Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I very much welcome the opportunity to address Seanad Éireann this evening on the cost of insurance working group's Report on the Cost of Motor Insurance, which was published in January and on which implementation has already commenced. I will also refer to the Report on the Rising Costs of Motor Insurance of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach in my address, which covers similar ground to the working group's report.

As everybody here is aware, the cost of motor insurance is an important issue that has had a significant impact on society as a whole. Throughout the country people have been paying significantly higher premiums for insuring their motor vehicles and many are struggling to afford what is, after all, an essential requirement for day-to-day living.

I take this opportunity to again acknowledge the work on motor insurance undertaken by the Oireachtas joint committee chaired by Deputy McGuinness. There are considerable overlaps between our respective reports, which ultimately share the same basic aim of delivering fairer insurance premiums for all consumers. On some issues, the recommendations in the Oireachtas joint committee's report are almost identical to those contained in the Report on the Cost of Motor Insurance; for instance, in providing more information to consumers regarding the breakdown of premiums and reasons for large increases, ensuring that the use of pre-action protocols is extended to personal injury cases and establishing the Personal Injuries Commission. In addition, there are further recommendations in the two reports which are broadly aligned such as recommendations to establish fully functional databases relating to both uninsured drivers and insurance fraud and to expedite the development of the master licence record. Therefore, in implementing the cost of insurance working group's report recommendations, a process already well under way, we will address many of the recommendations contained in the Oireachtas joint committee's report.

Essentially, there are five to six key priority reforms that I believe need to be made to improve the functioning of our motor insurance market. The cost of insurance working group report contains 33 recommendations, with 71 action points, which present a roadmap to achieving these reforms - one can see how we will get there, when and who is responsible. I will outline the key aspects in detail, as well as providing updates on the work already done. One of the key findings of the working group's report is the need to enhance transparency and facilitate the use of data sharing and collection to the level that we see in other jurisdictions. This was a common theme which arose in discussions with a wide range of stakeholders and is a matter which needs to be addressed. Currently in Ireland, claims data related to motor insurance are available from a variety of sources. However, no organisation is currently responsible for the collection of data from insurers for the purposes of improving transparency on emerging risks within the market, thus representing a clear information gap.

Pricing of insurance premiums reflects a current view on the likelihood and cost of claims into the future. Transparency of claims data could feed into insurers' current view of future risks, thereby improving their ability to price more accurately and reducing the cyclicality of their pricing. The working group has developed a phased approach to progress this matter. In the short term, it recommends commencing the publication on a quarterly basis of a number of key aggregated claims-related metrics to be provided by the insurance sector. A subgroup formed in order to progress the implementation of this recommendation has met on six occasions to date and a request for data will issue to insurance undertakings before the end of this month for completion. The metrics will then be published for the first time at the end of the second quarter of this year. This publication of initial metrics will act as a stepping stone to the establishment of a national claims information database by the middle of 2018, which will provide more detailed claims information and, therefore, should lead to better quality in-depth data analysis.The Central Bank will hold this database.

It is expected that the national claims information database will provide data on what claims are being made against property or for personal injuries, the legal and other costs that are being incurred, as well as the channel of resolution and what impact that has on the final settlement, among other things. It should assist in identifying emerging risks in the market relating to claims, trends and costs, for example. The information will be collected and stored at an aggregate level.

The second area where data availability is a live issue is in the field of uninsured driving. Figures from the Motor Insurers Bureau of Ireland, MIBI, show that the level of uninsured driving in Ireland rose from less than 5% in 2013 to 7.1% in 2015. The bureau is responsible for meeting the claims of those who have been in a collision involving an uninsured or untraceable driver. It pays out approximately €50 million to €60 million annually to meet such claims and this cost is passed directly to motorists. The insurance industry estimates that this adds about €30 to each motorist’s premium. It is imperative, therefore, that we tackle this issue without delay. The working group has recommended the establishment of a fully-functioning database to identify uninsured drivers to enable gardaí to check motor insurance compliance effectively. A project group has been established between the MIBI and Insurance Ireland to create a central database which will contain information required by the Road Traffic Act 2016, such as the driving licence number and policy number of each insurance policyholder. The ultimate aim is to provide An Garda Síochána with a mobile app, on an authorised user basis, to allow for roadside access to the database. The report sets a deadline of quarter 3 of this year for the database to go live vis-à-visprivately owned vehicles.

