Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister of State, Deputy Richmond, to the House. The time allocated to him is not to exceed ten minutes and group spokespersons not to exceed ten minutes. Time may be shared. All other Senators are not to exceed five minutes and the Minister of State will be given no less than five minutes to reply to the debate.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the opportunity to address the Seanad on the Bill. As Minister of State with special responsibility for insurance, I am bringing forward this Bill to transpose Articles 10a and 25a of the motor insurance directive, as inserted by the sixth motor insurance directive. The Bill has required significant technical input and involvement from a range of stakeholders. The Department of Finance has been intensively working on it for some time. Underscoring the domestic complexity of some of the issues the directive raises, it has consulted a wide range of relevant stakeholders through a working group on insolvency compensation comprising the Central Bank of Ireland, Motor Insurers' Bureau of Ireland, Departments of Transport and Enterprise, Trade and Employment, Revenue Commissioners, State Claims Agency and Courts Service. The Bill has undergone extensive engagement throughout the legislative process to date, particularly on Committee Stage in the Dáil, where we had a full and thorough discussion on its provisions. I express my thanks to the Deputies and various stakeholders for their contributions to date. I know Senators will also want to contribute to the debate on this important Bill and I look forward to hearing their views this afternoon.

The purpose of the directive is to protect and allow for the timely compensation of Irish motor insurance policyholders and injured parties in the event of an insurer becoming insolvent. This is an important policy development in improving consumer protection in the event of a motor insurance failure. As Senators will be aware, through the existing Insurance Compensation Fund framework, Ireland has a comprehensive compensation architecture to compensate policyholders and injured parties in the event of an insurance failure. The existing fund is primarily designed to facilitate payments to policyholders on a host basis, that is, relating to insurance risks in the State, where a non-life insurer goes into liquidation. The fund has previously been used to address failures of firms we are all well aware of such as Quinn and Setanta. However, Articles 10a and 25a of the motor insurance directive build upon our existing framework by moving the European Union towards a harmonised compensation framework for motor insurance by compelling member states to each establish a national compensation body. This is further underpinned by a centralised cross-border function to compensate policyholders and injured parties in a timely manner.

In summary, this Bill represents a positive development for Irish consumers, making it easier for claimants to seek compensation following a motor insurance failure either by firms regulated here or in other member states. Injured parties will be entitled to efficient compensation from the newly-established motor compensation body. By way of background to the Bill, the European Union consolidated and codified four motor insurance directives into one single motor insurance directive in 2009, setting out minimum insurance requirements for all member states to follow.This in turn facilitates travel by EU citizens and helps boost tourism, business and other cross-border activity in the Union. In 2019, the European Parliament and Council agreed on a revised version of this motor insurance directive, referred to as the sixth motor insurance directive. In this context, the Department of Finance is specifically responsible for transposing Articles 10a and 25a of this directive as these relate to situations of motor insurance insolvency. These provisions essentially provide a pan-European framework for motor insurance insolvency compensation, which in turn naturally has implications for countries such as Ireland where the existing insurance compensation fund framework exists.

I will outline some of the key elements of the directive which include the establishment of motor compensation bodies in each member state; a shift from a host to a home-based system, meaning that, crucially, the cost of such claims will be met by the home country of the insurer and, thus, Irish customers will not foot the bill for insolvencies outside Ireland; and the imposition of a hard deadline for the assessment and payment of compensation of claims of policyholders and injured parties relating to an insolvent motor insurer.

Until now, there have been no harmonised EU rules to ensure that injured parties are swiftly compensated in such situations involving motor insurance firm insolvency. Again, here in Ireland we are aware of circumstances where Irish motorists have been impacted by failures of firms based in other jurisdictions. This Bill will help to address such situations.

Turning to the detail, I now propose to give an overview of the Bill and each of its five Parts. Part 1 contains standard legislative provisions that cover the Short Title of the Bill and its commencement, as well as some relevant definitions and some standard provisions regarding regulations and orders made pursuant to the Bill, as well as expenses incurred by the Minister for Finance in the administration of the Act.

In accordance with the directive, Part 2 of the Bill will establish in legislation a motor compensation body with responsibility for dealing with claims arising from motor vehicle accidents where the relevant insurance undertaking is insolvent. Accordingly, Part 2 formally appoints the Motor Insurers’ Bureau of Ireland to this role, which follows on from a letter of nomination that was sent to the European Commission in June 2023. This section sets out how the compensation body will operate, how it will engage and co-operate with interested parties and other stakeholders and how the body will have sufficient funds for the purposes of providing compensation to claimants.

