Thursday, 16 December 2021
Department of Finance
272. To ask the Minister for Finance the extent to which the insurance industry here remains competitive when compared with insurance costs throughout the European Union notwithstanding national differences that may apply; and if he will make a statement on the matter. [62789/21]
The Irish insurance sector is diverse, comprising life, non-life and reinsurance firms providing a range of products and operating across a number of geographic markets. As Minister for Finance, I am responsible for the development of the legal framework governing regulation of this sector. This framework is mainly governed by the EU Solvency II Directive, which provides for three ways in which an insurance undertaking can operate within the Irish market. These are to:
- establish a head office in Ireland (authorised by Central Bank of Ireland);
- establish a branch in Ireland through Freedom of Establishment (FoE); or
- operate on a Freedom of Services basis (FoS), i.e. conduct business in Ireland from another country.
It should be noted that companies operate within each of these channels in the Irish insurance market, in addition to Irish companies operating across the EU on a similar basis. The Solvency II framework is designed to allow for a level playing field across the European Union for insurers, not only in terms of market access, but also with regard to the level of supervision and regulation. It also expressly prohibits Member States from adopting rules that require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.
I understand from my officials that it is difficult to obtain reliable data to compare the cost of insurance here to that in other jurisdictions throughout Europe. I am informed that international organisations, such as the OECD and Eurostat, do not publish comparative data on the cost of insurance between countries. Eurostat publishes Harmonised Index of Consumer Prices (HICP) data with regard to insurance, but this only provides a comparison of the level of inflation for different types of insurance such as motor and travel insurance. It is not possible to compare the underlying cost of each insurance type. In addition, this does not include a comparative index for the price of insurance to businesses.
In any event, any international comparisons based on price alone would not take into account relevant factors such as the various regulatory environments and liability systems in place in different jurisdictions. However, increased availability of data in relation to insurance and understanding the factors that influence or drive the cost of it are important. In Ireland, we have the National Claims Information Database (NCID), which is unique in Europe in terms of the transparency it provides into the insurance sector, including claims costs and average earned premium data. The Central Bank of Ireland has published three NCID reports on private motor insurance and one NCID report on employer liability, public liability and commercial property insurance to date. The Central Bank of Ireland will continue to publish regular reports that will provide us with a wealth of data in terms of how insurance costs are affecting different groups. The Government has also proposed for further enhancements to be made to the NCID in the new Insurance (Miscellaneous Provisions) Bill, to further increase transparency in the sector. The Heads of that Bill are currently going through the pre-legislative scrutiny process.
With regard to the competitiveness of the Irish insurance sector more generally, I believe that the implementation of the outstanding Action Plan for Insurance Reform elements will have a positive impact. In July, the Cabinet Committee Insurance Reform Sub-Group published the first six-monthly Implementation Report of the Action Plan. This showed that work is progressing well to implement these important reforms, with 34 of the 66 actions completed. Work remains ongoing across Government to deliver further elements of the Action Plan, including measures to reform the PIAB, reduce fraud, and make changes to the duty of care. The implementation of these key actions in particular are anticipated to have a positive impact on the affordability and availability of insurance for individuals, businesses, community and voluntary groups across Ireland.