Wednesday, 11 December 2019
Consumer Insurance Contracts Bill 2017: Committee and Remaining Stages
I refer to a matter I raised on Second Stage, and which Deputy Penrose also raised in the Dáil. I noted the Minister of State's comments. Deputy Penrose told me he spoke to the Minister of State following the debate on the Bill in the Dáil and that the Minister of State said he would seek specialist legal advice on the matter. I am glad to hear he has received that advice. However, I am still not clear on what that advice was and ask the Minister of State to briefly explain it. Deputy Penrose was concerned that there would be inadvertent consequences to this section, as it would remove the long-standing rule that bars parents from taking out insurance on the lives of their underage and dependent children, or from insuring the lives of other children with whom they have no connection. There was a concern that this would be an unforeseen and inadvertent consequence of the section, because while the Bill as a whole is very welcome and is based on a 2004 Law Reform Commission, LRC, report, another reform recommended by the commission, which would have resolved this issue, has not been implemented. I look forward to hearing the legal advice the Minister of State was given, because Deputy Penrose remains concerned about this aspect of the Bill.
The Senator opposes section 7 because of the concerns expressed by Deputy Penrose during Report Stage in the Dáil. The section, which relates to insurable interests, reflects recommendations made by the LRC that discussed in great detail the issues surrounding insurable interests and whether they should be reformed or abolished. As it stand, claims can be rejected by the insurance industry if the claimant is deemed not to have an interest in the subject matter of an otherwise valid contract. This section removes the ability of companies to reject claims solely on that basis. It also caters for those requiring an interest when a claim is made, while limiting this interest in order that it does not extend beyond an expectation of the economic benefits or losses that would arise.
I will address some of the concerns raised by Senator Bacik and Deputy Penrose. The report by the LRC was instructive in this respect. First, there is already an exception to the insurable interests for a person taking out an insurance policy on the life of their spouse, civil partner, cohabitee, or any other family member, on the understanding that they are likely to gain on each other's lives. The law assumes that in the event of the death of a public or civil servant, the entitlement of a widow, widower, or child does not create incentives for them to claim on the lives of those public or civil servants. Second, the Married Women's Status Act 1957 provides another exception to insurable interests for children and wives who are intended to benefit from a life insurance policy. Under this legislation, the definition of a "child" includes stepchildren, adopted children and those to whom the insured is considered in loco parentis. The law, again, assumes that these provisions do not create some of the perverse incentives that have been previously raised. Third, in every other jurisdiction where the reform or abolishment of insurable interests has been considered, that reform has resulted in an expanded list of persons in whom the insured is considered to have an insurable interest, including children. I refer the Senator to the reforms proposed by the English and Scottish law commissions, which would expand this list even further to include pension trustees, for example. A claim can be refused under any insurance policy, not only if it involves fraud but also if the claimant has been involved in any wrongdoing, including the crimes to which Deputy Penrose referred. The Bill provides that when a claim is made under a policy, including life insurance policies, the claimant must establish the loss. The provisions of this Bill and related legislation are sufficiently robust to address the concerns that have been expressed. For that reason, Sinn Féin opposes the amendment of this section.
I clarify that I do not seek to amend this section, though we did draft an amendment. We simply oppose the section.It is just not clear. I thank Senator Conway-Walsh and look forward to hearing the Minister of State's response.
For the record, we looked at it again following Deputy Penrose's observations on Report Stage in the Dáil and we are satisfied that there will not be unintended consequences. We got specialist legal advice and our advisers were also satisfied about the constitutionality of what we are doing.
Briefly in response, I am grateful to Senator Conway-Walsh for reading out what I understand is the substance of the specialist legal opinion received by the Government. This is a Private Member's Bill that is being supported by the Government. I confirm that my party also supports it but we are concerned about this aspect of the Bill. We cannot say any more that this would be an unforeseen consequence now that it has been foreseen by Deputy Penrose and by me. The Government has now taken advice on it and I am glad to hear that it is satisfied that this issue is dealt with adequately. I would have liked to see that advice or the substance of the response in advance of this debate. That would have been better practice. I checked with Deputy Penrose who says that he did not hear back from the Minister of State on this issue. In order to resolve the issue more swiftly, it might have been a good idea to have provided Deputy Penrose with a response. In the circumstances, I will not be pressing the matter but am anxious to put my concerns on the record of the House.
I move amendment No.3:
In page 11, line 20, to delete “three years” and substitute “five years on foot of the contract”.
Amendments Nos. 3 to 9, inclusive, significantly improve conditions for consumers and businesses when their policies are due for renewal and will strengthen their hands when they are looking for a better deal or are facing unjustified hikes in their insurance premiums. Our amendments deal with a number of issues which I will not outline in turn. When a consumer receives a renewal quote as his or her policy expires, the insurance company will be under legal obligation to provide details on any premiums paid by that person to it in the preceding five years. In addition, the insurance company will be under legal obligation to provide a list of any claims paid by it to the policyholder or any third party in the preceding five years.
