Thursday, 16 December 2021
Department of Finance
I am aware that the affordability of insurance is an issue of concern for some businesses. However, neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, nor do we have the power to direct insurance companies to provide cover to specific businesses or individuals. This position is reinforced by the EU Solvency II Directive framework.
Notwithstanding this, the Government keenly understands that access to affordable insurance is vital for businesses, and is therefore working to improve both the cost and availability of this key financial service through the Action Plan for Insurance Reform. This reform agenda is progressing well, with the first Implementation Report published last July showing that 34 of the 66 actions were complete.
One of the key achievements to date has been the implementation of the Personal Injuries Guidelines some six months ahead of schedule, which should provide much greater certainty regarding award levels, in addition to reducing awards for many common injuries. These should also lead to lower legal fees by encouraging greater use of the Personal Injuries Assessment Board to settle claims. The overall impact should therefore be to lower claims costs for insurers. In turn, it is the Government’s expectation that insurers will reflect any savings by reducing customers’ premiums.
In this regard, Minister of State Fleming recently met with the CEOs of the main insurers here to assess their response to the Guidelines, and to emphasise the importance of insurers not undermining the Guidelines by settling for amounts that are inconsistent with them. I understand that this engagement was positive, and that insurers confirmed that they are committed to passing on savings from the Guidelines, and are adhering to them in their direct settlements.
In addition to lowering premiums, it is hoped that consistent use of the Guidelines will result in a more stable claims environment that will encourage existing insurers to expand their risk appetite, and help to attract new entrants into the Irish market. Work being undertaken by the Office to Promote Competition in the Insurance Market to attract new providers here, in conjunction with IDA Ireland, will seek to leverage this. In his recent meetings, Minister of State Fleming also impressed upon insurers the need to expand their risk appetite into ‘pinch-point’ sectors that are experiencing issues with availability and affordability of cover.
In conclusion, work to complete outstanding reforms under the Action Plan remains ongoing. Upcoming priorities of particular note with regard to the childcare sector and high footfall industries include changes to the duty of care, which the Minister for Justice is leading on. It is my intention to work with my Government colleagues to ensure that the overall implementation of the Action Plan can have a positive impact on the affordability and availability of insurance across all sectors of the economy, including childcare.