Written answers
Tuesday, 17 October 2023
Department of Finance
Insurance Coverage
Seán Canney (Galway East, Independent)
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162. To ask the Minister for Finance if he is aware that small construction consultants are experiencing difficulties in obtaining professional indemnity cover, with the limit of indemnity being reduced from €6.5 million to €2 million in some cases, and a rise in premium of a multiple of four times; this is putting consultants in serious danger of not being able to carry out public works; if he will investigate the matter; and if he will make a statement on the matter. [44998/23]
Michael McGrath (Cork South Central, Fianna Fail)
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Government is aware that a small number of areas can face difficulties in terms of affordability and availability of insurance, including in the construction sector. As the Deputy will be aware, neither Government 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, individuals, or groups, or to deliver it at a certain rate.
The terms and conditions, including indemnity limits of cover, are a matter of contract between an insurer and customer, and Government cannot intervene. This position is reinforced by the EU Solvency II Directive insurance framework. As such, the Government faces constraints in seeking to address this matter.
I understand that the global insurance and reinsurance market for professional indemnity insurance is currently ‘hardening’, meaning it is becoming more expensive and subject to stricter terms and conditions than before. My officials have raised this issue directly with providers and the Insurance Ireland, the representative body for the insurance industry. They have indicated that the professional indemnity market for the construction sector has been an issue in particular since the Grenfell Tower tragedy in 2017. As a small, open market, Ireland is not immune to these global trends.
Nonetheless, we have therefore prioritised the implementation of the Action Plan for Insurance Reform, which aims to improve the cost and availability of insurance for all groups,. Considerable progress has been achieved, with the vast bulk of the 66 actions contained therein now delivered or ongoing. It is intended that the cumulative impact of these actions will be an improved insurance environment for all, including those in the construction sector. However, the issue of all classes of professional indemnity cover will continue to be raised in both political and official level engagement with the insurance industry.
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