I commend Deputy Pearse Doherty on these reforms and welcome him and Mr. Pól McIlvenny to the House. These reforms require the provision of a five-year history of premiums and claims to be given to policyholders at renewal. Deputy Pearse Doherty tabled these amendments on Committee Stage but the Minister of State was not in a position to accept them. I acknowledge, however, that he and his officials continued to work with Deputy Pearse Doherty and my party so that we could table them again in the Seanad. These reforms will bring transparency and give negotiating power to policyholders. Many policyholders are seeing their premiums rise even though they have not made any claims. The practice of dual pricing by the insurance industry has been raised by Deputy Pearse Doherty in the Oireachtas and with the Central Bank. I am pleased to say that the Central Bank has now begun an investigation into this practice, having received a request and a 130-page complaint from Deputy Pearse Doherty on the impact of dual pricing on loyal customers and on vulnerable groups.
Some will say that the requirement that the insurance companies provide their customers with up to five years of claims history data, including information on third-party claims, is too onerous. However, all of this information is available at the touch of a button on their computer systems. Far from being onerous, the legislation will extend and strengthen transparency for everyone in the insurance industry and everyone with an insurance policy. I draw attention to the fact that, under these amendments, insurance providers, excluding health insurers, will be required to provide a list of all claims that have been paid on foot of the contract in the preceding five years, including third-party claims. This is a crucial reform brought forward by Sinn Féin which will be welcomed by individual customers, businesses and voluntary organisations. These amendments will strengthen the hand of every insurance policyholder in the State.
This is a very good Bill. I will speak on the five-year provision in due course but will begin by noting that, overall, the Bill is very practical. If the measures contained therein are implemented by the insurance industry, premiums should fall. The measures that provide an increase in transparency along with the revision of the book of quantum should result in a reduction in insurance premiums. I commend Sinn Féin and Deputy Pearse Doherty in particular, on introducing this legislation. I also acknowledge the work done by the Minister of State in this area. He has been one of the most reforming Ministers of State in the area of insurance. His approach has been collaborative.
On the specifics of the legislation, there is no reason that insurance companies cannot provide information on premiums for the previous five years. That data is readily available. I have no doubt that when insurance companies are assessing risk, they use that very data. They have that data in order to assess risk and determine the level of premiums and they should be able to provide it to their customers as well. This is a very practical measure. I may not always agree with Sinn Féin but on this particular issue, I acknowledge that the party has introduced a very practical Bill. Furthermore, in anticipation of the Minister of State's response, six months should be ample time to allow the insurance industry to implement virtually all of these measures. Pressure should continue to be applied to the industry. If all of the measures contained in this Bill are implemented, we should see a reduction in insurance premiums.
I thank Senators for their remarks and acknowledge the widespread support for the change from three to five years. When we sat down with Deputy Pearse Doherty initially we agreed three years but I have no big problem with changing it to five years. If the insurance industry can provide data covering three years, then it can also provide it for five. That said, I must put it on the record that the Central Bank has expressed reservations about the additional years provision and has said that it may lead to extra costs for insurers. Furthermore, it is complex as it will apply to many classes of insurance. It is important that the House is aware that the Central Bank expressed that view to me. I also met representatives of Insurance Ireland on this matter and they also expressed concern about it. I have done my duty vis-à-visboth entities in terms of letting the House know their expressed views but I do not agree with their views and am happy to accept the five-year provision.
In terms of the triggering of the legislation, I have said there will be a three month lead-in time for the initial part, namely, the change of onus from the insured person to the insurance companies. The latter will be required to ask simpler questions so that people can understand what they are signing up to. I want that to happen within three months of the legislation being enacted. I am suggesting that the industry be given six months after enactment to put the five-year provision in place.We all accept the exclusion of health as we are clear that would become burdensome and could have a significant potential cost for health insurance. That is not what any of us are about. We are all about trying to improve transparency and the consumer protection side of insurance. On too many occasions, if the conflict is between prudential or consumer, prudential wins. On this occasion, I want to make sure it is the consumer who wins.
I move amendment No. 4:
In page 11, to delete lines 22 and 23, and substitute the following: “(b) a list of any claims, including if such have been made, third party claims, that have been paid, on foot of the contract, by the insurer to the consumer (or, as the case may be, to the third party or parties concerned) in the preceding 5 years, except, where the contract concerned is a health insurance contract in within the meaning of section 2(1) of the Health Insurance Act 1994.”.
I move amendment No. 9:
In page 11, to delete line 31 and substitute the following: “(3) Insubsection (2)the reference to any mid-term adjustment made to the contract is a reference to any alteration lawfully made to the provisions of the contract, at any time during its currency, that results in a change in the amount of the premium charged or in the application of any fee or other charge.”.
I am truly delighted that the Consumer Insurance Contracts Bill 2017 has passed through Seanad Éireann. Again, I commend my Sinn Féin colleague, Deputy Pearse Doherty, on introducing and persisting with this important legislation. I also acknowledge the valuable contribution of Peter Boland from the Alliance for Insurance Reform and that of all the contributors at the committee that examined the issue. The Bill demonstrates the value of a strong Opposition looking out for citizens who are being fleeced and in need of a break in terms of affordability and the lack of transparency regarding insurance. I thank the Minister of State, Deputy D'Arcy and his office for facilitating the passage of this Bill and for the work he has done, as well as Fianna Fáil, and I do not often do that.
