Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I welcome the opportunity to address the Seanad on the Insurance (Miscellaneous Provisions) Bill 2022, which was published on 1 April and which passed all Stages in the Dáil on 1 June. There were no amendments to the legislation as it passed through the Dáil. People were generally happy with it. I want to put that on record at this point.

As Senators will be keenly aware, the availability of affordable insurance is vital to underpin a healthy and vibrant economy. This is why the Government has continued to prioritise insurance reform, which is identified in the programme for Government. We are delivering on this commitment through the action plan for insurance reform, which is a cross-departmental initiative that seeks to tackle key insurance issues head-on. The issues range from award levels and the cost of claims to competition and fraud.

The Bill before the House speaks to a number of insurance-related issues that have arisen since the action plan was published in December 2020. In doing so, it represents another important step on the journey towards greater transparency and openness in our insurance market and complements the significant volume of work already achieved under the action plan. The Bill addresses four main issues, namely, the matter of insurers deducting State supports from claim settlements, the Central Bank's new price walking ban, technical amendments to the Consumer Insurance Contracts Act 2019 and changes to the scope of the insurance temporary run-off regime set up to ensure the orderly withdrawal of certain insurers from the Irish market following the UK's departure from the EU. Ultimately, these pro-consumer measures are about increasing transparency, clarity and legal certainty in the insurance market.

I will give a short overview of the Bill's main provisions. First, the Bill amends the Central Bank (National Claims Information Database) Act 2018 to enable the Central Bank to collect information regarding deductions by insurers from claim settlements that relate to State supports.Building on the well-established success of the national claims information database, NCID, this enhancement aims to increase transparency around such practices, and to generate evidence for future policymakers. In doing so, it will help apply important lessons learnt from the Covid-19 pandemic.

Second, the Bill requires the Central Bank to submit a report to the Minister for Finance setting out the steps it has taken to address the practice of "price walking", and its views on whether further action is required. Following a review and public consultation, the Central Bank has published new regulations to ban price walking in the motor and home insurance markets, which will be the first of its kind in the EU, from 1 July this year. As Senators may be aware, price walking can result in consumers who stay with the same insurer for many years being subject to a loyalty penalty. By requiring a report on the price-walking ban, the Bill will help reinforce the work of the regulator to end the loyalty penalty, and ensure timely oversight of this important new consumer protection measure.

I use the phrase "loyalty penalty" as shorthand to cover the practice that in many insurance companies the more loyal one is to a particular insurance company on the motor insurance side or the home insurance side, one is charged extra the longer one stays. One would have thought one would get a loyalty bonus but, in fact, the insurance companies in many cases have been penalising people for staying with the same company and not seeking to renegotiate their premiums on a regular basis.

Third, the Bill makes technical amendments to the Consumer Insurance Contracts Act 2019 to address technical and legal issues that arose following the initial enactment of this legislation. The Bill also inserts a new provision into the Act to require the disclosure of information by insurers in relation to deductions from amounts paid in claim settlements. In line with the enhancements we are making to the NCID, this is a further measure to ensure maximum transparency around such practices, and will mean that consumers benefit from full and complete information about any deductions from their claim settlements.

Finally, the Bill provides for technical amendments to the European Union (Insurance and Reinsurance) Regulations 2015, which underpin the temporary run-off regime, TRR, for UK and Gibraltar-based insurers as a result of Brexit. These changes will guarantee service continuity, and thus protection, for Irish policyholders by ensuring that certain firms which provide reinsurance, and firms in liquidation, can use the temporary run-off regime to run-off their existing Irish insurance contracts. By that, I mean they might be no longer writing here but a claim could arise and it might be quite a period of time before it comes to be settled and that is why we have this run-off regime to cover those issues.

The Bill passed smoothly through the Dáil, where I feel it got a broadly positive response. Accordingly, I hope that consideration by this House can be similarly constructive. I believe that the delivery of this Bill is timely in light of the clear desire for insurance reform, not least here in the Oireachtas, where we have had many important debates on this issue in recent times. From my regular engagements as Minister of State, I can see that the desire and willingness for tangible change exists among all stakeholders, from consumer groups to industry bodies. I believe that we now have to pull together and build on this momentum to deliver real, meaningful reform that will last, and lead to an improved insurance environment not just for our benefit, but for the benefit of generations to come.

This means completing remaining actions, such as reforming the duty of care, and enacting the Competition (Amendment) Bill 2022, which is currently making its way through this House. Delivering these outstanding initiatives remains the top priority of the Cabinet sub-committee on insurance reform, which is driving this reform agenda. However, it also involves all stakeholders playing their part to uphold and fully implement the many important reforms already delivered, notably the personal injuries guidelines, which have the potential to significantly alter the insurance environment.

Of course, the guidelines are only one of several key reforms that have been delivered in the first 18 months of the action plan. In that time, we have seen motor insurance prices continue to fall to the point where the latest CSO data for May shows a reduction of just over 40% from peak prices in mid-2016. It is my hope that with full buy-in from all interested parties, and the completion of some final outstanding measures, the action plan will lead to further declines in motor insurance, as well as increased availability and affordability of liability insurance. These reforms, including the measures contained in this Bill, should contribute to building a more open, sustainable and competitive insurance environment, one which works for both policyholders and insurers.

I stress the competitive environment aspect of it. We are a small country of 5 million people and we do not have as many insurance companies operating here as one would have in a country with 50 million, 60 million or 70 million people. It is important that, through our work at Government level, we do all we can to encourage existing companies that are in the Irish insurance market to spread their wings into areas that they are not currently covering and also to attract new businesses to write insurance in this area as well. In that regard, we are working closely with IDA Ireland to encourage new businesses to come to Ireland that are not currently based here.

I thank Senators for their attention today. I emphasise the importance of progressing this Bill promptly, in the interest of consumer protection. In order to guarantee timely insight into the effectiveness of the price-walking ban, it is vital that the Bill can be enacted in line with the implementation of this ban on 1 July. I also believe that prompt enactment of the changes to the temporary run-off regime is imperative in order to protect policyholders from any disruption in the servicing of their contracts. I look forward to hearing Senators' constructive views on this legislation, and listening to the debate in the Upper House here today. I commend the Bill to the House.