“Looking ahead, we need to build on three areas. One, we need to target new areas of growth such as sustainable finance, which is a key theme for me. Two, new innovative products and ways of delivery of financial products, particularly in the digital arena, will become increasingly important and provide exciting opportunities. Third, I strongly believe a greater focus on diversity will enhance the financial services sector and bring forward new talent and fresh perspectives.
There are significant opportunities for the insurance sector at this time with real confidence coming into the sector. As your members are aware, insurance reform has been and remains a priority for this Government and for our collective society. With the bulk of the Action Plan for Insurance Reform delivered, both Government’s and my strong focus is now on delivering the remaining elements, particularly broadening the scope of PIAB and reforming the duty of care.
A healthy and competitive insurance market is a vital part of our economy and wider society. In common with other countries, we have limits to the policy levers we can use when engaging with such an internationally-integrated financial service. Having said that, I and my Government colleagues are determined to reform our domestic operating framework. Underpinning this has been the policy objective to improve both the affordability and accessibility of insurance.
As a new Minister and public representative more broadly, I feel we are on the right road and good progress is being steadily made.
Regulation: The power of financial services to improve and transform the lives of our citizens and society for the better is significant. However, with this comes a responsibility for firms and regulated entities to ensure that the consumer is protected, be they a saver, policy holder or investor.
As your members are aware, much of our regulatory framework has its origins at the EU level. These proconsumer impulses and calls for increased transparency that underpin our regulation are unlikely to abate. What will be important is that we protect the consumer and press for a proportionate and fair approach for our sector here to maintain its vitality.
Attracting more capacity providers to the Irish insurance market: Government is continuing to encourage new capacity to enter the insurance market, increasing competition and delivering benefits for consumers and businesses alike.
In collaboration with the Department of Finance, the IDA is engaging with overseas insurers. We are telling the story of the impact of the Government’s reform agenda and I look forward to delivering this really positive message internationally on behalf of Ireland. In addition to this, I will soon meet the CEOs of the major insurance companies in the State to impress upon them that the Government has now delivered on its commitments in terms of reforming the insurance environment.
It is absolutely now incumbent upon them to both pass on savings accrued from these reforms, and to also expand their risk appetite into underserved areas, helping address market pinch-points. Brokers and other insurance intermediaries have a key role to play. Brokers Ireland members can provide a ready-made network to distribute new capacity.
They have the local, customer-focussed knowledge that new entrants will lack. Brokers will therefore be an important conduit for new insurance coverage to flow directly into the market. I really welcome initiatives from those firms who are seeking to introduce new carriers. There are positive indications that the market is responding well to the Government’s reform programme. New insurance companies are actively considering entering the market, which will help to provide more competition.
Providers are also moving into areas that they had previously avoided, such as inflatable hire, equestrian activities, childcare, and non-standard buildings. We do recognise that some issues remain, particularly in high-footfall, public-facing areas involving public liability insurance. As such, the proposals to rebalance the duty of care through amending the Occupiers Liability Act 1995, will have a positive impact on insurance affordability.
“Brokers and other insurance intermediaries have a key role to play. Brokers Ireland members can provide a ready-made network to distribute new capacity. They have the local, customer-focussed knowledge that new entrants will lack. Brokers will therefore be an important conduit for new insurance coverage to flow directly into the market.
Differential pricing and ‘price-walking’: The Central Bank of Ireland is independent of Government and, as part of its work, identified differential pricing as a growing consumer risk. A comprehensive review of differential pricing in the motor and home insurance markets concluded that ‘price-walking’ could result in unfair outcomes for some consumers.
It banned this practice from 1 July 2022. This move is strongly supported by Government as it is evidence-based, proportionate, and directed to the Irish market. Indeed, it specifically targets the so called “loyalty penalty”, while still providing incentives for consumers to switch and support competition, helping deliver pro-consumer outcomes.
Furthermore, Ireland is leading the way on this internationally; our price-walking ban is the first in the EU, and EIOPA is examining the matter in its recent Consultation Paper on the issue of differential pricing. The Government is determined that the price-walking ban will benefit consumers, and that is why the recent Insurance (Miscellaneous Provisions) Act 2022 included a requirement on the Central Bank to provide the Minister for Finance with a report on the implementation of the ban to be submitted by January 2024.
The Government is willing to consider further intervention if deemed necessary by this report, in order to prevent harm to consumers.
“I will soon meet the CEOs of the major insurance companies in the State to impress upon them that the Government has now delivered on its commitments in terms of reforming the insurance environment. It is absolutely now incumbent upon them to both pass on savings accrued from these reforms, and to also expand their risk appetite into underserved areas, helping address market pinch-points.
The Personal Injury Guidelines: Government has long recognised that there is no individual ‘silver bullet’ to improve the cost of insurance. That is why we needed a complete, whole-of-Government approach to reforming the insurance environment in our wideranging Action Plan for Insurance Reform.
The Personal Injuries Guidelines represent a central pillar of this reform agenda. They have transformed the landscape, especially for minor injuries. Since they were introduced in April 2021, Personal Injuries Assessment Board (PIAB) award levels have reduced by nearly 40 per cent on average, when compared to 2020.
As the cost of claims is the key driver of the cost of insurance, consistent implementation of the Guidelines should lead to savings for insurers, and importantly, for customers. Clearly, it will take some time for the Guidelines to fully pass-through into court settlements in the way we are seeing in PIAB. The Guidelines are also subject to a number of legal challenges, which has the effect of postponing their full potential.
Nevertheless, as Minister of State, I am somewhat impatient to see the impact for customers and am very clear in my view that reduced costs must be reflected in lower premiums – especially given the current inflationary pressures facing households and businesses. While the Guidelines represent a central element of the Government’s reform agenda, there are a number of other policy areas in which action is ongoing.
These include initiatives to reduce fraud, and the introduction of legislation penalising perjury. In terms of insurance for businesses, a key, immediate priority is the overhaul of the duty of care. The objective in reforming this is to restrict the liability of occupiers, thereby striking a common sense balance between their duty of care responsibilities while also acknowledging the importance of personal responsibility.
It will also address the issue of highfrequency ‘slips, trips and falls’, which are the dominant incident type in heavy-footfall, public-facing sectors. All of this should have a positive impact on business insurance, while also potentially unlocking further public liability insurance capacity.
Conclusion I look forward to engaging with stakeholders across the financial services community. This is a dynamic, vibrant and important sector which touches the lives of so many. It underpins our economy, provides a sound basis for investment and helps deliver several public policy objectives. It is vital that this industry, one of the cornerstones of our knowledge-based economy, continues to grow and is focussed to meet the challenges and opportunities that lie ahead.
