Ireland and he has specifically tasked IDA Ireland with going abroad to try to source new competitors into the market. The Minister of State might be able to give us a couple of words in his summation on how that task is going.
I also mention the upcoming Personal Injuries Resolutions Board Bill 2022 and I know that work on this is ongoing. Deputy Cathal Crowe mentioned a while ago that there are a lot of spurious and dubious claims and we need to have a hard line approach to them and adopt a much more stringent legislative policy towards how we deal with this. I am encouraged to see movement on price walking, or the penalty for customers who have demonstrated their loyalty to insurance companies over the years. I understand that Ireland will be the first country in the European Union to do away with that practice, which is also to be welcomed and hopefully we will see that felt in consumers' pockets sooner rather than later.
Amendments to the Occupiers' Liability Act 1995 and the rebalancing of the duty of care were touched on earlier. This is something that has gone on for an eternity and it is great to see that the Government is active in this sphere. When we say we are rebalancing the duty of care I hope the onus will firmly fall on the trespasser or the person who is utilising somebody else's land rather than the landowners themselves.
I also mention the Insurance (Miscellaneous Provisions) Bill 2022, which we are hoping will enhance transparency around the practice of insurers deducting State supports from insurance claim settlements. This is something that stuck in my craw during the pandemic. At that time we saw that the practice of some insurers was to take advantage of the fact that the State had subsidised businesses during the pandemic, when they needed it most. It was abhorrent to see insurers deduct from the settlements.
That kind of action shows more than anything what one is dealing with in the sector at times. In the middle of a pandemic, it stuck in my craw. I know it irked many other people as well. I welcome work on the Insurance (Miscellaneous Provisions) Bill.
I will mention home and flood insurance. In areas where the OPW has implemented successful schemes, action needs to be taken in terms of the protections we can give to people, many of whom have been flooded on numerous occasions in their lifetimes. With one claim, they are often dismissed from getting a subsequent policy to insure their homes. Even if they are given the right to access house insurance, it is often at exorbitant prices. We need to look firmly at areas where OPW schemes have been delivered. Where it is demonstrable that the OPW scheme might work, we need to be there to help people by reducing home insurance premiums in flood-risk areas.
I thank the Minister of State because a number of weeks ago he met a group of people from the children's entertainment industry with me. For many businesspeople in the sector who operate bouncy castles, play zones for children or whatever the case may be, it is their single greatest expense. There has been difficulty in sourcing reasonable insurance premiums in recent years and many businesses are bundling together to try to get communal policies. That is helping somewhat but it needs to be on the Minister of State's radar in terms of what he tackles next.
On flooding and subsidence, there are issues with outdated maps and historical legacies. These matters need to be reviewed periodically. Flood insurance is often based on areas that might not have flooded in more than 100 years but because they are coloured a specific way on the map, despite having no recent history of flooding, it carries over. Being practical, we need to review that periodically to give people a fair chance of getting reasonable quotes for home insurance.
I commend the Minister of State on the work he has done. Progress is slow up here. We know that, but, in general, the Ministers of State, Deputies Fleming and Troy, have proved to be very active in this and I hope it will be passed on to consumers into the future.
I am sharing time with Deputy Martin Kenny. I presume he is on his way. I am pleased to participate in this debate because there has been quite an amount of discussion about the cost of living, doing business and operating voluntary community services in recent weeks and months, and rightly so. The pressures in this State are so great on many workers families, small businesses, etc., because the most recent increases, especially in respect of fuel and energy, are the latest in a long list of areas in which the Irish people are being ripped off on an ongoing basis. We often discuss here how rents are among the highest in Europe and mortgage interest rates are among the highest in the Eurozone, the costs of childcare and the fact we do not have anything close to free education, despite the rhetoric often used. The cost of insurance is astronomical for many families, motorists, businesses, community groups and anybody engaged in a practice for which insurance is needed. That is a crucial point that needs to be made: these people need insurance. It is an essential service in order to operate. Therefore, we cannot treat this in the way we might do other private services. The provision of insurance cover is as important to a family, motorist or business as access to fresh water, wastewater facilities or electric facilities.
We cannot allow, as successive Governments have, this to become a private enterprise matter. That approach which Governments have taken has allowed insurance costs to dominate and become so large and astronomical that it is a preventative starting point for people to enter business. We have heard discussions around facilities that have been forced to close and businesses forced to lay off staff as a result of the huge insurance premiums or the inability to secure insurance cover at all.
The work Deputy Doherty has done on this has been incredibly important because he has shone a light on practices of excessive insurance costs. I commend him for that and welcome the fact the Government is taking minimal steps, but they are only minimal. It must go further and implement all the proposals that Deputy Doherty has laid before the House.
The issue of insurance reform probably affects every citizen in the State, in particular those who are driving and working. Car insurance is one of the key issues that needs to be dealt with because, in spite of the claims by various insurance companies about what will happen once claims come down through PIAB and all the measures we have to bring them down, we still have very high insurance costs in this country for motoring. That needs to be dealt with. The issue is that it is a private cartel. They are looking after each other and comparing prices with each other, and the public is suffering at the end of it.
In recent days I spoke to a community group in a town near me that runs a festival every year. Because of Covid, the festival has not happened for the last number of years. Now they are back up and running and hoping to run it again. They cannot find a company that will cover their insurance for that type of on-the-street music festival. That is a serious issue for our tourism industry and for commerce in many towns in which a weekend like that is a little bonus, bringing a few extra people around, and they can hopefully try to manage with it. However, they cannot get insurance. If they cannot get insurance, they cannot run these events.
The Minister of State has engaged with the insurance industry, but the process is taking far too long. These problems are immediate. The organisers cannot say they will leave the festival for another year and hopefully get insurance next year or the year after. When a community does not go ahead with an event like that, it dies and never comes back again.
The Minister for Justice announced earlier that she is hoping to bring forward proposals which will mean that there will be more personal responsibility for people. That is welcome and good but it does not come fast enough to relieve the problems people face. There are community projects and events that cannot go ahead and businesses that cannot operate, particularly in leisure and other industries like that. For instance, people who run bouncy castle businesses cannot get insurance or are finding it very difficult to do so. I have been contacted by businesses that run adventure sports involving kayaking, stuff on rivers and all that sort of thing. It is extremely difficult for them to get insurance, and they are priced out of it all the time. There are probably only one or two companies in the country quoting for those kind of activities right now. The Government needs to get a grip on this and deliver, not in the long term but in the very near term. Before the end of this summer, we need to see real change in the insurance industry.
On Monday this week, Fettercairn community and youth centre in my constituency announced that it has had to cancel its summer projects for this year because of the extremely high, unaffordable insurance costs it faced. That story is replicated around the country, resulting in a crisis for community groups, young people and families everywhere. The events committee in Fettercairn said that it has exhausted all avenues but found that insurance costs were at an all-time high, leaving no option but to cancel this year's summer project. These summer projects are non-profit events and it is a non-profit organisation designed to give children and young people a chance to enjoy themselves for a few weeks of their summer holidays through visits to water parks, adventure centres, working farms and other activities.
It was an important part of the summer for the community in Fettercairn for decades but it is gone this year because of the cost of insurance. Obviously, people hope it will be back again next year but, if we do not get a grip on this crisis, it will not be. It is a great loss to families and children in Fettercairn and this situation is replicated right across the country.
