Written answers

Thursday, 14 July 2022

Department of Finance

Insurance Industry

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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284. To ask the Minister for Finance the engagement by his Department and Government agencies with foreign or overseas insurance companies with a view to increasing the number of providers in the public liability insurance market in the State; and if he will make a statement on the matter. [39162/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Insurance reform is a key priority for this Government as evidenced by the fact that implementation of the Action Plan on Insurance Reformis overseen by the Cabinet Sub-Group on insurance reform. The second Implementation Report, which was published on 1 March 2022, shows that 80 per cent of the actions contained in the Action Planare now being delivered.

The establishment of the Office to Promote Competition in the Insurance Market, which is chaired by Minister of State Fleming, is a Programme for Government commitment. Its aims are to help expand the risk appetite of existing insurers and explore opportunities for new market entrants in order to increase the availability of insurance.

Since its establishment, the Office has held over 90 meetings with a range of stakeholders, including insurance companies and representative stakeholder organisations. As part of this, the Office is working closely with IDA Ireland to help leverage the ongoing insurance reforms with the aim of targeting new entrants to the Irish market, or persuading current incumbents to expand their risk appetite. This will, in the first instance, target providers who offer insurance in areas which have been identified as ‘pinch-points’ in the Irish market, such as the leisure sector and other sectors having difficulty in obtaining public liability insurance. Due to the successes of the Government reform agenda, such as the implementation of the Personal Injuries Guidelines which have now reduced awards by an average of 40 per cent, I am confident that the IDA now has a very positive message to deliver. Upcoming developments, such as the reform of the Duty of Care, will further enhance this by addressing the issue of ‘slips, trips and falls’ which is particularly prevalent in high-footfall/high-risk public-facing sectors. There are positive indications of some firms expanding their risk appetite into a number of these areas.

Finally, the recent NCID report contains much that is encouraging. It demonstrates that 57 per cent of ‘packaged’ EL/PL/commercial property policies had premiums of less than €1,000 and 92 per cent less than €5,000. Only 2 per cent had premiums over €25,000.

I wish to assure the Deputies of my intention to work with my Government colleagues to ensure further implementation of the Action Planwhich should have a positive impact on the affordability and availability of insurance for all consumers.

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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285. To ask the Minister for Finance his Department’s plans to ensure the right of access to insurance link information following the recent European Commission finding; and if he will make a statement on the matter. [39163/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, InsuranceLink is a data pooling system administered by Insurance Ireland for the stated purpose of fraud detection. It has been publicly announced that in response to a European Commission investigation, Insurance Ireland has provided a series of commitments to overhaul access to the InsuranceLink database, including the creation of an independent application and appeals process. Following a consultation period, and a number of amendments to the initial proposals, the Commission has now found that Insurance Ireland's final commitments will ensure market participants' access to the InsuranceLink platform, and has decided to make them legally binding on Insurance Ireland. These are anchored in EU anti-trust laws and will remain in force for 10 years, as well as being monitored by the EU Commission.

I welcome the fact that Insurance Ireland has provided these commitments to reform access to the InsuranceLink database, including enhanced governance arrangements, which will ensure equitable and transparent access to this data. Information sharing and data analysis have become increasingly important in promoting competition in the insurance sector and encouraging new entrants. Therefore the solution arrived at between the European Commission and Insurance Ireland should both maintain market competition and protect customer choice in the private motor insurance market.

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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286. To ask the Minister for Finance the measures that the Government plans to take to ensure that changes in the judicial guidelines on personal injury claims result in reduced premiums for insurance customers; and if he will make a statement on the matter. [39164/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will appreciate, neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).

Nevertheless, this Government is continuing to prioritise insurance reform through the whole-of-Government Action Plan for Insurance Reform. The Personal Injuries Guidelines represent a key achievement of this reform agenda, with recent data from the Personal Injuries Assessment Board indicating that the overall average award has fallen by 42 per cent compared to awards made in 2020 under the Book of Quantum. Given this pace of reform, and the many other measures being implemented, it is necessary for the insurance industry to pass on benefits to its hard-pressed customers. Both Minister of State Fleming and I have been clear on these points and have been holding the insurance sector to account, in so far as it is permissible, on commitments made.  

In this regard, Minister of State Fleming has met individually with the CEOs of the eight main insurers in the Irish market on a number of occasions since the adoption of the Guidelines. In these meetings, and in ongoing engagement with industry, Minister of State Fleming has consistently stressed the importance of insurers reflecting lower claims costs through reduced premiums. These engagements have been positive, with insurers confirming their commitment to passing on savings from the Guidelines. During these meetings, it was 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 addition, the National Claims Information Database (NCID) contains a wealth of information on premium prices and claims costs, and is unique in Europe in terms of the transparency it brings to the insurance sector. Following the introduction of the Guidelines, the Central Bank has amended the NCID data specification and will collect further claim settlement data. I look forward to the publication of the fourth Private Motor Report later this year, which will provide data up to the end of 2021, and should show some initial insight into the impact of the Guidelines.

Finally, it is important to note that it will take time for the Guidelines to take effect, particularly in terms of Court settlements, as there are still a number of existing claims before the Courts which will be assessed under the Book of Quantum. In addition, buy-in from all stakeholders is vital if the Guidelines are to have the expected effect, and it will take a period of time for their true impact to be felt. In the meantime, the Government will continue to engage with stakeholders in relation to their use, as well as with the Central Bank with regards to enhancing the NCID to monitor their impact.

