Wednesday, 11 December 2019
Consumer Insurance Contracts Bill 2017: Second Stage
I do not need to give any long speeches on Second Stage of the Bill. It has been well rehearsed. I will speak on amendments Nos. 3 to 9, inclusive, and address some other concerns that have been raised. I do not need time on Second Stage to do that.
I am happy to agree that. I will be very brief. Sinn Féin has brought forward a good Bill and the Minister of State and Department have taken it on board. There is general unanimity that this is a positive thing to do. It is fair to say that it is not going to change the world overnight, but it is a small positive step in the right direction.
We face an enormous challenge in respect of insurance. The Minister of State is trying his very best, to be fair to him, but we are not seeing a reduction in the cost of policies, more transparency or what we need to have a proper functioning market. Play centres, crèches, pubs, restaurants and other businesses face difficulties with insurance. We all pay when people make and get away with false claims. Pat McDonagh of Supermac's won eight or nine claims, but I understand the cost to defend them was in excess of €400,000. I believe €36,000 was paid out in claims and seven of the nine claims resulted in no payouts.
We need to tackle the cost of insurance and all of the related legal costs, payouts and so on. The Bill is positive and I welcome it, but there is an awful lot more to be done.
I will also be very brief. As my colleague, Deputy Penrose, said in the Dáil, the Labour Party supports the Bill. Most of the proposed reforms are not controversial and are based on a report from the Law Reform Commission, LRC. Deputy Pearse Doherty is present and, along with Sinn Féin, was the instigator of the Bill. Deputy Penrose raised an issue he was concerned about in the Dáil in respect of section 7, and I will speak to that on Committee Stage.
I would. I do not want to delay the Bill either, but I do want to discuss a number of aspects. The Bill involves a substantial overhaul of the law governing insurance contracts, as recommended by the LRC. It has been subject to a lot of scrutiny and a lot of work has gone into it. I compliment my Dáil colleague, Deputy Pearse Doherty, on the Bill.
We have to ensure there are no unintended legal consequences. In that regard, the Attorney General obtained a specialist counsel opinion on the Bill. Senator Bacik referred to the views expressed in the Dáil by Deputy Penrose. Following that debate, we re-examined the Bill. We are satisfied that section 7 is fine. We analysed the points raised by Deputy Penrose. We did not simply move on and ignore them.
I would like to highlight the main features of the Bill. They are to ensure that correspondence between insurers and consumers is clear and unambiguous; to place the burden on insurers to ask consumers relevant questions rather than consumers having to disclose information voluntarily at the pre-contractual stage; to require insurers to provide consumers with a completed application form; to reform the age-old condition of consumers having to have an insurable interest in the insurance contract, a matter raised by Deputy Penrose; to expand cooling-off provisions for all forms of insurance; to provide consumers with their previous claim and premium history at renewal; to ensure that when insurers cancel a contract, consumers must be repaid the balance of the premium; to provide clarity that insurers must provide 20 working days' notice before renewal for all insurance contracts in the scope of this Act; to ensure there is a duty on insurers to handle claims promptly and fairly; to allow third parties who are intended to benefit under an insurance contract to make a direct claim against the insurer, such as in case of a body in liquidation; to reform the practice of warranties in insurance whereby insurers are able to reject liability in a policy when there has been a breach in the warranty, despite a breach not being a relevant factor in the occurring risk; and to introduce rules on subrogration whereby insurers step into the shoes of the policyholder to seek recovery from the liable party.
The Bill implements amendments arising from recommendation 8 of the costs of insurance working group report on motor insurance and recommendation 10 of the working group's employer and liability insurance report. It will require insurers to engage properly with policyholders in regard to their claims. This has been a criticism that many of us have had in regard to insurance companies, namely, that they do not engage with their clients appropriately. This includes ensuring that a consumer is provided with the opportunity to submit to the insurer relevant evidence that could inform the insurer's determination in respect of a claim.
In addition, it requires a consumer to be informed when a claim has been settled, the amount it has been settled for, and the reasons for the settlement decision. This has been an aggravating aspect for many people who pay insurance.On many occasions, they do not even know that a claim has been made, let alone a settlement, until their insurance renewal comes around, at which point they find out that their premium has shot up. This is very important, major grievance, which many people brought to the cost of insurance working group's attention on multiple occasions. This section will introduce a much greater level of transparency to the claims settlement area.
Section 17 puts limitations on the practice of retention in respect of property damage claims. This practice was brought to my attention not too long ago following Storms Ophelia and Emma, when insurers were applying retention as they saw fit. We are now codifying this aspect of insurance. I again compliment the co-operation of Members on this legislation. We had proposed a figure of €20,000 to which the rates of 5% and 10% would apply. Deputy Michael McGrath suggested doubling that to €40,000. This is something I am satisfied to get on with. I do not have an issue with the concept of retention, but with the way it is being applied by insurers. This view is also shared by many loss adjustors who act on behalf of policyholders in negotiation with insurance companies. There are a range of different practices and some insurers appear to withhold large amounts and do not always pay out on claims. That is sharp practice. The purpose of this section is to regularise this and ensure the practice of retention is consistently and fairly applied in line with this legislation. It will level the playing field and provide for additional transparency, which no one could have an issue with.
I will also touch on how the legislation will be implemented. Section 27 is important as it allows different sections to come into effect on different dates. In broad terms, I will discuss the commencement of the bulk of this legislation in early 2020 with the Minister for Finance. However, insurers will be required to upgrade their systems to implement some of the provisions. The requirement for insurers to provide the latest five years of claims and premiums on renewal notices will take some time to implement, for instance. I wish to implement the earlier sections of the Bill sooner in the year and intend for all sections to be in place within six months of triggering the legislation.
I thank Senators for their co-operation in agreeing to take all Stages today. I want to get this insurance legislation not just through the Lower House but also the Upper House because it will benefit consumers. What benefits consumers will also benefit businesses, which are currently stretched to an appalling degree due to employers' liability, EL, and personal liability, PL awards and insurance.