It is entirely unacceptable that the profit motives of private insurance companies determine whether ordinary people and their children get to enjoy summer activities. To add insult to injury, the fact that the summer project in Fettercairn cannot go ahead comes hot on the heels of the closure of the Fettercairn Youth Horse Project in the same community for the same reason, insurance costs. This is another project that has been an invaluable part of the community for 22 years. It has been of enormous value for thousands of young people and adults, many of whom have complex and additional needs. It is closed completely at present because it cannot get the insurance it needs.
This entire debate and all of the examples we are hearing regarding the impact the insurance market is having on community groups in Fettercairn and across the country again demonstrate why we urgently need to break with the model of for-profit insurance and why we need a State insurance company to provide insurance as an essential public utility on a progressive, not-for-profit basis that takes account of people's and communities' ability to pay. Such a system of State insurance would provide the cover needed to ensure that these and many other community projects can serve their communities unhindered by the profit motives of insurance companies. The underlying assumption behind many of the so-called insurance reforms of recent years is that increasing transparency will increase competition and that this will inevitably lower costs. This flies in the face of our past experience, which shows that the real result of increased competition is an intensified cycle of boom and bust. Put simply, we cannot leave the insurance industry to profiteers. It is too important. The rights of the community in Fettercairn and communities right across the country are too important to leave to the capitalist market. Insurance should be run as a public utility in public ownership and as a service for people rather than as an extortion racket for insurance companies' investors and owners.
The whole issue highlights the lie that the model of free market capitalism is somehow efficient. For whom exactly is it meant to be efficient? It is not efficient for the workers who have to spend time every year shopping around for all of the varieties of insurance they need and looking at difference insurance products to try to find the best possible deal. It is not efficient for older people who may not use the Internet and who are therefore left vulnerable to being ripped off without any knowledge of the rip-off being perpetrated upon them. It is efficient only for the insurance companies, which utilise the mass of information available to them to target people and to maximise their profit. That mass of information should instead be available to our society as a whole and used to benefit ordinary people rather than to rip people off. Decades of history in respect of both the insurance market and the banking crash should be all the evidence we need of this.
Even the deputy governor of the Central Bank acknowledged during a meeting of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach we had a number of years ago that presuming that encouraging more competition will lower costs is an act of faith and relies on the prior existence of very high profits in order that "new entrants will come in and drive down premium rates". Rather than endlessly waiting for the invisible hand of the market to be freed to work its magic, the solution is for the State to nationalise the insurance industry to provide affordable insurance to car owners, homeowners, community organisations and small businesses as an essential public utility. A progressive, non-profit basis would mean taking account of people's ability to pay and ending the systematic discrimination against young people, those on low incomes and working-class communities. That is the single most radical reform of the insurance industry that is needed if we are to end the crisis facing the community in Fettercairn and other communities across the country.
I wish our visitors from Cork the best of luck today. Unfortunately, I think the Dubs might have the measure of Cork this weekend, but I would say that, would I not? I really appreciate the opportunity to contribute to this debate. I am on the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach of which Deputy Paul Murphy was previously a member. This is an issue that has come before us and the Minister of State has given us a great deal of time, as have his ministerial colleagues, to debate it.
It is not a new issue. I remember when I first got involved in politics and joined a party just under 20 years ago, the first campaign I was involved in related to the motor insurance rip-off relating to young drivers and how students, like myself at the time, people of 17, 18, 19 and 20 who, unfortunately, had to drive cars in order to simply get to college or to our part-time jobs were prohibited from doing so. It was quite clear that buying a car was much cheaper than getting it insured for a year. That is why, as a Member of the Seanad, I was very supportive of the setting-up of the working group on insurance reform.
I am grateful to see that motor insurance costs have reduced by 40%. However, it is disappointing - and we can all share in this disappointment regardless of our ideological approach to this debate - that we have not seen that replicated to the same extent in health insurance and home insurance. There are a range of sectors, to which other Deputies have already alluded in this debate, we all have individual experience of in our constituencies. We all deal with constituency groups, businesses and individuals who either cannot get insurance or for whom it is so prohibitive that it is not an option for them to proceed with the event in question. They may have to alter the event or completely reassess their business model.
Many of us spent this afternoon meeting the Federation of Early Childhood Providers. Some of us went to the audiovisual room for its presentation. Insurance costs for businesses in the early years sector, whether Montessori schools, crèches or preschools, are a contributing factor to the lack of availability and opportunities for those looking for childcare for those of preschool age, which, in turn, has a great impact on the wider economy and wider society. There has been an element of relief but it is still one of the massive barriers for people seeking to set up their own childcare facilities. We can talk about obstacles such as finding the space, getting planning permission or being able to meet the costs in the context of the rising costs of utilities or to work within the fairly meagre allocation of funding from central government, particularly when it comes to those who are solely involved in the early childhood care and education scheme, but insurance is definitely a major factor. It is a consideration for people, including the five providers in my local area that are more than likely going to close this year even though they do not want to. They have full lists but it is a question of whether it is better to keep the facility open or to look elsewhere. That is a common issue around the country and not unique to my constituency or the greater Dublin area.
One of the other areas that has been referred to is that of festivals, event hire and so on. My own local GAA club has had to completely change its family fun day on Saturday because it cannot afford the insurance that goes with bouncy castles and other inflatables - the normal things kids find so much fun in. As someone who has children of that age, I can tell you that there is definitely a black market for those trying to get a bouncy castle for a birthday party or a first holy communion because they are in such short supply. Again, it comes down to insurance costs being so prohibitive. Companies are simply not prepared to go into this area. These are the areas the Minister of State has undertaken to work on. They are the clear, obvious and practical areas about which people are coming into my office. They are the areas in which parents, children, families and community groups are being robbed of the opportunity to do very basic things.
This leads on to the more commercial scale and the ability to open children's play centres and various other activities in our communities. Many such facilities had to close down during the pandemic for understandable reasons but many have not reopened and will not reopen. There is now a dearth of such facilities. Despite all the other rising costs, insurance is still the greatest barrier. It is not simply a recreational matter. These are good businesses that employ a lot of local people, particularly on a part-time basis, including students and others. It is an issue across the country whether in Bray, Wicklow town or Dundrum and Stillorgan in my constituency. They are missed by a great many people. It is an area we need to continue to work on.
As I have mentioned, we have seen great progress with regard to motor insurance but a lot more can be done. I do not fault the industry.
I do not fault customers or the businesses that need to get the insurance or indeed the lawyers and judges who are working in this sphere because it is something that needs a complete response and the Government alone cannot do it. I appreciate the legislative moves and the interventions that have been made but they are still a factor.
I am not going to do down the insurance industry. The insurance industry is a vital part of our economy which provides a really important service and employs tens of thousands of people either directly or as brokers or otherwise and we need that industry. With the post-Brexit economic diversification of our economy, we have seen large-scale insurance jobs move from the City of London to Dublin to continue to have access to the European Single Market. That is a boon. These are really good jobs ensuring people can live good lives and contribute back to the economy. We need to work with companies and the providers but it comes back to the core areas.
When he is wrapping up, I ask the Minister of State to provide a breakdown. Each of us has raised individual areas and given examples of clubs, festivals or businesses in our own community. I do not expect him to provide specific answers on the Fettercairn festival or Ballinteer St. John's GAA club but they are all very distinct sectors.
At one stage only one brokerage was providing insurance for early years education, bringing in options from the UK for early years providers, including crèches and Montessori schools. Insurance needs to be provided to early years providers, festivals, events, youth resources and the child entertainment sector. We also have traditional insurance that everyone thinks about such as home, health and car insurance. We need more than one approach to address the overall insurance area. We need to see the same success we have seen in the motor industry come into early years sector and festival insurance.