I am joking, of course. Obviously, it takes a leader to lead this but it also takes co-operation, and it has taken the co-operation of the Minister of State and the other parties who have supported the Bill.
It has been described as the most radical shake-up of consumer legislation in centuries in this State. The Alliance for Insurance Reform has said the legislation is a game changer that will alter the balance of power between insurers and policyholders, such as consumers, small firms and community groups. The truth is people are being crippled by the astronomical cost of insurance. This is a crisis. Businesses are being forced to close, jobs are being lost and people are working just to pay the huge cost of insurance.
Insurers will now have to provide a schedule outlining any premiums paid within the preceding five years. Sinn Féin, with others, is taking on the insurance industry and ending the rip-off. This legislation is part of our journey to stamp out fraud, to protect consumers, to ban dual pricing and to make premiums affordable. We recognise this is a contribution to that journey and we will continue that journey. As was said, I do not see any way that this legislation cannot lead to the reduction of insurance premiums, which is what it is all about. It is about the money in people's pockets and about people being ripped off. We have a responsibility to do everything we possibly can to stop that happening. Again, I commend Deputy Doherty on doing that in this legislation.
I commend everyone involved, including Deputy Pearse Doherty of Sinn Féin and the Minister of State, Deputy D'Arcy. A significant number of advances have been made in dealing with insurance in the past year and this Bill is a significant element. The pivotal element for me is the book of quantum. The Minister of State, Deputy D'Arcy, has very much been driving this to have the book of quantum guidelines revised as expeditiously as possible. We want a competitive insurance industry, not an industry that is ripping off customers. The key point is that we want a system that is fair. As it stands, the book of quantum is outdated and needs to be revised. A structure is now in place. I hope that we will see that happen quickly and that we will get to a situation where we have an insurance industry that is working at all times in the best interests of consumers.
I want to start where the Bill started, that, is with Deputy Pearse Doherty and the LRC report. I thank Deputy Doherty. As I have said on many occasions in many different areas, in particular on the airwaves, the level of support I have received from both Houses in regard to insurance has been complete. Nobody has once been in any way obstructive in regard to legislation we have to get through. We can sometimes go into combat based on political views and opinions, but the support has been complete, and I thank both Houses for that.
This is one piece of legislation on top of the Insurance (Amendment) Act, which gave effect to the Supreme Court decision about Setanta, and on top of the national claims information database that we also got through this time last year, and Senators may remember we had to get it through so we could have the information that flowed from the motor sector in 2018 and backwards from there. We also have the Personal Injuries Assessment Board Bill, the Judicial Council Bill and this legislation. Some would say it is not fast enough, and it is absolutely not fast enough and I would love it to be faster. However, we are all operating in a confining area. We are confined by operating within the rules set down by the Central Bank of Ireland, which is the regulator, and we do not have authority over that.
The Judiciary has set the book of quantum over the years. The seven judges are in place as selected by the Chief Justice, Frank Clarke, and I wish them well. I want them to operate in a good and speedy manner so we can get the awards down, given they are too high. The reason I want awards to come down, and this is something I believe the Law Society is correct about, is that too many people are victims of the insurance companies. How do I know that? Thousands of cases every year go to the insurance ombudsman, which should not be the case. On too many occasions, the insurance companies were using the benefit of the small print not to pay out, and while they were legally correct, they were morally very wrong. That is not what any of us want on behalf of the consumers. The consumers are the clients of the insurance companies. The consumers who are really impacted upon right now due to the level of awards are businesses throughout the country.That said, our insurance sector must be sustainable, and to be sustainable, it must be profitable. If it is not profitable, companies will leave the sector quickly. The insurance companies blame the lawyers, the lawyers blame the insurance companies, and we, as legislators, are stuck in between trying to protect consumers. Without the support of Members, we could not do what we are doing here this evening, passing important legislation through a House of the Oireachtas in one movement. I am very grateful for that support because I want this legislation in place just as dearly as Deputy Pearse Doherty and everybody else. I again thank the Acting Chairman. I also thank my staff in the Department of Finance. Some of the best staff in the Department work in the insurance section. They are helpful and co-operative. I know that they sometimes get annoyed with me but that is okay too. We have done some good work this evening. We will now take the amendments to the Dáil, where I hope to get them through next week so that this Bill can be signed by the President, enacted and in place as quickly as possible to protect consumers. That is something we all want.
I thank the Minister of State. It is interesting that we managed to get all Stages completed in 30 minutes, before the concluding comments. It is probably one of the Bills that has passed most quickly, following straight on from the legislation that took the longest to pass, the Judicial Appointments Commission Bill 2017. We have gone from the longest to the shortest in a breath. I thank the Minister of State. On my own behalf, I also thank Deputy Pearse Doherty and the Sinn Féin Senators for their contribution in bringing forward the legislation. I am in the Chair now so I need to be neutral. I thank all Members and the Minister of State's staff. That concludes business for today. When is it proposed to sit again?