Thursday, 5 March 2020
Department of Finance
82. To ask the Minister for Finance the status of plans to deal with the rising cost of motor, home and business insurance; the steps being taken to prevent businesses from closing and bring down premiums; and if he will make a statement on the matter. [2891/20]
104. To ask the Minister for Finance the measures he plans to implement to deal with exorbitant insurance costs affecting many sectors of the economy; and if he will make a statement on the matter. [3756/20]
I propose to take Questions Nos. 82 and 104 together.
The general problems across the country as a whole faced by many consumers and businesses in relation to the cost and availability of insurance are well known. Unfortunately, there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises or increase capacity. This is because there are many constraints faced by the Government in trying to address this issue in particular the fact that it can neither direct the courts as to the award levels that should be applied, nor can it direct insurance companies as to the pricing level, which they should apply in respect of businesses seeking insurance.
However, insurance reform remains a priority. Consequently, following the publication of its Report on the Cost of Motor Insurance in 2017, the Cost of Insurance Working Group (CIWG) undertook an examination of the employer liability and public liability insurance sectors. This second phase culminated in the publication in January 2018 of the Report on the Cost of Employer and Public Liability Insurance. There has been significant progress in the implementation of the two CIWG Reports. Examples include the following:
- the establishment of the Personal Injuries Commission, and its subsequent recommendations relating to addressing award levels for soft tissue injuries – this has provided the objective evidence we need to be able to address award levels;
- the establishment of the Judicial Council and its Personal Injuries Guidelines Committee, which is due to prepare new draft guidelines for personal injuries awards later this year;
- the establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance; the Central Bank is to commence work on expanding its scope to cover employer and public liability insurance this year;
- reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019;
- amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;
- the reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers;
- various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the recent commitment by the Garda Commissioner to investigate insurance fraud at a divisional level and which will be guided by the Garda National Economic Crime Bureau (GNECB) who will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee, which targets insurance-related criminality; and,
- the work currently underway by the Law Reform Commission (LRC) to undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries.
These reforms are having a significant impact with regard to private motor insurance (CSO figures from January 2020 show that the price of motor insurance is now 27.4% lower than the July 2016 peak). It is important to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant to businesses.
Undoubtedly the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs particularly for small businesses is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. In this regard, I believe good progress has been made with the establishment of a Judicial Council and its decision to nominate 28 April for the establishment of the Personal Injuries Guidelines Committee (PIGC). My understanding is that this means that the PIGC will be required by the legislation to submit draft Guidelines to the Judicial Council by 28 October. While the Government cannot interfere in the Judicial Council’s deliberations due to the constitutional separation of powers, I would hope that the Guidelines will take into account the Personal Injury Commission’s benchmarking report, and can come into operation as soon as possible following their submission to the Judicial Council. In return for lower and more consistent award levels, I believe insurers have to significantly reduce their premium levels and broaden their risk horizons.
Finally, I would like to assure the Deputies that the Cost of Insurance Working Group is continuing to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. The cumulative effects of the completion of the two Reports’ recommendations should include increased stability in the pricing of insurance for businesses and a more competitive insurance market.