Insurance is one of the largest bills people face on an annual basis. Many small businesses, community groups, motorists and homeowners cannot make a living without insurance. Insurance companies are well aware of this stranglehold. Between 2009 and 2020, insurance companies increased liability premiums by 25%. They had an operating profit of 20% in 2020. Following the introduction of the new personal injury guidelines which came into force on 24 April 2021, data from the Personal Injuries Assessment Board show a 42% drop in awards. However, a recent survey by the Alliance for Insurance Reform shows that premiums have risen by 16%. I call on the Minister of State to ensure these significant savings are passed on in some form to already squeezed customers facing inflation rates not seen in this country for more than 20 years.
It is incumbent on the Government to use its power put pressure on these companies. One significant way it could do this is to support Deputy Doherty's Judicial Council (Amendment) Bill 2021. It simply provides for the monitoring of insurance companies by the Central Bank and the Oireachtas to provide an annual auditing report to assess if some of these savings can be passed on to their clients. I do not understand why the Government would oppose such legislation which would provide customers with a robust form of protection against overpricing.
Local clubs and associations even tidy towns committees in my county are coming under severe pressure to continue to provide insurance cover for their members. Some clubs are asking members to take out their own private insurance. This will act as deterrent to upcoming sportsmen and sportswomen, putting parents under even more pressure and will cause some smaller groups to disband altogether.
The Government must act accordingly. Too many sectors, such as self-employed, tradespeople, leisure, motorists, childcare, tourism, clubs and all sorts of associations are affected by an unregulated free market. We welcome the setting up of the office to promote competition in the insurance market, but this must go hand in hand with measured scrutiny and annual collected empirical data of the industry to ensure that people are not paying premiums way above the norm. I call on the Government to support the Judicial Council (Amendment) Bill 2021 to curtail the excessive profiteering of this industry and protect the citizens of this country from being overcharged.
Even though the personal injuries guidelines came into effect last year, many groups and organisations have still not felt their benefits. The Alliance for Insurance Reform has found that liability premiums have actually increased by 16%. The same survey found that 42% of organisations which responded believe that insurance costs have put their future in jeopardy. While those increased costs are affecting the organisations, the premium rises are impacting the communities which these groups serve. For example, the estate where I live will have been open for 40 years this year. We had planned to hold a party, but we cannot have a bouncy castle for the children because of these insurance claims, which is crazy. Now more than ever after two years of pandemic, we need to be able to promote our country especially internationally, but this has been prevented by high insurance costs.
After discussing the insurance costs being incurred by community groups organising and hosting events and festivals, members the Tipperary Cahir Cashel Municipal District decided to write to the Minister of State. They made the point that while local authorities have increased funding for schemes and grants to facilitate local community groups, spiralling insurance costs have resulted in major restrictions being put on such groups. With all the restrictions it is not worth holding anything anymore. We need a rebalancing of the duty of care to ensure the community sector, voluntary groups and small businesses face a fair playing field in getting access to affordable insurance. The same is the case with childcare, leisure, tourism and self-employed tradespeople who face a shortage of insurance options in the sector.
I have been contacted regularly about insurance for thatched buildings. In April the last domestic insurer for this group left the market, meaning that anyone seeking a new quote is unable to insure their home. Any person whose insurance lapsed or could not avail of it previously cannot get insurance for their thatched domestic home. The thatched property insurance action group have written to the Minister of State, Deputy Noonan, and made a submission in respect of action 29 of Heritage Ireland 2030. I urge the Minister of State, Deputy Fleming, to read this letter and take in its observations and suggestions. This issue has the potential to affect mortgage contracts and, of course, the retention of these valuable aspects in our heritage. The Minister of State, Deputy Noonan, has advised that under action 6 of A Living Tradition, work is under way to establish which companies are prepared to write insurance and the affordability of such premiums. I would appreciate any update the Minister of State, Deputy Fleming, can give me. I again urge him to read the latter from the thatched property insurance action group.
I always try to bring the concerns of constituents into my contributions, when possible, because the most fundamental purpose of us being here is to represent our constituents. The week before last I received an email from a lady in County Wexford, which is relevant to the topic of insurance reform. It stated:
I am writing to you in relation to the Alliance for Insurance Reform.
Ireland has an incredibly skilled circus industry featuring world renowned performers and coaches. Despite our industry being small in numbers we are highly committed to our safety standards and have been updating our knowledge and protocols continuously over the years. In recent months our insurer informed us that the underwriters are no longer able to cover ‘Aerial Dance’ and have removed aerial dance from their list of approved activities. I am now in a situation where I have put massive time and financial pressure on getting myself through the intensive training to qualify as a coach and performer to be faced with an insurance crisis placing significant threat on the future of myself as a performer and coach, the futures of my coaches and fellow instructors, and the future of the overall circus arts industry, here in Ireland.
Ultimately government can and must get liability insurance premiums down to affordable levels with reforms that keep them that way. Recent research by the Alliance for Insurance Reform shows that 42% of organisations say that insurance premiums are threatening their future. While recent reforms such as the judicial guidelines are welcomed and having an impact of motor premiums, they are clearly not having an impact on the liability premiums paid by businesses, voluntary and community groups, sports and cultural organisations and charities.
This is just one industry facing serious problems when it comes to insurance.
Many other people in other industries could tell similar tales of insurance rates becoming unaffordable and businesses subsequently in jeopardy. It has happened in the childcare sector. It is happening on an almost daily basis to community groups trying to run fundraisers which were run perfectly safely for years.
I wish also to draw attention to the views of the Alliance for Insurance Reform who are doing sterling work in pursuit of improvements. It highlights that the current personal injury system, via the Personal Injuries Assessment Board, PIAB, delivers damage well in excess of European norms to plaintiffs in a manner that is quick and low-cost. When claims for minor injuries go to litigation, only lawyers benefit. Equally, insurers cannot continue to delay the delivery of reduced premiums or all the benefits of the reforms being processed currently and recent High Court decisions will flow directly into the back pockets of insurers as additional profits. We expect substantial reductions to the cost of liability cover and further proportionate reductions to motor insurance costs immediately.
All of this seems to link back to the decisions of the Judiciary. I know we in this House must be very careful around the separation of powers. However, if our legal system allows exorbitant pay-outs for minor injuries, or even if there is a threat of such pay-outs being awarded, the inevitable consequences are that premiums will increase and remain high. Any actions that can be taken by the Oireachtas which do not infringe on the separation of powers must be considered to help the many struggling industries to find insurance cover.
I welcome the opportunity to speak about insurance reform. We could talk about many aspects of insurance but I want to home in on a few matters. In my area, voluntary groups have rural social schemes and community employment schemes which do work in the community. However, they are not able to do work on the roads or in public areas without having public liability insurance. Those groups are doing the work of the local authority and that work should be covered by the local authority as part of its overall insurance cover. The situation as it stands is creating a layer of insurance on top of a layer of insurance. People, including Tidy Towns volunteers, cannot do work in those areas. They cannot do grass trimming or whatever else. Local authorities do not have the people to do that work. We must be practical.
