Government Opening Statement for Dáil Éireann Private Members’ Motion proposed by Fianna Fáil – Business and Motor Insurance Costs
17 May 2017
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I welcome the opportunity to address Dáil Éireann on behalf of the Government this afternoon on this Motion. The matters raised are very important.
Intention to Oppose the Motion
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. Consequently, the Government will be opposing the motion and will set out in response what has been done to date to tackle this issue.
Approach of Cost of Insurance Working Group to its review
In relation to tackling the cost of insurance, the first point to note is the establishment of the Cost of Insurance Working Group by the Minister for Finance in July of last year and the subsequent work of this group including its motor insurance report. In carrying out its task, I would like to remind the House about the collaborative approach which the Working Group has adopted in relation to its regular engagement and co-operation with the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach on the cost of insurance project. In this regard, the Minister of State Eoghan Murphy TD has made several appearances before the Committee. He has listened closely to the views of the Committee and its chair John McGuinness TD. While there are some differences in emphasis between the respective reports, there are much more similarities than differences. There is also a recognition in both reports that there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises. This suggests that there is an appreciation by the Committee report that it will take a certain amount of time to transform the current insurance premium landscape.
Progress on the implementation of the Recommendations
The Cost of Insurance Working Group produced its first quarterly report on the progress of the implementation of the Action Plan at the start of this month. This report provides a comprehensive update on progress to date and reasons where delays exist. The Government remains committed to continue driving implementation in a timely manner in line with the prescribed deadlines in order to stabilise this important sub-sector of the domestic economy.
It should be noted that the timeframes chosen for various recommendations and actions were considered very carefully by the Cost of Insurance Working Group. Great care was taken to strike a balance between the urgency of implementing change as soon as possible and the realisation that where significant initiatives are being undertaken time is required to ensure the necessary consultation is carried out, before decisions are made as to how take such projects forward.
A good example of this is the establishment of the Personal Injuries Commission. This body lies at the heart of this current review process. However before it can come to any conclusions about what changes are needed as to how injuries are assessed and how they are graded, they need first to carry out amongst other things a comprehensive data gathering exercise to assess systems for handling personal injuries claims elsewhere. This takes time and this is why we have given them till Q4 2017 to submit their first report.
Tackling the Rising Cost of Business Insurance (Employer and Public Liability Insurance)
The motion makes a number of valid points with regard to the rising cost of business insurance. However, it is incorrect to say that the Government is not doing anything to address this issue. Deputies will be aware 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 is building upon the work done in the motor phase to determine how it can be applied in the employer liability and public liability insurance claims areas. The Working Group is also considering the impact of the cost of insurance on the competitiveness of particular business sectors, the impact of health and safety issues on the cost of insurance and other market issues.
Extensive consultations with a range of stakeholders have been held and further consultations are also planned and submissions have been invited from interested parties.
With regard to specific points raised around the timeframe for this work, the intention is to publish an addendum to the motor report, covering EL & PL. While a final report may not be ready until September, this does not mean that work on EL & PL reforms will only commence then. It is hoped that there can be clarity around the potential new measures in July. As soon as there is certainty about the planned direction of travel, Minister of State Murphy will publish accordingly and will appear before the Oireachtas committee to explain the underlying thinking.
Indications of Stabilisation of the Insurance Market
The latest data from the Central Statistics Office indicates that motor insurance inflation in 2017 has remained flat month-on-month (0 per cent change from December 2016 to April 2017) and as of April 2017 motor insurance was 6.1 per cent below its recent peak (July 2016). If this trend continues, the Government is hopeful that it might be signaling the start of a stabilisation of pricing in the market.
In conclusion, for the reasons outlined, the Government does not accept the assertions made in the motion and must oppose it, as it gives no recognition 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.
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