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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287. To ask the Minister for Finance the legislative changes that are planned or are underway to ensure a reduction in insurance premiums for customers; and if he will make a statement on the matter. [39165/22]

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
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288. To ask the Minister for Finance if he will provide an update on the work that is being carried out under the action plan for insurance reform; and if he will make a statement on the matter. [39166/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 287 and 288 together.

At the outset, it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive). 

Nonetheless, this Government recognises the concerns felt by many groups regarding the cost and availability of insurance, and has therefore prioritised insurance reform via the Action Plan for Insurance Reform which was published in December 2020. As the Deputy may be aware, the Government published the second Action Plan for Insurance Reform Implementation Report in March this year, which shows that work is progressing well to implement these important reforms, with 80 per cent of the actions already being delivered.

The Action Plan is a whole-of-Government strategy contains several initiatives expected to positively impact insurance costs. For example, the Personal Injuries Guidelines (implemented in April 2021) have significantly lowered award levels for many common injuries, with the latest data from the Personal Injuries Assessment Board (PIAB) indicating that the overall average award has reduced by 42 per cent compared to 2020. Consistent implementation of the Guidelines should therefore lead to a reduction in the cost of claims, which is the main driver of the cost of insurance.

Another key development with regard to home and motor insurance costs has been the Central Bank of Ireland’s Regulations to prohibit price walking from 1 July 2022. This is a form of dual pricing whereby customers are charged higher premiums relative to the expected costs the longer they remain with an insurance provider. This ban is a balanced approach that will protect customers who prefer to stay with their current provider from being subject to a ‘loyalty penalty’, while still allowing customers to benefit from discounts from new providers.

Recent legislation (the Insurance (Miscellaneous Provisions) Act 2022), commenced on 8 July, responds to this development and includes a requirement for the Central Bank of Ireland to submit a report to the Minister for Finance setting out the steps it has taken since regulating price walking. The Act provides for this report to be submitted within an 18-month timeframe from enactment, and for it to be laid before the Oireachtas upon receipt. This will allow for timely oversight of the price walking ban by Government and the Oireachtas, to determine whether further measures need to be taken to address the issue. The legislation also addresses a number of further insurance issues that have arisen since the publication of the Action Plan.

Some of the other achievements to date aimed at reducing costs include: 

- the establishment of the Office to Promote Competition in the Insurance Market, which aims to lower costs by promoting greater competition in the Irish market; 

- the enhancement of the enforcement powers of the Competition and Consumer Protection Commission (CCPC) through the Competition (Amendment) Act 2022; and

- measures to reduce fraud, including the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021, which places perjury on a statutory footing for the first time.

Work is continuing across Government to drive forward the outstanding aspects of the Action Plan. This includes further legislative changes intended to reduce costs, including:

- the Personal Injuries Resolution Board Bill 2022, which will strengthen the Personal Injuries Assessment Board to ensure more cases settle at that stage instead of proceeding to costlier litigation (this is under the responsibility of the Minister for Enterprise, Trade and Employment); and

- the Courts and Civil Law (Miscellaneous Provisions) Bill 2022, which will contain amendments to the Occupiers’ Liability Act 1995 to rebalance the duty of care (this is under the responsibility of the Minister for Justice).

It is my belief that the overall implementation of the Action Plan should help to improve both the cost and availability of insurance.

Finally, I would also note that recent data from the Central Statistics Office shows that average private motor insurance prices have fallen by 41 per cent since their peak in July 2016, and it is my hope that these ongoing reforms will bolster this downward trend in the wider insurance market, to the benefit of consumers, businesses and community groups.

Photo of Ruairi Ó MurchúRuairi Ó Murchú (Louth, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

289. To ask the Minister for Finance if he will provide an update on the work of the Office for the Promotion of Competition in the Insurance Market; and if he will make a statement on the matter. [39167/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Insurance reform is a key priority for this Government as evidenced by the fact that implementation of the Action Plan on Insurance Reform is overseen by the Cabinet Sub-Group on insurance reform. The second Implementation Report, which was published on 1 March 2022, shows that 80 per cent of the actions contained in the Action Plan are now being delivered. 

The establishment of the Office to Promote Competition in the Insurance Market, which is chaired by Minister of State Fleming, is a Programme for Government commitment. Its aims are to help expand the risk appetite of existing insurers and explore opportunities for new market entrants in order to increase the availability of insurance. In that regard, the Office is working closely with IDA Ireland to help leverage the ongoing insurance reforms with the aim of targeting new entrants to the Irish market or encouraging current incumbents to expand into underserved areas. Since its establishment, the Office has held over 90 meetings with a wide range of stakeholders including insurance companies, voluntary groups and representative bodies on issues surrounding competition. Minister Fleming also met with the CEOs of the major insurance providers in Ireland, and they have confirmed that they are passing on savings achieved as a result of Government reforms to customers. The Office has also cooperated with the Central Bank to create a databank for new market entrants, which was launched on 8 February 2022. This databank is an additional source of information for insurance providers who are considering entering the Irish market, as it provides ‘one-stop’ access to key sources of information on insurance in Ireland, and showcases the high-quality work being done in data collection by the Central Bank, such as the National Claims Information Database (NCID). 

Through initiatives such as the Action Plan, this Government is committed to securing a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland. In this regard, it is my intention to continue working with my Government colleagues to ensure the timely implementation of the Action Plan, which will bring benefits to the wider economy and society. 

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