Between employer liability and public liability insurance, professional indemnity insurance and product liability insurance, we are creating and layers and layers of insurance. Take the example of any Government body involved in building a project, a housing scheme or whatever else. The relevant local authority must take out insurance on the site and the contractor must take out public liability and employer liability insurance on the site. The subcontractors must take out public liability and employer liability insurance. Main contractors and subcontractors must also take out professional indemnity insurance. We are creating more and more layers of insurance. If the contracting authority would take out an umbrella insurance on the site to cover all aspects of activity for the duration of the work, there would be savings on insurance premiums and the cost of delivering those projects. There would be savings for the taxpayer. It would bring a little sense to the overall issue of insurance for businesses. That is a matter we need to consider closely. We tried to do it a few times when I was involved in the construction industry. The benefit to the client who went to take out insurance was that there was no reduction coming to the contractors from their existing insurance because, as I said, they do not work like that.
I know of a number of cases relating to flood insurance, including in the town of Headford where a housing estate sits approximately 25 ft. above any flood line but because a map has been prepared showing a flood risk within the area and the circle of risk includes the estate, insurance companies are refusing to give cover for flood damage to those houses. That is discrimination affecting six or eight houses in an estate. I know of a case in the past where a flood map was produced by the Office of Public Works that suggests a 100-year risk of flood and an insurance company refused to offer flood insurance. There are housing estates close to me in Tuam and in other places around Galway that have never flooded but because there is a risk of flooding, the insurance company is refusing to take into account the fact that there is no history of flooding on the sites. There is an onus on us to ensure we highlight those issues so the Minister and the Government can prepare to bring in insurance that is workable for businesses.
I acknowledge the Alliance for Insurance Reform and all the work it has done in trying to highlight the issues. It is important that it is doing that work because business is suffering as a result of the premiums being charged. We need to be able to reduce those premiums. We need to look at this issue in a completely fresh light and ensure that people are covered, claims are reasonable and insurance premiums are affordable to business people.
We all know how important a subject this is across our communities and especially for business owners. The Alliance for Insurance Reform was before the Joint Committee on Enterprise, Trade and Employment recently. We discussed many of the problems of which the Minister of State is well aware and has covered recently. When will the duty of care legislation be published? When will it be enacted? More importantly, when will it commence? Can we expect that to happen soon? I know the Minister of State has been approached by a number of lobby groups that have told him how important this is because of the amount of cases that are pending and, unfortunately, the number of cases is rising, not falling.
A number of personal injury cases in the Circuit Court were reported to have escaped the PIAB process, as the Minister of State knows. Judges in those cases made awards that were well outside the judicial guidelines. We had thought we had closed out that problem but obviously we have not. There are some reasons cases exit PIAB and go to the courts but as was highlighted in a newspaper yesterday, the increases are significant. It is not the case that the person bringing the case gets a whole lot more in compensation but rather that the legal fees become stratospheric. How does the Minister of State propose to properly close out this issue? How is he going to get judges to observe the judicial guidelines that were agreed for injury awards? How is he going to stop lawyers from trying to take cases to the Circuit Court rather than going through the PIAB process? Perhaps in his summation the Minister of State will discuss some of those issues.
A case that was mentioned in a newspaper yesterday involved an employee of an insurance company who made a fraudulent claim that they were in a vehicular accident and it turned out they were not. It was found in the courts that the person concerned was not in an accident. The case, if you like, collapsed, but the judge made no finding for costs. In other words, rather than awarding costs against that person, who was essentially committing perjury, the judge let the matter lie so that the insurance company would pick up the cost. This is a significant problem in the insurance industry all the time. If people are going to bring bogus claims, there must be some sanction and grounding within the Judiciary to award costs against such a claimant and not to have the costs put back onto those who carry insurance. The reason it is being done is because otherwise nobody gets paid. It is easy to put the burden back onto the insurance companies, which means the cost automatically goes back onto the insured. Perhaps the Minister of State will respond to that point.
I was recently approached by a restaurant owner who had a claim of discrimination made against him through the Workplace Relations Commission, WRC. The discrimination involved related to an individual who came into his premises and requested to use the toilet. This happened when mask-wearing was required and the restaurant had a mask mandate. All the customers and staff were masked. The person concerned was unmasked and when asked to wear a mask, they said they did not need to because they had a medical exemption. When asked for that medical exemption, the person said there was no need for them to provide it. Management told the person it was the policy of the restaurant not to allow access to the toilets unless customers were wearing a mask. The person then left. The person videotaped the whole conversation on their phone and then went to the WRC which proceeded to bring a case on the grounds of discrimination.
There are a number of these cases pending. They are collapsing, but what if this gentlemen had taken the advice given him, which was to engage a senior counsel and a barrister at a cost of probably €10,000 to €12,000 to answer that case, which was an absolutely spurious claim? I ask the Minister of State, through his office, to have a word with the WRC and ask it to implement some kind of filtering system around discrimination. Surely these cases should never get to court and should not be oppressing hard-pressed business owners who are finding it hard enough to make ends meet.
I welcome the opportunity to contribute to this debate. As others said, insurance costs are a vital concern of businesses, families and communities. Between them they must come up with €2.8 billion to fund motor insurance, employer's liability and public liability. These are often huge burdens on businesses and families that are already hard-pressed. For families, insurance typically runs to about 5% of household spending. That gives an idea of how important insurance is. It ranks ahead of clothing and footwear when measured by the amount of the household budget spent on the various types.
I am glad to say the Government's reforms are working, but that is not to show any signs of complacency. We must not let up either in the implementation of those reforms, nor in pressing for greater transparency from the insurance sector and competition within the sector. One of the things that has characterised this debate over many years, and I have followed it for a long time, is pointing the finger at different elements. For some, it is excessive and unchallenged fraud. For others, it is unnecessary legal costs, or it is the courts setting awards at unrealistic levels, or it is insurance companies' lack of interest in controlling their costs. The truth is all of these have a share of truth in them but they have long been a feature of debate without having any capacity to bring science to bear on which are the more important.
One of the really important successes for long-term reform in insurance is the legislation that has brought this sort of focus on the actual hard data on what is happening in the sector. That evidence is beginning to shed light and exposes many of the bad practices we need to address. For instance, the recent report by the Central Bank on the motor sector shows the insurance companies are seeing steadily rising profits. Last year they were 12%, the year before 11%, the year before that 9% and the year before that 6%. Thus, we are seeing motor insurance becoming increasingly profitable in operating profit terms. We are also seeing questionably high administration costs in the insurance sector. They are running at €450 million, or 33% of premiums being earned in the motor insurance sector. There must be greater scrutiny of controlling those costs and making sure we are getting best value. Also really striking is the ratio of claim costs to premium income, which is a vital element in determining how profitable it is to quote motor insurance. That has reduced from 92% in 2014 - in other words, costs were 92% of premiums - which is down to 50% this year. That is a significant improvement in the environment for motor insurance that has been brought about by many reforms that have been undertaken by communities and indeed by Government. A clear signal from all of these figures on the motor sector is not enough of the gains have been passed on so far in the sector. I fully acknowledge the CPI is showing a 38% in motor insurance since December 2016, which is really healthy, but the Minister of State must not let up on his expectation to see more progress in the motor sector.
That report also shows if a case goes to the PIAB it incurs one twentieth of the legal cost. It is the difference between a few hundred euro and several thousand euro - perhaps €15,000. The difference in compensation is small. On the extra cost of having escalated a case from the PIAB to the court, 98% of it goes in legal costs and only a trivial amount goes to the increased settlement of the person who was the subject of the claim. There is a loud call there to ensure we do everything possible to prevent cases leaving the PIAB and going to litigation. It is worrying that even in motor, 36% of cases are still litigated, and that represents 66% of the settlements. In other words, these are the higher costs. We need to root that out. I really welcome the changes we now have before the House to bring mediation into the PIAB. Without mediation it has been easy for lawyers to persuade people to go to the next level and down the litigation route. Also valuable in that legislation is that it will remove the sort of one-way bet people have had whereby you could go to the court and have a reasonable expectation the settlement of the legal costs would fall on the insurance company and not on the claimant. That made it easy for a bit of ambulance-chasing, if you like, and less resistance to going down the legal route. Both those reforms when implemented will see a big improvement in reducing the proportion that still go to litigation.
