Michael McGrath (Cork South Central, Fianna Fail)
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192. To ask the Minister for Finance the position with regard to insurance companies taking into account a person's previous criminal conviction when deciding to offer home or car insurance; and if he will make a statement on the matter. [45156/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I 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. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting such rules. Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of policyholders.

Notwithstanding this, my officials raised the Deputy’s query with Insurance Ireland, the representative body for the insurance industry in Ireland. On the basis of this enquiry, I have been advised that as an insurance contract includes a duty of utmost good faith on both the insurer and insured, a duty of disclosure of all material facts is required from which insurers will make their underwriting decision on the provision of cover. In general, insurers will use a combination of individual rating factors. Such factors include, but are not limited to age, type of driving licence, engine size, rebuilding cost of property, previous convictions if applicable, etc., but they will vary by insurer depending on the market segments, on which individual insurers focus and the claims experience of individual insurers.

Insurance Ireland also acknowledged that access to and fair treatment by financial services providers is an important part of social inclusion which is mandated by the Consumer Protection Code. It is noted in this regard that the Criminal Justice (Spent Convictions and Certain Disclosures) Act 2016 allows for certain convictions to become spent after a period of time.

In relation to motor insurance specifically, the Deputy is aware of the Declined Cases Agreement (DCA). That agreement is adhered to by all motor insurers in Ireland. It states that if a consumer is unable to secure a quotation on the open market, he or she may be in a position to avail of the Declined Cases Agreement (DCA) process. Under the terms of the DCA, the insurance market will not refuse to provide insurance to an individual seeking insurance if the person has approached at least three insurers and has not been able to obtain cover from them.

Data obtained from Insurance Ireland states that the total number of DCA applications in 2017 was 1,423. In that year, ‘convictions’ was noted 261 times as the primary reason the applicant was declined motor insurance.

There are further details available on the Insurance Ireland website in relation to the DCA, while Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. The relevant contact details are: feedback@insuranceireland.eu or declined@insuranceireland.eu or 01-6761914.

Eamon Scanlon (Sligo-Leitrim, Fianna Fail)
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193. To ask the Minister for Finance if his attention has been drawn to situations in which insurance companies have exaggerated the size of payouts in order to increase premiums; if a taskforce will be established to investigate the increase in premiums; the amount insurance companies paid out in claims between 2015 and to date in 2018; and if he will make a statement on the matter. [45191/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank can interfere in the pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.

However, it is acknowledged that pricing in the insurance sector has been subject to volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level in the motor sphere to the more recent experience of large increases across a number of lines.

The problem of rising insurance premiums was the impetus in 2016 for the establishment of the Cost of Insurance Working Group which is now chaired by the Minister of State for Financial Services and Insurance, Mr. Michael D’Arcy T.D. Its Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan. The Working Group continued its work throughout 2017 and subsequently published the Report on the Cost of Employer and Public Liability Insurancein January 2018. In both of these Reports the factors as to why insurance costs have increased has been set out, however no evidence was presented that insurance companies were deliberately exaggerating the size of pay-outs in order to increase premiums.

It is clear however from the Working Group’s extensive consultations that there is a lack of transparency around the personal injuries claims environment. A similar view was expressed in the Joint Oireachtas Committee report. Consequently, transparency has been one of the key themes of both the Motor and Employer and Public Liability Reports.

In this context therefore an important step forward is the approval by the Government to publish the Central Bank (National Claims Information Database) Bill 2018. The Bill, which is currently being considered by the Houses of the Oireachtas, when enacted, will enable the Central Bank to publish an annual report using data gathered from the insurance industry to increase transparency on the relationship between insurance premiums and related costs, identifying the factors that drive movements in the price of insurance in the State, the number of claims, as well as providing statistical analyses of the costs associated with settling claims, and importantly understanding the settlement channels used. I am hopeful that with the cooperation of all parties in the Houses, it can be approved expeditiously to have the database in place as soon as possible. It should be noted that the initial focus of the database will be on motor insurance.

With regard to the total amounts companies paid out in claims between 2015 and 2018, the Central Bank has very limited data of this type available to it. This is because with the European-wide transition from Solvency I to Solvency II regulatory regime (in place since 1 January 2016), it no longer produces the annual Insurance Statistics publication, known as the ‘Blue Book’. The tables in the Blue Book were extracted from the Solvency I forms which were completed by the industry and were publicly available (in the Companies Registration Office) and, as these are no longer completed, most of the Blue Book tables cannot be continued in the old format. Furthermore, the underlying data in the Blue Book is now valued on the Solvency II, as opposed to the Solvency I, basis and many of the time series have been broken.

That said however the Central Bank provided my officials with the data below for a previous PQ in July 2018 in relation to motor insurance claims for the years 2013 to 2017. This data includes both private and commercial motor insurance, and excludes the costs associated with the settlement of these claims.

The Deputy should note that the data reflects the business of insurance undertakings prudentially supervised by the Central Bank of Ireland (6 undertakings) and undertakings operating on a freedom of establishment basis (3 undertakings). It does not however include any data related to insurance undertakings operating in Ireland under freedom to provide services. In addition, these claim amounts do not represent a constant market size and/or share as, for example, the number of vehicles insured by these undertaking will have varied each year. The Central Bank advised at the time that direct comparison of earned premiums to paid claims is not necessarily appropriate, as it is important to also consider the reserves set aside to meet claims that have not yet been settled and/or notified.