Thursday, 5 March 2020
Department of Finance
I am very aware of the affordability and availability of insurance cover issues facing local community groups, including insurance coverage for events that they hold. I have much sympathy for the position such groups 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 to community groups or their events, as this is a commercial matter for insurers. This position is reinforced by EU Single Market rules relating to insurance which expressly prohibit Member States from adopting rules, which would require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. A further constraint is the fact that the Government cannot direct the courts as to the award levels that should be applied.
Notwithstanding these constraints, insurance reform remains a priority. 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/community 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 2003, and the establishment of National Claims Information Database in the Central Bank of Ireland. It is clear however that the single biggest challenge that still needs to be addressed and which is having the most impact on the community group 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. On foot of the PIC recommendations, 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.
I am also pleased that the Judicial Council held its first meeting on 7 February, and that it has nominated 28 April for the establishment of the Personal Injuries Guidelines Committee. I understand that this means that it 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 PIC’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.
In summary, the key outstanding challenge to satisfactorily resolve the cost and availability of insurance issue is a recalibration of award levels downwards. I believe that if this is done and these awards are applied consistently by the courts, the current problems being experienced by impacted community groups, as well as other businesses and organisations more generally, will recede.