When you turn to the evidence on employer's liability and public liability the Central Bank produces, it is even more worrying and we need to continue to press these reforms. The proportion of such cases that still go down the litigation route is 58%. By value, more than 80% of the cases are going down the litigation route. Again, this represents extra legal costs of €35,000 for each and every one of those cases. That is a massive amount. What is a bit disconcerting is it seems in the case of employer's liability and public liability, litigation is generating more settlements, so half the extra cost is going to the lawyer and half to the individual. That suggests to me there is a lot of inconsistency in the application by the courts of the quanta we are introducing. As other said, we need to have greater scrutiny of what is happening in these litigation settlements. Many of them do not go to the courts, as we know, and are settled on the steps of courts but there needs to be more consistency by insurers to stand up to these claims for higher settlements and to stand by the quanta of damage and not see this drift that seems to be a particular feature of employer's liability and public liability. As the Minister of State knows, the cost of claims to employers and other community groups taking on those types of insurance have increased by 37% in two years for employer's liability and 24% for public liability. We need to push on with reforms in this sphere. To be fair to the insurers, operating profits have been very poor in this sector. They were sustaining losses of nearly 50% of their premium income in 2015 and they have had to turn that around. It is healthy to see it has now moved to a break-even position and we must expect the insurance industry will co-operate very strongly with ensuring the PIAB that cuts out unnecessary legal costs becomes more and more the route by which these cases are resolved and that we do not have settlements on the steps of the courts where parties settle at much higher levels than the PIAB. We need to see more scrutiny of those settlement cases because we are only seeing aggregate data. It will be important for the PIAB to track what happens to cases where it has made a preliminary ruling and that subsequently go to court to see what exactly is happening.
I heard the Minister for Justice say earlier the duty of care reforms are pushing ahead with speed and I welcome that. It is important we have a fair balance or responsibilities when someone enters a premises as between the liability of the owner and the risk borne by the user of the facility. That balance has not been fair and the alliance of small businesses is right to be looking for reform there. I welcome the changes that are coming and like others think they cannot come quickly enough. It is important the Minister of State keeps pushing ahead with the transparency work he is undertaking. The Central Bank has pointed in its reports to further measures it will take to ensure scrutiny.
We need to see all segments of the industry and the legal profession co-operating in this regard. There is no doubt but that at a time of increasing pressure on the cost of living, which every family is experiencing, we cannot afford to have unnecessary losses, be they through fraud, through poor administration, through the unwillingness to challenge, or through settling at levels that are not in accordance with the community-accepted quantum of damages.
It is worrying to see that in its most recent report, the PIAB outlines that those accepting their awards have dropped from 51% to 37%. It suggests there are people stepping back and waiting to see if they will or will not have a punt on going down the litigation route. We need to keep a very close eye on that. It would be devastating if that occurred.
I welcome the Minister of State's resolve. He has put a lot of personal effort into this. It is a tough battle and it must be fought inch by inch. The consumer price index is showing that we are winning the battle. The 38% fall in motor insurance since 2016, the increases in health insurance falling below the general consumer price index, and the same for domestic dwelling insurance, suggest that we are beginning to win this battle. I urge the Minister of State to continue in relentlessly pursuing the agenda he has set for himself.
I recognise and thank my party colleague, Deputy Doherty, for the Trojan work he has done to help reduce insurance premiums and to deliver real insurance reform. Deputy Doherty has led this campaign and this call and I hope the Government will take on board the proposals and solutions of Deputy Doherty and Sinn Féin to help speed up and deliver insurance reform.
The Government is delaying and is dithering. We need delivery now. We need to reduce and see realistic insurance premiums. The Alliance for Insurance Reform has found that 42% of small businesses believe the high cost of insurance is a threat to their business. Voluntary groups, community groups, small businesses and public outdoor events are struggling to operate because of the sky-high premiums. The Government needs to do something here and it needs to step in. A number of soft play children's centres in Cork have closed over the past number of years. It is not just Cork; it is right across the State and is because of the high price of insurance premiums. The costs are too astronomical for these businesses to continue.
I put it to the Minister of State that people are struggling today. They are struggling with the high costs of living and the crisis we are in. They are angry and frustrated when they see the high price of insurance premiums. Motor insurance claims are down by more than 10% but claims awards are down by about 40%. Insurance companies are not passing on the savings. It is on the Minister of State and the Government to ensure that happens.
Community projects and voluntary groups cannot operate and run events this summer because of the cost of insurance. Things are tough this year with the high cost of living and the crisis we are in but now parents and community groups cannot run events because insurance companies are putting profit before people, children and families. This is wrong. I believe they need support. The insurance industry should not be allowed to get away with this.
In the past decade, motor insurance rose by 25% but the average cost has reduced by 29%. The figures add up for themselves. We need reform quickly and we need to let insurance companies know that they cannot put profit before ordinary people and businesses.
Sinn Féin has been vocal for many years in advocating for insurance reform. Some progress has been made but we all know that the latest reforms are not enough. Since they were introduced, we have seen the average personal injury award drop by 42%. Even with these reductions, consumers do not feel that the savings being made by insurance companies are being passed onto them. The idea behind the reforms was to reduce premiums but many of my constituents are still coming to me about the high costs of quotes from insurance companies. We have seen minimal reductions in motor insurance but businesses are saying that public liability insurance premiums have increased over that period.
The results of the latest survey by the Alliance for Insurance Reform make for grim reading. They found that of the 954 respondents, liability insurance premiums have increased by 16%. Of those surveyed, 42% said that insurance costs were a threat to their businesses. The situation is also being seen by childcare providers and many other types of businesses are closing their doors in my constituency. This has a huge impact on the communities that use their services.
The Government needs to ensure that citizens will be protected from inflation in the insurance sector also. For a start, the Government could progress Deputy Doherty's Judicial Council (Amendment) Bill 2021. It would allow us to get a real-time picture of the savings being passed on to the consumer. We must also progress legislation that rebalances the duty of care, making insurance affordable for small businesses, the community, and the voluntary sector. People need to be protected and particularly when these companies are posting massive profits.
I am glad to get the opportunity talk about this very important matter. The claim culture, awards by judges and no competition in the market certainly are combining to make insurance more costly than it should be. Our culture is being threatened and many festivals and events are being cancelled because they cannot afford the cost of insurance. Some horse hunts did not operate last winter because they could not get any quote. There was only one company doing it and it would not quote at all. Places like Castleisland had problems with insurance for the races last week. Hopefully they will get going in a couple of weeks' time. Many festivals are threatened and this is threatening our culture.
Why is the cost of VHI cover and voluntary health insurance so expensive? If a person goes into any hospital perhaps the cost for a day stay is €75 or €80. If, however, they ask if the person has VHI or that kind of health cover, then the cost is more than €800. Obviously, this is having an adverse effect on the poor people who are trying to provide health cover for themselves. This is what is coming out of it.
