Government insurance reform progress “Disappointing” – AIR
“If this was a school report for the Government, it would be a disappointing one” – AIR.
“Unfortunately, if this was a school report for the Government, it would be a disappointing one,” said Peter Boland, Director of the Alliance, “The Government acknowledged the seriousness of the insurance crisis in establishing the Cabinet Sub-Group for Insurance Reform last year, Chaired by the Tánaiste and including many of the key Ministers and Ministers of State involved in this issue.
“After some initial progress on issues such as the Judicial Guidelines, we’re concerned that the Sub-Group may be regressing to a box-ticking exercise, recently claiming that ‘34 actions out of 66 have been completed’ when what’s needed is an intense focus on meaningful reforms.“
The reforms identified as meaningful by the Alliance include:
Duty of Care: For the sake of every household or organisation that has visitors, customers, participants or recreational users, the Duty of Care must be urgently rebalanced in a manner that’s fair, reasonable, practical and proportionate – and in the public interest.
The Cabinet Committee Sub-Group on Insurance Reform published its most recent Implementation Report in July 2021. In it, the Sub-Group reported that, “The Department of Justice is working on a General Scheme to give effect to the proposals (on duty of care) and expects to bring these to Government in September 2021 for approval”.
However, this General Scheme has not yet been published and no revised timeline for its publication has been given, other than a worrying reassurance that proposals are “at an advanced stage” points out AIR in calling for this draft legislation to be published immediately.
Reform of PIAB: The Personal Injuries Assessment Board is a sound concept rooted in the common good, intended to deliver compensation to injured parties without excessive legal costs. But it has been fundamentally undermined by numerous and ongoing challenges by the legal profession, intent on protecting a valuable income stream, states AIR.
As such, AIR welcomed the public consultation on reforming and enhancing the PIAB carried out last April by the Department of Enterprise, Trade & Employment.
“We believe that nothing short of radical reform is necessary to give PIAB the meaningful status it deserves,” AIR continued, “The Cabinet Sub-Group on Insurance Reform in its July Implementation Report stated that it was intended to publish a General Scheme of a Bill to reform PIAB in July. But we have still not seen that General Scheme. This draft legislation must be published immediately.”
Legal fees: The Government appears to be moving on the eye-watering cost of legal fees which act as a brake on much more than the fair resolution of personal injury claims in Ireland, AIR believes. The Department of Justice has initiated an economic and legal review of the options available to cap fees.
“This initiative cannot be allowed to falter on the back of the intense opposition we expect from the legal industry, intent on protecting its own vested interests,” stated AIR.
Claims database: A claims database available to all insurers is essential to allow them to protect policyholders from fraudulent claims and to ensure fair competition. However InsuranceLink, the only such database in Ireland, is owned and controlled by Insurance Ireland, the insurance industry representative body, for the benefit of its members.
The European Commission has made a preliminary finding that Insurance Ireland delayed or denied access to InsuranceLink to non-member insurers, placing them at a competitive disadvantage.
“We have urged Government to take the database into State control, ideally through PIAB, but after four years of discussions, we’ve still not seen any proposals from Government and every time they’re challenged on the issue, they cite vague data protection concerns. This is simply not good enough and policyholders deserve a more positive response in 2022.”
Judicial guidelines: The Judicial Guidelines implemented on the 24th of April would be expected to deliver significant reductions in premia. However, AIR believes that there’s a real risk that any gains will be derailed by a host of court challenges to the guidelines by the legal industry; and undermined by incumbent insurers settling above the new guidelines as a financial expedient.
“The legal challenges are up for mention in the High Court on the 19th of January and we’d expect a robust response from the State to ensure a quick and positive resolution. Equally, we expect the Department of Finance to apply intense pressure on insurers to hold firm on the new guidelines.”
Additional competition: It’s clear that additional underwriting capacity and competition are urgently needed in the Liability insurance market and while the Government’s Cabinet Sub-Group on Insurance Reform has acknowledged this by establishing the Office for Insurance Competition in 2020, the success of this office’s work is limited so far, with nearly 40 sectors and sub-sectors unable to get affordable cover or down to their last underwriter at this stage, points out AIR which adds that, “The Office for Insurance Competition will have to step up several gears in 2022”.
Lower insurance costs: The process of reacting to the reforms implemented so far (most notably the Judicial Guidelines, the Garda Insurance Fraud Coordination Office and the Perjury Act), has already begun in the motor insurance sector where there’s meaningful competition.
“Respondents to our ongoing policyholder survey are reporting an average 10% reduction in motor premiums on renewals since the 24th of April. In the Liability sector however, where there’s markedly less competition, policyholders are experiencing average increases of 16%. Government must apply intense pressure on the incumbents to deliver reductions while we wait for additional competition to enter the market.”
“Insurance crisis will not be solved by vested interests”
Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and a Director of the Alliance, summed up: “Given the money being made from the insurance crisis, it will not be solved by vested interests. Government must move aggressively to resolve it because we cannot recover from Covid-19 as an economy or a society unless insurance is sorted.”