Fraud, like uninsured driving, has been highlighted as an area where the availability of more quality information can lead to a reduction in its negative impact on the cost of premiums. While the vast majority of claims are genuine, there is a public perception that insurance fraud is a victimless crime. However, nothing could be further from the truth and fraudulent claims, whether of an opportunistic and exaggerated nature or facilitated by highly-organised crime rings, need to be made as difficult as possible to get away with. In this regard, the insurance industry has estimated that fraud costs it in the region of €200 million each year, adding approximately €50 to each premium. To deal with this problem, the report recommends the establishment of a fully-functioning integrated insurance fraud database by the end of next year to enable the industry to detect patterns of fraud. It is likely to be modelled on an equivalent UK system and will be funded by industry but managed by an independent not-for-profit body. This will be progressed in tandem with actions to ensure any data protection issues are appropriately addressed.

Another core recommendation is the establishment of a personal injuries commission to investigate and make recommendations on processes in other jurisdictions which could enhance the claims process in Ireland. The terms of reference for that commission are set out in the report and they include the commissioning of medical research, bench marking of international awards for personal injury cases, analysing and reporting on international compensation levels and compensation mechanisms and reporting on systems where detailed grading of minor personal injuries is in operation. The need to begin this work immediately has been recognised by Government and on 10 January, the former President of the High Court, Mr. Justice Nicholas Kearns, was appointed as chairperson of the commission. The other members are stakeholder representatives from the medical, legal and insurance sectors as well as relevant Government Departments and agencies. The commission met for the first time on 10 February and has agreed a work plan. The second meeting took place on 3 March, with the next one scheduled for 7 April.

While the aforementioned measures could be seen as the core recommendations, the report should be seen as a package of reforms which, when implemented together, will provide for greater stability in the pricing of motor insurance and help to prevent the volatility that we have seen in the market in recent times. In this regard, another bundle of measures addresses the issue of protecting the consumer through, for example, the extension of the current renewal notification timeframe by five working days. Additionally, the Department of Finance is working with Insurance Ireland to develop protocols to require insurers to set out reasons for large increases in premiums and to assist returning emigrants by requiring insurers to accept driving experience from abroad where a person has previous driving experience in Ireland. Another part of the recommendations centres on reducing costs in the claims process in tandem with the running of the personal injuries commission. These actions will seek to maximise the usefulness of the Personal Injuries Assessment Board, PIAB, and to improve the book of quantum. Further reviews will also take place to examine the impact of the changes in the court jurisdictional limits, the setting of the discount rate in personal injury lump sum awards and the introduction of periodic payment orders. The implementation of the recommendations of the review of the motor insurance compensation framework is also ongoing as we speak, with heads of a Bill to be brought to Government by the second quarter of this year. Actions have also been recommended to develop a protocol requiring insurers to seek proof of an up-to-date national car test, NCT, or certificate of roadworthiness and to promote compliance with road safety legislation. Insurance Ireland will also present the working group with a report on the use of telematics in Ireland by the end of the year.

I appreciate being given the opportunity to discuss the important objective of reducing the cost of motor insurance and I look forward to hearing the comments of Senators here today. It should be noted that the ongoing progress of the working group can be followed through the quarterly updates which will be published on the Department’s website from quarter two. I have also provided the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach with an initial progress report following my recent appearance before it and this has been published. While I have said on a number of occasions that there is no single simple method to immediately stem or reverse premium price rises, I believe that with the effective and timely implementation of these reforms and with high levels of co-operation and commitment from all stakeholders, we can create a more accessible market which can deliver fairer premiums for consumers without unnecessary delay. We can achieve this for the consumer while also protecting the stability of the insurance market.