We miss Seán Quinn being out of the market. We just do not have enough competition. Hotels are being asked to pay premiums from €62,000 to €120,000. Consider also the young people trying to get car insurance who are being quoted in excess of €3,000. I am a firm believer that youth should get a chance. Until they blot their copybook they should get a fair chance to go on the road. These quotes are on top of all the other costs they must pay to attain their driver's licence, including driver instructor fees and the price of the licence and all of that. With regard to community and voluntary organisations, 40% of them have said that their future is threatened and 90% of the survey respondents said that the Government is not doing enough.
I am delighted to get the chance today to talk about insurance reform. To be honest, we have been talking about insurance reform since I was elected to Dáil Éireann in 2016. While there have been some reductions in motor insurance, it looks to me as though the insurance companies are sucking up all of the reductions and are coming through with massive profits.
The people suffering the most are those in the community and voluntary sector. We would not be here today if it were not for them. I attend meetings when I go back to my constituency in south west Cork. Every time we talk about putting on an event, like a festival or whatever, someone asks about insurance, saying this or that will not be covered. Events are being blocked all over the place, even very simple things. Recently I was at a meeting and people were setting up a bouncy castle. The first thing somebody asked was whether we were covered. We were not. We went ahead with it that day but it could not go ahead afterwards because we did not have the cover and it would be a liability on the directors or the voluntary organisation.
The Minister of State may say insurance has come a long way but it needs to come a hell of a lot longer. While motor insurance has decreased, youths are being fleeced in every which way. Every ordinary mother and father is being fleeced too. Fuel prices are astronomical at the minute and the Government is standing over them. Its tax take is cruel to the ordinary human being but for a young person trying to get car insurance and get off the ground, it is almost impossible between buying the car, running it and paying unrealistic money for insurance.
The Judiciary gives out massive awards. We are not allowed talk about them but I do not understand why, because the State is paying for these massive awards. Hotels and nightclubs are facing difficulties in obtaining insurance. All of that is fed back to the ordinary mother, father, man or woman who attends the event. There is very little understanding or sympathy for them. The community and voluntary sector has said that people on CE schemes and rural social schemes are not able to carry out jobs because of insurance on roadsides, which is a huge issue in rural Ireland.
Since the action plan for insurance reform was published in December 2020, I would like to think it has brought transparency to the insurance industry. I understand that price walking or loyalty penalties will be illegal by July of this year. The Central Bank has banned this practice from 1 July. Did the Minister of State know that if one half of a married couple gets penalty points, and if they are insured on a second vehicle in the family home, the insurance company will shove up the premium on the second car, even though it is not that person's primary vehicle? Is that not illegal? If one person gets penalty points, the insurer will raise the spouse's insurance as well because their partner is named on the insurance policy. They are shoving up premiums based on that. Is that legal? It should not be happening.
For SMEs, insurers are basing the premiums on their turnover. Their product is costing more so their turnover is higher but their profit is less and the insurers are charging more for insurance cover. That is not right either. What are we going to do to counteract that? Insurance companies are putting up car premiums because of the lack of vehicles in the country. They say the vehicle is now worth more so they are charging more for the same vehicle, which is a year older, because of inflation. That is not right. Hotels are being charged an excessive amount of money for insurance. They are creating employment and creating a place we can go to socialise or holiday. The person booking the hotel ends up paying for it because they have to add on the costs. It is all a knock-on cost, which the insurance companies are using. They are also using the hotels' turnover to raise their premiums. Everything in this country is being driven by inflation and insurers are jumping on the bandwagon. They are just shoving up insurance prices because they are allowed to by the Government.
While in opposition in 2017, Fianna Fáil said the Government could not continue to be allowed dodge the issue of the high cost of insurance. Five years later and after two years in government, this is exactly what Fianna Fáil is doing. It has done nothing to help the people, whether young people, businesspeople, voluntary groups or the local communities that are trying to organise events. Everybody is being crippled by the ever-increasing cost of insurance. It has to be said that compensation culture plays a part in this. I want to make a clear distinction here. If a person has an injury or damage is done to his or her property, of course he or she should be adequately compensated. If somebody's body is hurt or damaged due to an accident, of course that person should be compensated adequately. However, every one of us is aware of bogus claims that are going on. You do not have to be a public representative to know about or have experience of bogus claims. Everybody in all walks of life knows a person who has feigned or exaggerated injury. Somebody has to pay for that. Who is paying for that? It is every one of us, every person who has the responsibility of paying an insurance premium. Something will have to be done. It is like an industry at the moment and that is wrong. It is not free money.
The Alliance for Insurance Reform recently told the Joint Committee on Enterprise, Trade and Employment that the ongoing high cost of insurance is threatening the future of more than 40% of commercial and voluntary organisations in the State. That is totally ridiculous. There are groups of people trying to do work and organise events and all of a sudden they are having to shut them down because they quite simply cannot afford the cost of insurance. It is wrong beyond belief. The Minister of State has failed, this Government has failed and previous Governments have failed.
The Irish Hotels Federation held its most recent conference in March. Hotels in County Kerry raised a motion calling for urgent action to address spiralling hotel insurance costs, which they say have risen by an average of 20% year on year. The former president of the IHF, Elaina Fitzgerald Kane, has said that insurance costs are one of the most serious challenges facing the sector, with a third of properties, 35%, experiencing difficulties in securing insurance cover. People cannot have discos and nightclubs are finding it impossible. There is no such thing as personal responsibility anymore. If a person falls now in Ireland, somebody will have to pay them to get up. That is bloody well ridiculous. If people do something stupid of their own accord, it does not automatically mean somebody has to pay them a lump of money to get up off their backsides. I will stop but the Acting Chair will be interested in this himself-----
People who have injuries and want to exaggerate them, because they are lazy and do not want to work and because they want to get money for nothing, should get nothing but a good kick up the backside out the door and back to work again. God be good to the genuine people who are hurt. I think the Acting Chair for his indulgence.
I thank the Independent Group for giving us its time to speak on this very important issue. As many of us know, there are genuine insurance claims but there are also too many bogus claims and we need to crack down on that. It seems to be easy money for some people who want to chance their arm and cost an employer or close a business. It is just not good enough. Unfortunately, we see too much of it and we need a total crackdown. Stronger measures are badly needed. Last month, I welcomed a series of reforms that were announced with respect to the duty of care aspect of insurance law. This was after the Minister for Justice confirmed that a range of significant changes would be made, including a proposal to amend a number of sections of the Occupiers' Liability Act, 1995.
I have been lobbying for changes in the insurance sector for the past number of years, particularly around the need to enable the leisure industry and the adventure tourism sector to provide an appropriate balance between customer responsibility and occupier liability. That is why I broadly welcomed the measures announced last month as a belated but important milestone on the road to bringing back some kind of sanity to the insurance sector, particularly for the adventure and tourism sector, which was in difficulty. At one point there was only one insurer in the market that was covering the sector. I welcomed the changes, which will hopefully benefit these businesses. I also acknowledge the Minister of State's hard work in this regard. It goes without saying that this would not have happened if it were not for his efforts.
For too long there has been an excessive and disproportionate focus on penalising businesses and demanding extortionate premiums for risk management, but we have to bring back balance and cop-on to the sector and must support and protect the businesses, because they provide much-needed employment in areas where there virtually no such opportunities, such as some rural communities.
As I understand, the reforms also propose to include a voluntary assumption of risk. This should go some way towards removing the major obstacles that cause high insurance costs and the entirely negative impact they have on our community and voluntary sector, as well as the commercial sector. I raised this matter directly with the Minister for Finance last April, when I notified him only one insurer was available in the leisure and tourism sector.
