Matt Shanahan: Insurance 'strangles' business, seeks legal reform

Tanaiste, we are at an inflection point for this Government. Given you are to rotate away from the Enterprise Department, can I ask you for your reflections on the Programme for Government commitments to deliver on insurance reform? What changes have been made? What you feel has worked and not worked? And what the next Minister should perhaps try? Because despite all the noble words, premiums continue to float upwards and insurance continues to strangle the social, cultural and commercial life of our country. Some commercial premiums are reported to be rising 50% this year. This performs with no history of claims. For others, business liability insurance premium is up by 30% and good luck trying to get a quote for adventure tourism. No new competition has entered the market to shake things up. We have another 15 years of the 2% levy brought about by the Quinn insurance collapse. 20 to 30 euro per household per year. Something to look forward to, I suppose. We have no present public record of circuit court awards, so we cannot see where payments are reasonable or unreasonable. The extent to which our independent judiciary have reflected on agreed claims guidelines is a cause for concern. Too many cases still end up in the courts. The legal fees and the costs cost too much. The court outcomes are too unpredictable for many insurance underwriters to try their luck. The programme for government sets out the problem clearly. Insurance costs are too high for business, for motorists, households, sporting groups, community and voluntary groups. The programme for government priority was to improve competition, to moderate excessive payouts and excessive compensation claims. But most importantly, to deliver legal reform reform. It all sounds a bit Mary Harney-esque to be honest, circa 2003. The Dáil is waiting for the government to move the Occupiers Liability reform bill forward. We are also waiting to see new insurance competition office actually working and doing the job it is required to do. doing the job it is required to do. We have to wait to see if PIRB is more successful than PIAB and to that point I was the only deputy to bring forward an amendment looking for a further subsequent review to the PIRB legislation and I think that should still happen. But we already know some reforms already look like they are not up to the task. Perhaps we need to bite the bullet to Anishter and consider a citizens assembly and a referendum to make insurance work for our economy and our society rather than having our society working for insurance. Anishter, what changes have been made that you feel have worked and not worked? What should the next Minister try to achieve lasting insurance reform? Thanks very much Deputy and thanks for raising this question and as you know I chaired the Ministerial Committee on Insurance Reform and want to acknowledge the work of Minister Fleming as well in that regard as the Minister responsible for the sector. For far too long the cost and availability of insurance has been a big problem for business, for consumers and community and voluntary groups. We have made good progress on implementing the action plan but I've always said that the success of the plan will not be measured by the number of completed actions but rather whether the reforms implemented over the lifetime of the government result in reduced premiums and increased availability of insurance. While we have seen some signs of improvement when it comes to availability, we've only seen premiums decrease from motorists to date. There's also likely to be a lag time between implementing these reforms and people seeing the benefits. The Cabinet Committee subgroup has worked very well in overseeing the action plan and 90% of actions are now complete. So I want the subgroup to continue its work next year and it will continue to be chaired at a high level either by the Taoiseach or the Tánaiste. It will actively review developments in the sector, monitor price changes and engage with stakeholders. The progress that we have made to date includes the new personal injury guidelines which are being used, new offices established to promote competition and crack down on fraud. We've strengthened the law on perjury. Legislation to reform the personal injuries assessment board has been passed and now awaits a signature by the President. I understand we accepted your amendment on the review as part of that and that was a welcome contribution. We also have proposals in place to amend the law on occupiers liability, that's the duty of care provision, to rebalance responsibility between those who run and own a premises and those who may come into it. We anticipate having that done in the first quarter of next year, if not the first quarter, certainly in the first half of next year. Where savings have arisen from these reforms, we do expect them to be passed on to policyholders and that's the message that's being conveyed to the industry by ministers and I reiterate it today. In terms of prices to date, despite the current trend in headline inflation at about 9%, CSO indicates that motor insurance is 10% lower than a year ago and 43% lower than when it peaked in 2016. PIAB data also shows a significant 44% reduction in award values for general damages and we now expect those reductions to be passed on to policyholders. So we've seen a significant reduction in motor insurance from peak in 2016. We now want to see that when it comes to employer and public liability insurance over the course of the next year. Taoiseach, we need the occupiers liability legislation enacted as soon as possible and the costs are not coming down as well as hoped in the commercial and insurance sector and that remains the significant problem. We are not seeing the arrival of new competition into the sector and with respect to that there are now the formation of buying groups that are being spoken about where industry sectors can come together and look to get a discount and get underwriting but unless they have a combined insurance premium of over a million euro there is nowhere for them to run to and that is a big problem for people in the bouncy castle business, in the sports and adventure centres and the performing arts. What is government doing to support these smaller businesses? We need greater transparency regarding the free income and the insurance company profits that are being levied at the present time and I think we need strict review procedures as I have advocated for to ensure that PIRB and subsequently occupiers liability is working as desired but most of all we need to stop the feeding frenzy that is personal injury compensation in this country and we need to see that being really sat upon now by the new insurance office in the coming year. Thank you very much Deputy. I am informed that the duty of care legislation, that is the occupiers liability legislation was passed by the Dáil last week as part of an amendment to another justice bill but I think that has to go through the channel yet so it will be enacted then I expect in the first quarter of next year and we expect the President to sign the legislation reforming the personal injuries assessment board and turning it into a personal injuries resolution board within the next couple of days and once that is up and running I think it will change the incentives. At the moment if you don't accept a PIAB award there is really no risk you can go to court and you will either get the same or more and the only risk is having to wait. It is going to change it so that there is a risk in going to court you may end up with less and legal fees and I think that is going to be a positive change and like I say this is something that the government is very committed to. The changes that we made around motor insurance took a year or two to result in lower premiums. We believe that the changes that we have made in the last year or two will result in decreased premiums in the next year or two and that is what we need to see that is the benchmark for success.