Tuesday, 10 December 2019
Department of Finance
Let me say at the outset that I am very aware of the affordability and availability of cover issues facing businesses and organisations in the culture and leisure sectors including the organisation mentioned in the details supplied.I have much sympathy for the position such organisations find themselves in, however as the Deputy is aware, there are significant constraints on what the Government can do to immediately resolve this issue. In this regard, neither I, nor the Central Bank of Ireland, have any influence over the pricing of insurance products, and neither can we compel any insurer operating in the Irish market to provide cover as this is a commercial matter for insurers. This position is reinforced by the EU framework for insurance (the Solvency IIDirective) which expressly prohibits Member States from adopting rules, which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, the Government cannot direct insurance companies to cover certain types of risk, such as those in the culture or leisure sector. A further constraint is the fact that for constitutional reasons, the Government cannot direct the courts as to the award levels that should be applied.
Notwithstanding these constraints, reducing the high cost of insurance generally has been a priority for the Government. The Cost of Insurance Working Group (CIWG) was established in July 2016 and undertook an examination of the factors contributing to the increasing cost of insurance in order to identify what short, medium and long-term measures could be introduced to help reduce the cost of insurance for consumers, businesses and the voluntary and arts sectors. The CIWG has produced two reports the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance.
Many reforms have been made already including amendments to the Civil Liability and Courts Act 2004, the Personal Injuries Assessment Board Act, and the establishment of National Claims Information Database in the Central Bank of Ireland, however it is clear that the single biggest challenge that still needs to be addressed and which is having the most impact on the culture and leisure sector is the level of awards that exist in Ireland, for relatively minor injuries, as compared to other jurisdictions. In this regard, the key recommendation arising from both of the CIWG’s reports was the establishment of the Personal Injuries Commission (PIC) and the publication of its two reports. The PIC conducted a benchmarking of award levels between Ireland and other jurisdictions for the first time and this has been very helpful in identifying the scale of the problem that is faced. This research showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales. The PIC recommended that a Judicial Council be established and that it should compile guidelines for appropriate general damages for various types of personal injury. In carrying out this exercise, the PIC believes that the Judiciary will take account of the jurisprudence of the Court of Appeal, the results of its benchmarking exercise, etc. On foot of this recommendation, the Government with the support of all parties in the Oireachtas prioritised the passing of the Judicial Council Act 2019. This Act provides for the establishment of a Personal Injuries Guidelines Committee upon the formal establishment of the Judicial Council. This Committee is tasked with introducing new guidelines to replace the Book of Quantum.
With regard to the Personal Injuries Guidelines Committee and the subsequent publication of its new guidelines to recalibrate award levels and replace the Book of Quantum, it is a matter for the Judiciary to put in motion the necessary process to expedite these. The first important step in this process was the recent announcement by the Chief Justice of the names of the seven “members designate” of the Personal Injuries Guidelines Committee (PIGC), which will be chaired by Ms Justice Mary Irvine of the Supreme Court. This is a significant step forward as I believe it is a recognition of the prioritisation that the Judiciary are giving to this issue.
I am hopeful that the creation of personal injury damage guidelines by the Judiciary can result in the lowering of award levels. Were this to happen, I would expect a lowering of the costs of insurance generally. In this context, I note the comments made by the Interim Insurance Ireland CEO Gerry Hassett recently that if award levels come down so will premiums. I believe that this is a very reassuring commitment and it is one the Government intends holding the insurance industry to.
Finally, I wish to reiterate my view that a recalibration of award levels will go a very significant way towards addressing the current problems around the affordability and availability of insurance being experienced by impacted businesses and voluntary groups, including the arts and culture sectors. I also believe this recalibration in combination with the cumulative effects of the implementation of the two CIWG Reports’ recommendations will lead to a more competitive insurance market.