There is an issue also with car insurance. People on low incomes, elderly people with older cars and young people going out to work are being charged very high premiums and that needs to be looked at because it amounts to discrimination. That Ireland pays some of the highest insurance costs in Europe for young drivers who need cars to go to college or work also needs to be considered. CSO figures show motor insurance costs have fallen by 8.6% but in many respects that has not gone far enough to benefit or help our younger drivers or to tackle the wider issue of high insurance premiums for older cars that have passed the NCT. That needs to be examined because it amounts to outright discrimination, an issue I have raised previously.
I was directly informed by a nursing home provider in Laois-Offaly that one of the major insurance companies had effectively pulled out of the market, leaving nursing homes with under 40 beds entirely at the mercy of just one provider, which is unacceptable. This could have a devastating effect on providers in the form of increased premiums and on families and residents, who will be impacted by the inability of their provider to pay the insurance quotes that will be demanded by the sole insurer left in the market. This is the last thing they need, especially at a time when we recognise the importance of shielding our loved ones in nursing homes and when our communities and families are already under severe stress.
The Government must do all it can to make the insurance market fair, transparent and competitive. In the absence of such a market, many nursing homes may be left with no options but to pay or close and that is not good enough. We need action on that.
I thank the Independent Group for sharing time with our group to speak to this issue and, in particular, Deputy McNamara for accommodating it. In the spirit of co-operation, it is great.
I have always had great respect for the Minister of State but I do not like to see the Government telling us about the 66 actions it is going to take. If it wants to reform insurance, it should look at no more than ten actions it could take. Whenever I see reports with 60, 70 or sometimes 100 recommendations, I know nothing will be done. We have more regulators in this country than we have fine days, and it is a shame to see the price gouging that is going on and the way people are being destroyed.
Take the example of thatched houses. I beg the Acting Chairman’s indulgence to allow me to give a bit of a lecture on green policies often raised by the Minister, Deputy Eamon Ryan, in the context of his eco-friendly buildings. They will be very familiar to older people, such as my sean-mháthair and the Minister of State’s sean-mháthair. If he goes to the Nire Valley, where there are still a few of them left, he will see them. Those people had eco-friendly houses well before the Minister was so much as a bad thought in his father’s mind. They had small windows and a thatched roof kept them warm in the winter and cool in the summer, and now we have to knock down everything. Thatched house associations are pleading with us. Thatched houses have all been listed, and rightly so for many of them but many other owners of them did not want their houses to be listed, and now they cannot get insurance. What kind of a farce is that? There was a lovely thatched pub in the middle of the road in Béal Átha Lúbaigh, known as Keating’s. The proprietor passed away and the sister was on her own, so she closed the door. It was a pity the pub was imithe. Because the pub is thatched, the daughter cannot insurance on it as a house.
This affects mortgages, all aspects of people’s lives and everything else. We need to do something about thatched houses because the Government is compelling people to keep their homes thatched and in good repair, a scheme I would support if the Government gave them support but it does not. It gives them only a pittance with the heritage grants, and then it will not allow them to get insurance. What kind of a Government have we? I recently flew out from Cork Airport and got through security in four minutes. I asked the Minister for Public Expenditure and Reform why the Government cannot direct some of the planes from Dublin to Cork and was told the airlines dictate where the planes go. It seems everybody is dictating things except for the Government. Why does it not close up shop here in Leinster House, get its knapsacks and go walking on the hills and mountains and let the cowboys who are reigning here run the show? It is shocking.
The insurance industry is taking on plant-hire contractors. I am one myself, I should declare. To be taking on these community groups is shocking. We are going to kill our culture and heritage. We should have a pattern day in Newcastle. It has been part of our heritage for generations. Examples have been given from all over the country and it was mentioned during the debate in the context of Dublin city and everywhere else. They are all being stopped because they cannot afford insurance. A drastic change is being cast over Ireland in a deep, dark plume of fog, whereby we cannot do anything but take more medicine, much of it green, AdBlue or whatever you want to put into it, and we cannot live our lives in peace and harmony with our neighbours and help one another in the spirit of meitheal.
This is what is going on in every business. A person cannot get a bouncy castle for a child’s communion or whatever. I heard Deputy Richmond say this is tough and that he would not say anything to insurance companies, but I would because they have been milking the system and the cow for far too long. The Government is stopping farmers milking cows but it will not stop these people milking citizens. It is farcical and the Government has it all upside down. It is an upside-down world and the Government is serving masters who are not the electorate of Ireland. It serves global masters. The Acting Chairman is a new Teachta Dála and I am not saying it to him but instead am talking about Cabinet Ministers. I refer not so much to his party leader but, my goodness, to the Taoiseach, the Tánaiste and the Ministers for Finance and Foreign Affairs. It is from Bilderberg to the World Health Organization, WHO, and whatever else. It is about anything of interest rather than our country here.
What about the British warship that spent a week in the Port of Cork last week? Did we invite that into our waters? What about the French and what they are doing at the moment upsetting the ocean floor and so on, given all we hear about ecology and everything else? It seems to be a reign of terror by anybody on the people. The Government can stop us all doing anything, whether driving the car or plugging in anything. If we had shorter showers and salad baskets on the windows - you name it – we would be fine. It is all “slow down” and everything else. It is about curtailing, containing, beating down and browbeating our people.
I have a message. The Tipperary people rose up in the troubled times and fought for freedom. Breen and Treacy rescued Seán Hogan and we are not going to take much more of this. Liam Lynch was shot in the Knockmealdown Mountains. The people cannot take it. They cannot live and or even eke out a living, given the price of petrol, insurance, NCT tests and everything else the Government puts on top of them. Everything is a racket. I have no problem with the NCT to test the safety of chassis, tyres and everything else but when we see the reasons cars fail, it is a money racket. The Government should contain that cash cow and let farmers who want to milk cows to feed the people work away.
I have listened to this debate with great interest. It concerns an issue I have raised previously in this House in the specific context of the difficulties of obtaining insurance for the fair on Spancil Hill. Thankfully, through the efforts of Clare County Council’s elected members and management, that has now been obtained, but I thank the Minister of State for his offer and the work he did as well. As it happens, it was not needed this year, although it may well be needed next year and I thank him for his willingness to try to ensure an event such as that on Spancil Hill would be able to obtain insurance.
Of course, that event is not unique in regard to the difficulties in obtaining insurance. We have heard a lot about the need for reform and for the legal sector to look at how it does its business. I agree with all that and much of it is being done, but there is another issue we need to look at in the context of the rising cost of insurance, namely, the fact Aviva Ireland doubled its profits this year, to €57 million in Ireland, while FBD increased its profits, notwithstanding the business interruption claims through Covid, to €100 million. In the case of Zurich Ireland, I could not find a separate figure for its profits but the Zurich Group was up by 35% internationally, recording profits of $5.7 billion. While there are difficulties in Ireland, there is also a degree of profit-taking by these companies and that needs to be examined because we need to ensure they will not start price-gouging now they have got what they sought.
The judicial guidelines were introduced. There has been a sharp reduction in the amounts being paid out by the courts, and perhaps rightly so, in the vast majority of cases, especially small cases. We need to make sure that now that the insurance companies have got what they want, they are not just creaming off profits.
I thank the 30 Deputies who contributed to this debate on insurance reform. One of Deputies stated that it is a dry topic. Anybody who contributed to the debate understands that insurance is a real issue that affects every household and business in Ireland.