Following its authorisation as the compensation body in Ireland, once this Bill is enacted the Motor Insurers’ Bureau of Ireland will be empowered to manage claims directly and make payments in a timely manner. In order to achieve this, the Bill will provide the Motor Insurers’ Bureau of Ireland with the full range of functionality required to manage claims, administer a fund to make payments and engage with EU bodies.

In considering this, the Department of Finance carried out a detailed assessment with the various stakeholders within the insurance compensation fund framework and it was ultimately determined that the well-established Motor Insurers’ Bureau of Ireland is the most suitable agency to be appointed to the role of national compensation body in Ireland. The role also complements the Motor Insurers’ Bureau of Ireland’s existing role of compensating victims of road traffic accidents caused by uninsured and unidentified vehicles, one which it has fulfilled in this jurisdiction since 1955. In addition, the State has considerable experience of working collaboratively with the Motor Insurers’ Bureau of Ireland in the context of the Motor Insurance Insolvency Compensation Fund. This is a motor insurance compensation fund the bureau has administered since the failure of Setanta Insurance. Accordingly, we see the nomination of the Motor Insurers’ Bureau of Ireland as a positive evolution of its role in protecting policyholders.

Turning to how this would operate in a cross-border context, where the relevant claim relates to an insurance undertaking that is authorised in another member state, the Irish compensation body has the right to be reimbursed for the relevant compensation by its counterpart body in the “home” member state of the insolvent firm. On Committee Stage, a pertinent question was raised regarding the specific circumstance where an Irish resident is a holidaymaker in another EU member state such as Spain and the Spanish insurance company goes insolvent. This provides a concrete example of how this Bill and the directive will have a positive effect for policyholders and claimants. In this circumstance, the Irish resident can present their claim to the Motor Insurers’ Bureau of Ireland. The claim will be assessed locally by the Motor Insurers’ Bureau of Ireland and, where compensation is due, it will pay the claim to the Irish resident before seeking reimbursement of the claim amount from the Spanish compensation body - assuming the insurer is authorised in Spain. Equally, if it is authorised in another member state, Germany, for example, the Motor Insurer’s Bureau of Ireland can seek reimbursement from the German compensation body and so on across the 27 EU member states. This change under the Bill and directive ensures that the ultimate financial responsibility is borne by the insurance sector of the home member states of the insurer, while allowing for an efficient and prompt payment to injured parties.

Part 2 also sets out in detail how a claim can be presented to and processed by the compensation body. The compensation body will be empowered under Part 2 to collect the relevant information from both policyholders and injured parties and then utilise this material while co-operating with other insurance compensation fund stakeholders to ensure the assessment of claims and payment of compensation occurs in an efficient and timely manner.

In summary, section 9, together with the amendments to the 1964 Act under Part 5, facilitate a comprehensive reform and streamlining of the existing legal framework relating to the insurance compensation fund into a one-stop shop for motor insurance insolvency claims. As such, claimants will go directly to the Motor Insurers’ Bureau of Ireland which will handle these claims rather than dealing with different liquidators and will also ensure that customers receive their compensation within three months of the offer. In order to achieve this, the Bill now enables the compensation body to assess and pay compensation to injured parties without recourse to High Court approval, as is currently the position under the 1964 Insurance Act.

Significantly, the Bill preserves the existing broad spectrum of compensation that is available domestically under the 1964 Act for claims relating to motor vehicle liability by allowing the compensation body to also handle, for example, claims on comprehensive motor policies, which predominate the Irish market, rather than the minimum bar of third party cover, as is the requirement under the directive. As such, we have tailored our approach under this Bill to meet the specificities of the Irish motor insurance market. I hope and believe we all welcome this approach.

Part 3 sets out the comprehensive governance and oversight processes that will be put in place relating to the processing and auditing of claim payments under the Act. This in part reflects the reform proposed under this Bill where the role of the High Court in approving payments has been changed to the compensation body now fulfilling this in a timelier and more effective manner.

A thorough discussion of the provisions of Part 3 took place on Dáil Committee Stage. During the course of the debate, I offered to provide further clarity on the transparency, governance and oversight provisions within the Bill. In that context, the Department of Finance set out additional detail in relation to the key issues of governance, oversight and transparency under the Bill in a letter to the committee in advance of Report Stage in the Dáil.

I will set out a summary of the matters addressed in the letter for the benefit of the Senators present. In summary, the letter provides a detailed overview of the claims assessment and payment process; the additional oversight and controls included in the Bill; and the reporting and transparency provisions under the Bill.

First, with respect to the processing of claims and the payment of compensation by the compensation body, the function of claims assessment will be performed by well-established claims handling offices, which are authorised and regulated by the Central Bank of Ireland. The assessment of each claim by the relevant handling office will be overseen and monitored by the Motor Insurers’ Bureau of Ireland in accordance-----

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Minister of State's time is up.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | Oireachtas source

There is no clock.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

The clock beside me is ticking.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will conclude this paragraph, although there is still a bit to go.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

If Senators so wish, I will be happy to allow the Minister of State to conclude.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is that agreeable to the House? It is important to put all of this information on the record.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is that agreed? Agreed.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | 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.

Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Minister of State is very welcome. Fianna Fáil welcomes and supports this crucial Bill which will provide essential protections and ensure timely compensation for Irish motor insurance policyholders in the unfortunate event of an insurer going insolvent. The Motor Insurance Insolvency Compensation Bill 2024 is significant legislation that insures the existing insurance compensation framework within our State. By establishing a centralised compensation body, this Bill makes it easier for policyholders and injured parties to seek compensation following a motor insurance failure. This is a positive development for consumers. The Bill transposes Articles 10a and 25a of the EU directive. A key component of this Bill and the directive is the shift from a host-based to a home-based system for insurers. This means that if an insurance company based in another EU state sells into the Irish market and goes insolvent, it will be that member state's responsibility to pay. Irish policyholders will not have to bear the cost in such instances.

This Government has made significant progress in implementing insurance reform and this Bill builds on that work by further protecting motor insurance policyholders. We have seen instances in the past where insurers have failed, leaving claimants in a difficult position while liquidation processes dragged on. This important legislation ensures that injured parties will receive their just compensation in a timely manner. Ultimately, this Bill means that if policy holder has an accident and the insurer involved is insolvent, the Motor Insurers' Bureau will protect that individual and ensure that he or she receives compensation. Instead of dealing with liquidators, customers will go directly to the Motor Insurers' Bureau of Ireland which will handle these claims and ensure compensation is received. Critically, the cost of these claims will be met by the home country of the insurer, meaning that Irish insurance customers will not be footing the bill for insolvencies outside Ireland. This Bill is a positive development for anyone holding motor insurance in Ireland and is a testament to the Government's commitment to insurance reform.

Maria Byrne (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State and the officials from the Department for coming here today. Senator Casey and the Minister of State went into the more technical elements of the Bill but it is clear that this is a good news story for motorists because regardless of where an accident happens, injured parties will receive their compensation within three months. We often see cases going on for a very long time. I appreciate the fact that this legislation represents a guarantee for motorists, which is really important. The Bill is quite technical in that it is amending older legislation but it is about protecting the driver and making sure that he or she is properly insured. It is a good news story and I thank the Minister of State and the departmental officials for all the work they have put into this legislation, including their engagement with stakeholders. I welcome the fact that they listened to and engaged with the stakeholders. In the context of insurance and claims, it is really important that the point of view of the stakeholders was taken on board. Having read the Bill and listened to the Minister of State, I am assured that the Department has tried to cover every area that needed change or support. Well done on that and I look forward to engaging further on the next Stage next week. As I said, it is a good news story and it should receive the full support of the House.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

As no other Member is indicating, I invite the Minister of State to reply.

Neale Richmond (Dublin Rathdown, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As I said at the outset, this is extremely technical legislation. I thank the Senators who contributed to this debate and outlined their support for the Bill. I look forward to engaging further with them on Committee and Report Stages as the Bill completes its journey through both Houses. The Motor Insurance Insolvency Compensation Bill represents an important enhancement of protection for motor insurance policyholders by transposing the EU's sixth motor directive. Ultimately, it represents a positive development for consumers by making it easier for claimants to seek compensation where due. In order to achieve this, the Bill builds upon the existing insurance compensation framework currently in place within the State through the appointment of the Motor Insurers' Bureau of Ireland as the national compensation body. The new framework for the presentation and processing of motor vehicle liability claims to the motor compensation body requires that complainants should receive payment of compensation within three months from the date their offer is accepted.

In terms of funding, the compensation body will have recourse to the insurance compensation fund to cover its costs and expenses while performing its duties under the Bill and to provide it with the funds it needs to compensate injured parties when such payments are due.

Again, I thank Senators today and, previously, Deputies in Dáil Éireann, for their contributions to the development of this Bill. The underlying policy importance of this legislation is clearly recognised by the Senators here today. The Bill will transpose Articles 10a and 25a of the motor insurance directive into law in Ireland and most importantly, ensure that injured parties will get their just compensation in a timely manner. I commend the Bill to the House and hope it will receive strong support from across Seanad Éireann. I look forward to engaging further with Senators on Committee and Report Stages. I thank the Cathaoirleach for chairing this debate and Senators for their contributions this afternoon.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

When is it proposed to take Committee Stage?

Maria Byrne (Fine Gael)
Link to this: Individually | In context | Oireachtas source

Next Tuesday.

Jerry Buttimer (Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is that agreed? Agreed.