Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank the Cathaoirleach and Senators for their indulgence. This payment approval process currently necessitates approval of payments by MIBI’s head of finance and risk or a member of the accounts team. In addition, further approval requirements exist at the level of chief risk officer and chief executive officer for payments of a value greater than €20,000. It is proposed this well-established approach will be carried over to the new compensation framework to be created under this Bill.

In order to enhance the level of transparency with respect to the nature and robustness of MIBI’s internal governance processes around claims review and payment, a summary statement of governance and controls will be included in the annual report.

In addition to the necessary internal governance processes of the compensation body and the internal and external audit processes for the compensation body itself, Part 3 also provides that an audit will be carried out by the State Claims Agency on a sample of claims on an annual basis and a further ex-ante check will be carried out by the State Claims Agency on certain claims above a material threshold before such a payment is made. Provision around this may be further clarified by way of an order of the Minister for Finance. Part 3 also provides that the timeframes and operational practicalities of these ex-ante and ex-post audits will be agreed in a memorandum of understanding between the compensation body and the State Claims Agency, which will in turn be subject to the review and consent of the Minister for Finance.

It is worth noting that the Bill also provides that a statement of the amounts of compensation paid will be included in a report to be submitted to the Minister and laid before the Oireachtas and will be included in the report submitted by the Central Bank to the Comptroller and Auditor General for possible audit.

Part 4 contains a number of provisions that facilitate the disclosure and processing of personal data by the compensation body and other stakeholders in accordance with the general data protection regulation and Data Protection Acts. This is to ensure that the relevant stakeholders can co-operate and share information as required under the motor insurance directive. At this point, it is worth noting that the Data Protection Commissioner was consulted during the preparation of this Bill in accordance with the GDPR and Data Protection Acts.

Part 5 contains a number of provisions that amend the existing legislative framework governing the insurance compensation fund under the 1964 Act.Specifically, Part 5 of the Bill moves the current framework from a host-based to a home-based system for motor third party liability risks. In simple terms, this now means that if an insurance company is based in another EU member state and selling motor insurance into the Irish market, it will ultimately fall on that member state to pay if the insurer goes insolvent. The Irish compensation framework will not have to foot the bill in such instances. Operationally, it was necessary to amend the 1964 Act to ensure that such insurance business is carved out. Part 5 of the Bill also makes a number of amendments to the 1964 Act to ensure that the compensation body has recourse to the insurance compensation fund to cover the costs and expenses of the compensation body while performing its duties under the Bill. As the fund is administered by the Central Bank of Ireland, the Bill makes further amendments to the 1964 Act to facilitate such payments by the Central Bank to the motor compensation body. The 1964 Act is also amended to allow the Minister for Finance to advance funds to the insurance compensation fund to enable compensation payments.

In summary, there are two potential costs that arise from the transposition of the directive, namely, the cost of the establishment and operation of the new compensation body and potential increased exposure to the insurance compensation fund. Although there is the potential for an increase in exposure to Irish-authorised insurers exporting insurance to other EEA member states under the new arrangements, this needs to be balanced against the reduced exposure to insurers selling motor insurance here from other EEA member states which, as I mentioned earlier, will now be covered by their home state. Overall, based on the most recent gross written premium data assessed by the Central Bank relating to 2023, we currently expect that this should result in a slight decrease in exposure for the insurance compensation fund.

In terms of the legislative process thus far, the Bill progressed through Dáil Éireann, with the Report and Final Stage debates taking place on 10 July. I commend the Bills Office, the Deputies, and the Ceann Comhairle on their support and assistance in bringing this Bill through the Dáil process. As I noted earlier, an extensive amount of stakeholder engagement was undertaken and credit is due to the officials in the Department of Finance who carried that out. I reiterate the importance of the swift passage of this Bill to ensure that the new compensation body can be established and to ensure the directive is transposed into law in Ireland as promptly as possible. In advancing this Bill, we will achieve further improvements in the insurance environment to the benefit of both policyholders and the industry.

Finally, I thank colleagues for their support to date on this important Bill. I look forward to engaging further with Senators on Committee and Report Stages. I commend this Bill to the House.