Shay Brennan: Calls for action on competition in insurance market

Thank you, Brian. Thank you, Vincent. I have a series of questions here, and they're just covering a couple of areas, so I'll just try and maybe stick to one area, come back, and then we'll move on to the next area. Obviously, you're pointing to a lack of competition as a problem here, and I fully agree with you. It does certainly seem to be something that could help unlock this if there was more competition. It would appear that at 13% average profit margin, two and a half times the EU average, that it's quite a lucrative market for insurance companies, probably the most lucrative in all of the EU. So that does beg the question, well, why is there not more competition? And irregardless of any government agency or body to promote it, and the underlying economics would certainly suggest that the Irish market is one that an EU operator should naturally be looking at. And you're pointing to there being barriers to entry, and I'm just wondering if you could elaborate on what you feel those barriers to entry are, because I know in your submission you're encouraging the government agency to have a look at that, so I can't call the name of it, but you're encouraging that to be looked at. But you must have anecdotally have some idea what those barriers to entry actually are. I think one of the things, in fairness to point out, of course, is the relative size of the Irish market. You know, we are a smaller country with a smaller population, you know, compared to other countries, and that I'm sure is a factor. I do think the reputational issue is another reason that has needed to be addressed. I do think that the need to now promote Ireland as a destination, and the stability of the market, because of the reforms that have come in, needs to be beefed up, because it's important to get that message out there, and sometimes the older views can take a longer time to shift. So I know, as I said earlier as well, I know there had been issues around access to data for businesses making decisions about whether to enter the market. Now, those have been somewhat addressed, but perhaps a longer-term solution is needed there as well. And ultimately, I think that that is what is required. I mean, it's difficult to understand why, I think, 20% of the 775 organisations that responded have only one underwriter willing to provide cover. They've got the 40 with only two. There is a dearth of competition, and one of the eternal frustrations of some of our members, albeit in perhaps more niche sectors, is they look around and they say, why can our counterparts in Sweden and Germany and France get insurance for this activity, but we can't get it in Ireland? And there's no satisfactory answer, whether that's in the arts, or in, and I'm thinking in particular, performative arts, that there are some issues there where the same insurers will cover it in other countries, but not here. There's no satisfactory answer that we've been able to yield or elicit from them as to why that's the case. So, I mean, I do think that that's perhaps market size is the only thing, but I think really the work, there is an opportunity now because of all the reforms, and indeed because of the promise of additional reforms that the new action plan holds as well. So, there's a lot to, there's a lot to, a lot of positive steps have happened, but it's, that's only, it's only good if you tell people about it. Thanks. You, you, I found the name of that agent, the Office to Promote Competition in the Insurance Market. Should have been on the tip of my tongue. But you, you appreciate by calling for additional resources for that body, they, they can't do anything to affect the size of the Irish market. And if market size is, is the key problem here, we, we, we, we might look, need to look at other potential solutions, such as via the EU in terms of standardisation, or opening up of the, the, the borders a bit more within that industry. I notice you're not pointing to those as potential solutions. Are they areas that have been discussed or considered? I think the role of the EU probably does need further examination and is something that, that probably hasn't been considered as much in, in, in, in recent years, and it is an area that, that would benefit from, from, from greater scrutiny. I wouldn't say that market size is the single biggest reason. Well, certainly nobody has officially said that to me, if that, if that makes sense. I'm sure it is a consideration. But I am certain that awards that are four times, you know, awards in Ireland at one point were a multiple of 4.4 greater than those in the UK, only a few years ago in 2019, like 440% greater. That is something that is obviously very relevant to prospective insurers looking to enter, enter the market. The volume of claims having been disproportionately high again in Ireland relative to its size was another area. And just previously with the book of Quantum, not knowing, you know, what is, what is that elbow going to be worth in terms of a claim? And there being quite a, you know, the, the new present injury guidelines are much more prescriptive and fair. And if your injuries of this duration and this severity, this is what you get. And that affords predictability and stability in the market, which to be fair to insurers is something that they need. But I fully take your point about, about the European angle. I think it is something that needs to be explored further. Yeah, I think it's, it's a problem across the financial services industry in general. And, you know, no doubt there is, there is a lack of competition