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Closing statement for Dáil Éireann Private Members’ Motion proposed by Fianna Fáil –
Business and Motor Insurance Costs
Eoghan Murphy TD, Minister of State for Financial Services
17 May 2017
I would like to thank Fianna Fáil for tabling their motion on business and motor insurance costs. This is an important issue because of its impact on society as a whole. Throughout the country people have been paying significantly higher premiums for insuring their motor vehicles and businesses, and many are struggling to afford what is, after all, an essential requirement for day-to-day living.
As indicated in the opening statement, while the Government does not dispute that the increase in the cost of insurance has had a negative impact on consumers and businesses, it disagrees with the thrust of the motion that the Government has done nothing to try and address the underlying causes of this problem, and that is why it is opposing the motion.
Progress on the implementation of the Recommendations
Key to the Government’s commitment on this issue is the establishment of the Cost of Insurance Working Group, of which I am the Chair. Much work has been done by this Group which culminated in the publication of the “Report on the Cost of Motor Insurance” in January. This report contains 33 recommendations and 71 action points all of which have been assigned to relevant bodies for completion by specific dates. Therefore there is a rigour to this project which puts pressure on all parties to deliver on time.
A key part of the work to date has been the interaction of the Working Group with the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach. In this forum, I have listened closely to the views of the Committee and its chair John McGuinness TD, and considered its recommendations on motor insurance many of which were in line with the emerging recommendations published by the Department of Finance in October and which were further elaborated upon in the Report on the Cost of Motor Insurance. Therefore, while there are some differences in emphasis between the respective reports, there are much more similarities than differences.
It is recognised by the Government that implementing the cost of motor insurance report quickly is very important. In this regard, therefore the first quarterly report of Cost of Insurance Working Group provides a comprehensive update on progress to date and reasons where delays exist.
However it should be noted that throughout this process, there has been recognition by all sides that there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises. Therefore while the most recent CSO figures suggest that motor premium levels have stabilised to some degree, the Government is not taking this position for granted and also recognises that the levels at which motor insurance premiums are at is still too high. Therefore the implementation between now and the end of 2018 of all the report’s recommendations are critical to introducing fairer premiums for consumers.
The motion correctly points out that 10 actions were scheduled for completion in Q1 2017. Seven of these 10 actions were fully completed, while two of the remaining measures are due to be completed shortly, while the third measure is ongoing. It is important to recognise that substantial work has also been undertaken in respect of a number of the other actions, including the further eight which are classified as “ongoing” in the Action Plan.
As mentioned earlier there has been some criticism of the timeframes for the delivery of some of the key recommendations of the Report. However as explained earlier on issues such as the work of the Personal Injuries Commission and the development of a National Claims Information Database, these unfortunately take time. Lots of details need to be considered and the appropriate level of consultation needs to take place in order to get things right. In addition, legislation will be required.
Other recommendations rely on the resources of the relevant stakeholders, in particular where several recommendations have been addressed to them. With 71 actions, it would simply be impracticable to be able to work on all of the recommendations at the same time.
I will ensure that the Working Group continues to monitor the implementation of the recommendations by the relevant Government Departments and Agencies and keep the Oireachtas appraised of progress. In this regard, I am due to provide the Committee with another update on 1 June.
Tackling the Rising Cost of Business Insurance (Employer and Public Liability Insurance)
The CSO does not publish data for business insurance, and it is not possible for me therefore to give definitive official figures for price increases or decreases. Nevertheless, the Government recognises that the motion makes a number of valid points with regard to the rising cost of business insurance. It is important to recognise that motor was the priority for the Working Group and the Oireachtas Committee given its impact on so many people. Almost half of all non-life insurance business written in 2015 was motor insurance. This is where the focus of our resources must continue to be, while looking now at EL & PL as we have been since January.
It is also important to note that reforms being made to the insurance sector will address motor directly, but will also read across to EL & PL, for example the Personal Injuries Commission. So it is wrong to suggest that nothing is being done for EL & PL at the moment.
There is little acknowledgement that the Cost of Insurance Working Group commenced the second phase of its work in January to look at public and employers’ liability insurance in parallel with implementing the motor insurance recommendations.
The Working Group has met a range of stakeholders and the following broad themes have emerged:
- Significant increase in costs for both PL and EL for all businesses
- Public liability seems to be of greater concern to most groups we have talked to
- Increasing trend towards taking on a greater excess to keep premiums down (as the motion mentions also)
- Related to this an increase in number of business self insuring
- Lack of competition
- Frustration with inconsistency of awards
- Huge legal and business costs associated with challenging claims through court process
- Companies not being given sufficient credit for improving health and safety standards
- Statute of limitations concerns
- Insurers settling without proper notification or consultation
- Seeking legislative limits on book of quantum
- Some businesses feel they are victims of fraudulent and exaggerated claims
- Role of PIAB should be developed
The Working Group is currently considering these matters and will consider what recommendations it can make to address them. It must be recognised however that there are some very complex legal and constitutional issues which would need to be addressed if we are to make progress on these points to the satisfaction of the business sector.
I also note that the motion refers to the practice of insurance companies using non-disclosures where they would have had no bearing on the decision by an insurer to price cover at a particular level. I agree with the motion that it is unacceptable that they be used for the sole purpose of avoiding payment. I will raise this matter with industry.
As outlined in the opening address, my current intention is to publish an addendum to the motor report to cover EL and PL. However I am reviewing this at present, as there might be additional elements that we also want to introduce to the motor section, where there are strong linkages between it and EL and PL. Furthermore, we are considering the need to address quite fundamental constitutional issues, [such as the statute of limitations, capping of awards,] on which serious legal consideration will be necessary.
A final report may not be ready until September, but this does not mean that work on EL & PL reforms will only commence then. I’m hopeful that we can have clarity around the potential new measures in July. When I am certain of our planned direction of travel I will publish it and appear before the Oireachtas committee to explain our thinking.
In conclusion, for the reasons outlined this evening, the Government does not accept the assertions made in the motion and must oppose it.
In our view, little recognition has been given to the significant level of work done to date by of the Cost of Insurance Working Group in relation to addressing the cost of insurance issue. There is also no acknowledgement that the satisfactory resolution of this issue is a complex one which involves addressing an array of disparate issues which will inevitably take some time. However that being said the Government believes that cooperation and commitment between all bodies and individuals with a stake in a stable and accessible insurance market will result in fairer premiums for consumers over the course of the implementation of the Cost of Insurance Working Group Report.
17 May 2017
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