I will summarise one or two points I made at the beginning in case some Deputies were not present. The biggest sector in the insurance market is motor insurance, with 2.2 million policies. Some 1.6 million homes are insured in the house insurance market, which is the second biggest sector. The business sector is the third biggest sector. The one surprising thing in that figure is that it means a number of houses have no insurance whatsoever. That is interesting. We do not have exact details on where those houses are located. When we look at the number of house insurance policies in place, however, it is less than the number of houses. I do not know whether it is the cost, that people do not know they should have insurance or whether they think someone else is insuring their home. The number of houses without insurance is something to bear in mind.
The first thing I wish to do is respond to some of the specific issues in this debate, which has gone on for more than three hours. I was asked by two or three Deputies across the Chamber why the Government is not supporting the Private Members' Judicial Council (Amendment) Bill 2021. I acknowledge and accept the work put into the insurance area over a period by Deputy Doherty and the Sinn Féin Party. A number of its proposals have been incorporated into Government legislation, such as price walking. We decided not to go ahead with that legislation, however, because the timescale proposed in it with regard to reporting information is longer than what we will achieve by means of the Insurance (Miscellaneous Provisions) Bill 2022, which was passed by the Seanad yesterday and which ill hopefully be signed by the President next week. We included a shorter timeframe in that Bill in respect of the receipt of information, rather than having people wait a few years.
The main reason we did as I have outlined was to solely focus on the cost of the reductions resulting from PIAB awards. That is not the only reduction that will occur in respect of the cost of insurance because that excludes legal costs, efficiency costs and the savings for policyholders as a result of increased competition. What was proposed in Deputy Doherty's Bill was worthy, but it was too narrow and not reflective of the entire savings that occur in the area. I accept the goodwill and good intention behind the Bill, however. We took a more comprehensive approach through the information the Central Bank is issuing by means of its national claims information database, which is vastly superior to what is available in any other EU country. It is very important to say that.
It was mentioned that PIAB awards are down almost 50% and that people have not seen this coming through in their premiums. That is true, and there is good reason for it. Some of the reductions are being tested in the courts because they are so significant. There have been test cases. We had two good judgments recently, backing them up in their entirety. People have been slow to accept the new reduced awards. There is a backlog of awards. Once the courts firmly stand over the judicial guidelines, as they have been doing to date, all those reduced awards will come through the system. It will result in reduced premiums when the costs actually flow through. A measure of how these new guidelines are much tougher than those which preceded them is reflected in the fact that people are not happy with them. I would have been more concerned if everybody was accepting of the new guidelines because it might say to me that they were not reduced sufficiently. The fact is that they are coming through, but it takes time.
I was specifically asked about the reform of the PIAB legislation. That is at pre-legislative scrutiny stage at the moment. I was separately asked about the duty of care legislation. The Minister for Justice spoke at length earlier and outlined the exact position in that regard. That legislation has been approved by Government. We expect all those items of legislation to go through in this calendar year.
The issue of flood insurance was raised by a number of Deputies from different parts of the country. One point I will make is that where flood relief work is carried out by the OPW, two types of defences are put in place. Fixed permanent defences are put in place as part of a flood scheme and demountable defences are only brought out when there is a severe weather warning and when there will be major flooding involving a particular river. The local authorities or their contractors know they have a couple of hours to get the temporary demountable defences up and in place for one, two or three days or for as long as the flood continues. Some 94% of houses in the areas covered by fixed flood defences have flood insurance. The figure is 74% for those in areas where there are demountable defences because the risk is still a bit high if the demountable defences are not put out quick enough. There is a lesson to be learned there. We should be going for the fixed defence mechanisms, where possible, but there are often local objections in terms of having them in place on a permanent basis. These factors should be looked at before any schemes are put in place in future.
On the issue of mapping, people have different maps. Some insurance companies operate their own maps based on their own customer knowledge. The OPW has its own maps but, because it is a State body, it cannot make those maps commercially available to the insurance companies. Therefore, there are OPW maps, local authority development maps and insurance company maps. I would like to see some rationalisation in that area in order that everybody will know what map they are working from. As a result of the fact that insurance is a competitive industry, each insurance company does not automatically share the information it has gathered through its own resources. As a result, that is something I would support.
The Alliance for Insurance Reform and the survey of its members regarding the pinch points was mentioned by several speakers. I understand and appreciate all of that. I acknowledge the work of the Alliance for Insurance Reform, Mr. Peter Boland and the people who work with him on that. I have met Mr. Boland on a number of occasions. I will be meeting him again very shortly to discuss the measures that have been raised in this debate and his ongoing contact with the office.
With regard to what IDA Ireland is doing with the Office to Promote Competition in the Insurance Market, which I chair, IDA Ireland has informed me that because of the changes that have been made in the insurance market here, it now has a package it can take to international insurance companies to attract them to this country. IDA Ireland me two years ago that it could not have done it because of the level of uncertainty and lack of the legislation regarding duty of care and the cost of claims. However, it is now saying that because of the changes in the past two years, it has its package and is commencing to attract some foreign companies into the country.
One speaker suggested that insurance is just a profit-making business for a handful of wealthy people and that the State should insure everything and pay the cost of every claim in the country. I will let people make their own judgments if they think that. We got the full gamut of approaches to that, however.
The issue of thatched roofs was mentioned. There has been contact with the heritage section of the Department of Housing, Local Government and Heritage. I will make a point to make direct contact with that Department through my office in order that we are pooling our resources and efforts in that regard. A number of houses and pubs have thatched roofs. As a result of Brexit, some of the companies have pulled out of that business. We basically have only one company providing that cover; it is difficult now.
The issue of circuses and aerial dancing was raised. I am not familiar with that matter but I will immediately follow it up through my office. The matter was raised of the information issued by the Central Bank earlier today through its national claims information database. That represents full information from the insurance industry, the millions of policies involved and costs of various claims that have been made, whereas I understand the Alliance for Insurance Reform information will be based on a survey of its members. The volume of information the Central Bank covers in its report is vastly more extensive than what would be available on a survey based on Alliance for Insurance Reform members. That is not to take from the good work the Alliance for Insurance Reform does. I am working closely with it in dealing with the various pinch points. Today's report shows that insurance costs for the vast majority of businesses - 60% of them - are less than €1,000. Therefore, the cost for sole traders and a person with one or two employees is under €1,000. Some 92% of all businesses in Ireland have premium costs of less than €50,000.
With regard to specific areas that have been dealt with successfully in recent times and in respect which there were questions today, the early childhood sector in Ireland is now covered by Allianz Ireland working with the brokers of Arachas Insurance. PALI is covered by Berkshire Hathaway, which is a great new support in the industry for play and activity centres. Horse Sport Ireland and horse and equestrian sports are being dealt with by Allianz Ireland. That was not the case last winter when there was no cover for various equine activities. It is now in place for people who wish to do them. Ireland's Association of Adventure Tourism is being dealt with through Fáilte Ireland and the insurance brokers Arachas Insurance. The Spancel Hill horse fair was referred to in the House some time ago by the Deputy from Clare. As it is being conducted in a public area, the local authority has come in to help on that.
I was told coming up to last Christmas that ice rinks could not get insurance. Two rinks were successful in doing so. We are making progress even on the pinch points. However, the position with regard to things such as bouncy castles continues to be a problem.
I will conclude with that. I thank the 30 Deputies who contributed to the debate. We accept that significant progress has been made. Much now depends on the courts implementing the policy decisions relating to insurance made by the Oireachtas, supported by all sides. I look forward to further progress in the period ahead.