in the banking sector currently as well. And, look, measures will have to be taken in order to address that. So, so would you see, see insurance rolling up in that and that the solution is potentially a broader solution in the financial services sector? Or would the Alliance prefer to push for a kind of a, a, a, a single insurance solution? Yeah. We'd have to give consideration to, to that insofar as that, I mean, we're primarily, most of us in the business, though we're, we represent voluntary and community as well. But those of us in the business believe in the, in the, in the model of competition. So, we would consider that the, that the first thing that you would look for would be competition. Should that competition only be limited to companies that are registered and trading only in Ireland? Or should it be further aside? What are the downsides to it? Because the last thing we want to do is to see a slew of money going outside of the country and then all kinds of difficulties when you, when there are claims or otherwise. So, we think that there should be at all stages that it should be held within, that, that, that the primary matter should be held within Ireland. But if you can't get the insurance companies to, to play fair, and again, I'm coming back to it, they're not playing fair. We need them, and certainly this committee needs to ask of the insurance industry, with all the benefits that we've given you, and you can list them out, you know them because you've actually, you've actually seen through and passed through the legislation to allow for it, or seen the administrative changes, with all those benefits that we've given you. Why is it that the citizens of the state and the businesses of the state, because every, every week, every day, a company is closing because it can't afford cover or can't get cover. And you ultimately are wrongly being blamed for that. So, you've got to fight back as well. I mean, we've all got to fight back, but certainly the insurance companies hold, hold us in contempt for the way that they've been behaving. Yeah, and, and I think you, you'll, you'll find that part of the reason we're having this committee hearing today is, is to, to attempt to, to join you in that fight back and find out where the problems actually are. I mean, what, what we actually need to fight here. And, and that does take me to my next point. Um, you, you, you touched on a, maybe a lack of willingness from the insurance companies to, to engage, uh, or, or to, I, I, I mean, there seems, looking at this, that there's a kind of a black box scenario going on here. Uh, we can't see into the insurance companies. Um, they're making twice the, uh, premiums and, uh, sorry, they're charging twice the premiums. But they're making two and a half times the EU average in, in, in profits. Um, so, you know, it would suggest that if they wanted to, if they put their minds to it, uh, they, they, they could, uh, they could certainly, you know, uh, adjust their profit downwards. And you, you pointed to, uh, the CEO of Aviva, uh, sounding almost perplexed that they were making so much profit and saying that they'd like to, to, to make, uh, 5%. Um, but, you know, I, I, I, I just, I, I, I don't know what we need to do to encourage them to get there. Um, and I'm just wondering, you know, given that all the reforms that we've introduced, the profits haven't actually changed in the insurance companies. Uh, so you, you, you mentioned 10%, 14%, et cetera. So 13%, give or take, but the low teens are, are, are, are the profits. And, and are there any, I know we can't see into the companies, but you, you'd be closer to this than, than, than I would. Are there any structural issues within the insurance companies, um, that, you know, for example, their cost base, uh, or problems with their investments, uh, or maybe some re-insurance that they're doing with their parent companies, uh, that are not allowing them to pass these profits on to the consumer by way of lower premiums? Do you understand what I'm saying to you there? Yes, you can answer, um, succinctly enough, and then we can always come back in. I'm not aware of any particular impediment on them passing on, uh, reducing premiums and still making a reasonable, a reasonable profit. I also think that there's areas where, while we have seen, you know, a very welcome introduction of the NCID reports and so on, in providing us with that greater transparency around, around insurers and premiums and volume of claims and policies held and profits and so on. I do also think there's probably a need for, for even greater transparency from within, that tells you on a macro level of, let's say, what 80% of the market insurers are, are doing. But I do think there's benefit in being able to see with the large individual insurers, how they're treating reserves, remittances and reinsurance over a period of years, because they are also important devices in terms of that make up the overall package. Well, and this, sorry to interrupt you, this is exactly what I'm trying to get at here, because the simple solution from the outside would be half your profits and half your premiums, and we'd all get on with this. Um, but is there something in there, in their books, such as the reinsurance or investment problems, that means that they can't do that. And we'll just wrap up on that and then we'll let other people come back in. Is that okay? Can you answer really succinctly or we'll move on? Succinctly? There's no problem. If they wanted to, they could. If they wanted to, they could. But nobody's forcing them. That's fairly succinct and to the point. Thank you.