Seanad debates
Thursday, 12 July 2018
Commencement Matters
Insurance Costs
10:30 am
James Reilly (Fine Gael)
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I have raised this issue on the Order of Business a number of times. It concerns the cost of doing business in Ireland. The committee launched a report yesterday and one of the three big things we dealt with was the rising cost of insurance. Some businesses are finding it impossible to continue, while others can no longer expand because of increased premiums, some of which have doubled in one year. One of the main reasons behind this is fraud. We have all heard in the general media of road traffic accidents being staged and I have seen videos of accidents being staged in public toilet areas of restaurants and other public buildings such as shops.
One of the groups to appear before us was the Alliance for Insurance Reform, which represents organisations like The Wheel, Play Centres, Ireland Active, the Association of Irish Festival Events, the Irish Hotels Federation, the Restaurants Association of Ireland, the Irish Road Haulage Association, Ireland's Association for Adventure Tourism and many more. They represent not just businesses but charities too and they are finding it impossible to keep up with the rate of inflation in insurance.
Currently, there seems to be no consequence for individuals who engage in insurance fraud but it is a crime for which we are all paying. In its excellent presentation, the group brought forward solutions and suggestions. One of the solutions was to set up a Garda insurance fraud unit. Its members suggested it be funded by the insurance industry but I do not think that is necessarily a good idea. We definitely need an insurance fraud unit in An Garda Síochána as there have to be consequences for people who engage in this sort of thing.
They also suggested looking at the book of quantum as the awards in this country are way out of kilter with those in other jurisdictions, with between three and five and a half times as much being paid out for the same injury here as in the UK, as an example. Nobody wants to interfere with judicial independence but if the book of quantum is exceeded by a judge he or she could, in the interests of transparency, give a written explanation as to why. We respect the fact that they are entitled to do it but we need an explanation as to why is it done in particular cases.
I look forward to the Minister's response to the very reasonable suggestions to which I referred. They also asked for sections 26 and 25 of the Civil Liability Act to be linked so that exaggerated and misleading claims are automatically forwarded to gardaí for investigation, and prosecution if necessary.
Ciarán Cannon (Galway East, Fine Gael)
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I start by passing on the apologies of the Minister of State with responsibility for financial services and insurance, Deputy Michael D’Arcy, who is before the Select Committee on Finance, Public Expenditure and Reform, and Taoiseach this morning. The Minister of State also wishes to thank Senator Reilly for raising the issue of fraudulent claims.
The Senator will be aware that the report on the cost of motor insurance was published in January 2017 and made 33 recommendations. With regard to fraud, the working group made recommendations on improving data sharing to identify patterns of suspected fraud through the development of an insurance fraud database. The working group also recommended that further co-operation between the insurance industry and An Garda Síochána be developed. The Department of Justice and Equality is the lead owner of both of these recommendations.
In relation to the recommendation regarding the co-operation between the insurance industry and An Garda Síochána, I understand that the Garda national economic crime bureau, GNECB, has had a preliminary engagement with Insurance Ireland with a view to examining the possibility of the insurance industry providing funding to set up a dedicated investigation section within the GNECB, to focus exclusively on the investigation of insurance fraud. The structure of this proposed new Garda section is envisaged to be largely based upon that of the Insurance Fraud Enforcement Department, IFED, a specialist unit which is hosted by the City of London police but works on cases throughout the UK.
Insurance Ireland informed the cost of insurance working group at the start of this month that it was recommending the funding by its members of the proposed new Garda section, although it stressed that industry funding should also come from non-Insurance Ireland members writing non-life insurance business here. It is important to note, however, that the Department of Justice and Equality has informed me that all that has happened to date is a scoping of the possible cost and feasibility of setting up such a unit, and it is for the Minister for Justice and Equality, on foot of a recommendation from the Garda Commissioner, to decide whether the establishment of the proposed unit is something which should be pursued.
At this stage, the Garda Commissioner has not yet formed a view on the proposal as there are a number of very serious issues which will require further consideration before any decision on whether or not to proceed in this manner is taken. In relation to the suggestion that the Judiciary has to offer an explanation when awarding damages which exceed those outlined in the book of quantum, a key consideration here has to be the principles of judicial independence and the separation of powers. It must be emphasised that the book of quantum is a guide which merely reflects the prevailing levels of compensation in Ireland for various types of injury based upon what has actually been paid out in the courts, by the State Claims Agency in direct settlements by the insurance sector, or awarded by the Personal Injuries Assessment Board, PIAB.
The book of quantum does not represent set recommended levels of compensation and the figures contained therein are not binding on judges. However, the Civil Liability Act 2004 states that judges are obliged to have regard to the book. Also, it should be noted that the Judiciary, in determining damages, generally provides detailed reasons based on such medical and financial evidence as was adduced or agreed. In many cases, the damages awarded are significantly increased by reasons of the extent of the special damages involved and these would be unrelated to the book of quantum figures.
Finally, a revised version of the book was produced in October 2016 and this has alleviated the key complaint of the Judiciary itself that the book had become irrelevant, having not been updated for 12 years prior to that. The 2016 edition also includes additional injury categories and improved granularity of injuries.
James Reilly (Fine Gael)
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I thank the Minister for his reply. I hope a Garda fraud squad for insurance is set up, although I am not vexed as to whether it is funded by the insurance industry or otherwise. Businesses are struggling in this country and SMEs, which are the backbone of our economy, are afraid to expand because they are not sure what their insurance premiums will be next year. We have nearly reached full employment but we could find ourselves sliding back very quickly if SMEs are afraid to expand. One has to have some degree of certainty. Brexit has brought us a considerable degree of uncertainty so let us have certainty over the areas where we have some control.I am given to understand by the Alliance for Insurance Reform that only one conviction has taken place in the last six years. Whether that is one conviction leading to incarceration or one conviction in total under the current Acts, it is an astonishing figure, knowing what we know is going on in this country.
Again, I emphasise and want to make it very clear there are many people who are genuinely injured and who have genuine claims, and this is in no way to cast aspersions on them or undermine their ability and right to receive proper and fair compensation. However, those who engage in fraudulent and exaggerated claims damage everyone, including those with genuine cases and people who are trying to make a living in this country.
Ciarán Cannon (Galway East, Fine Gael)
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Again, I thank Senator Reilly for raising this very important issue. I agree wholeheartedly with him. The rising cost of insurance is becoming a serious impediment to the survival of SMEs in some cases, and to the expansion of SMEs in others, and it needs to be treated with a great degree of urgency. I assure the Senator that the Minister of State, Deputy D'Arcy, believes the implementation of the recommendations of both the motor and employer public liability reports cumulatively can achieve the objectives of delivering those fairer premiums and delivering a more stable and, ultimately, a more competitive insurance market. The views and concerns of the Senator will be passed on directly to the Minister of State, Deputy D'Arcy.