Tim Lombard (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister to the House. It is great to see a former Senator returning to the House in such a distinguished role. I congratulate him on his great achievement.

The issue I am raising today is the cost of insurance for businesses and farmers in Ireland. It is a very important matter. The cost of doing business in Ireland has dramatically increased over the past few years and the cost of insurance is a major part of that. We are trying to ensure this is a competitive nation but insurance is making us uncompetitive at present. I have been contacted by constituents in towns such as Bandon, Clonakilty and Skibberreen who have seen the cost of their insurance go through the roof. They have not been able to get flood insurance since 2009, but now the cost of their normal retail insurance has increased dramatically. In 2014, one of these people got insurance for €4,500. In 2015, it was €7,500 and in 2016, after a struggle, they got it for €10,000. It is the same premises with no major change but the cost of insurance has driven the cost of the person doing business through the roof. The knock-on effect, unfortunately, is that the consumer pays. It is a major problem.

In 2017, the Minister of State's predecessor, the Minister, Deputy Eoghan Murphy, produced a very positive report on the motor insurance industry. It contained 33 recommendations or objectives. They were positive recommendations. We now must see the same positive input with regard to the business and agricultural communities. There must be a similar report that will examine the needs of those sectors and the needs of the consumer to ensure we can have a competitive market.Unfortunately, we have only two major insurance companies in that market so there is no competition due to the fact that there are only two players. There is talk of price fixing and other issues. On 4 July the Competition and Consumer Protection Commission raided insurance companies in the course of investigating another issue. There are issues of concern in the insurance industry but, unfortunately, there is no silver bullet.

This afternoon I hope we can progress the situation and move forward in order to provide stability in the market. The biggest problem those people face is what their insurance premia will be next year, given that it has literally doubled in the past two years, the question is whether it will double again. They cannot afford to do business like that. We need to have Government intervention so we can have competition and for the Government to step in and ensure that people can do business. I realise there is no silver bullet to solve the issue but unless we start we will not do what is appropriate, which is hopefully to make sure the cost of insurance does not stop people from doing business.

Michael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Senator Lombard for raising the matter and for his good wishes. It is always nice when a good friend offers wishes of that nature and we are good friends. It should be noted that the Minister for Finance is responsible for the development of the legal framework governing financial regulation. Neither he nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. However, as has been stated, it is possible for the State to play a role in helping to stabilise the market and deal with factors contributing to the availability and cost of insurance.

It was for that reason that the cost of insurance working group was established by the previous Minister for Finance, Deputy Michael Noonan, in July of last year. As the Senator noted, the first phase of its work centred on motor insurance given the large increases seen in the sector in recent years. As part of the consultations during that phase, the working group received a number of submissions from businesses on the increasing cost of insurance they were facing, in particular in employer liability and public liability cover. The submissions made it very clear that there was a pressing need to examine the rising and unsustainable cost of such insurance for businesses. Reinforcing that position are the Public Injuries Assessment Board, PIAB, statistics which indicate that employer liability and public liability insurance are the two largest areas, after motor insurance, where personal injury claims arise. In 2016, for example, public liability and employer liability applications represented 27% and 15%, respectively, of all applications received by the PIAB. By comparison, motor applications made up approximately 57% of applications. For those reasons, the working group decided to undertake a second phase to see what could be done to tackle the cost of employer and public liability insurance as those are the two core types of insurance which the business and agriculture sectors require. In carrying out its work, the working group is considering the impact of the cost of insurance on the competitiveness of particular business sectors, the impact of health and safety issues on the cost of insurance and other market issues.

The working group is also building upon the previous work done in the motor phase on personal injury data, the effect of legal costs on insurance costs, current claims compensation arrangements and the cost of claims, and the impact of unlawful activity on the insurance sector to determine how it can be applied in the employer and public liability insurance claims areas.

The working group has held extensive consultations with a range of stakeholders including the Irish Farmers Association, which provided a submission to the working group. There have been two meetings with Meat Industry Ireland, one with officials and one which I held. I have also very recently received a submission from Donegal Marts Association. Consultations have also been held with, for example, IBEC, ISME, Chambers Ireland, the Irish Hotels Federation and RGDATA, the Retail Grocery Dairy & Allied Trades Association. A range of issues has been raised by the business and agriculture sectors including lack of competition in the insurance market, frustration with inconsistency of awards, and huge legal and business costs associated with challenging claims through court process, among other things.

It is envisaged that the final results of the second phase will take the form of an addendum to the existing report. As with the first phase, the aim is for all relevant bodies and stakeholders to work together in order to deliver fairer premiums for businesses without unnecessary delay. As it is likely that employer and public liability risks are a major factor in the cost of insurance for those involved in agriculture and business, any recommendations emerging from the review should be of relevance to those sectors.

Tim Lombard (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for his report on this very important matter. The working group is an important initiative and I compliment him on his involvement and ensuring the working group is up and running. He mentioned that it will produce a report. When does he envisage the report will come before the committee and does he propose to bring a copy of the report to this House at some stage as well? The previous report on motor insurance that was carried out by a committee under the chairmanship of the then Minister of State, Deputy Eoghan Murphy, came to this House for discussion and it would be appropriate that when the next report is published that the Minister of State, Deputy Michael D'Arcy, might bring the report to the House.

Michael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To clarify, the motor insurance report contained 71 recommendations. We are on target to fulfil 45 recommendations before the end of this calendar year. The hope and expectation is that all 71 recommendations will be concluded before the end of 2018. What we learn from the implementation of the report we will use in the area of personal injury in terms of employer liability and public liability so we will not need to do all the same work again. We will be able to transpose as much of that as it practicable into phase 2, namely, employer liability and public liability. We understand that this is a significant business cost.

If someone's business terms and conditions have not changed and there has not been a claim, there are no grounds for an alarming increase in the premium. I was insistent that each time a premium is renewed it is important to show the amount paid in the previous year. I spoke with one farmer who has 13 insurance policies ranging across machinery, stock, goods, public liability and employer liability. He said he could not remember what each one cost on each occasion. On each occasion that one gets a quote the documentation should show the amount one paid in the previous year. If there is an alarming increase and there has been no change one should contact the company and other companies. In the short term that I have been in this job I was shocked to hear the number of occasions on which people have had a large increase. They challenged that or went to other brokers or companies. On many occasions they came back to me to say that when a different broker went back to the same company there was only a modest increase in the premium. What is happening in those circumstances is that a different underwriter takes a different view and comes up with a different cost for the customer. That indicates to me that there is something very wrong with the insurance sector.