The Government has a strategy on insurance costs of “crossing their fingers and hoping the industry will do the right thing and cut premiums” in the wake of the implementation of personal injury guidelines.
Sinn Féin finance spokesman Pearse Doherty made the claim as he introduced legislation obliging firms to report on the amounts paid each year in personal injury claims and the amount that would have been paid had the guidelines not been in place.The legislation echoes regulations introduced in Britain.
The Donegal TD said the same big companies operating in Ireland - RSA, Aviva, Axa, Zurich, Allianz and AIG - are also the biggest players in Britain where they are subject to these requirements.
The move would increase transparency and shame companies into reducing premiums.
He said “we should not accept any less oversight for consumers in this State” as he appealed to the Government to drop its amendment to his Bill to delay its introduction for nine months.
However Minister of State for Finance Sean Fleming said it was the Judicial Council's personal injury guidelines that would result in cuts in premiums.
“There is not a scintilla of a sentence or a syllable in this legislation to bring about reductions in the cost of insurance,” he said.
Sinn Fein’s Judicial Council (Amendment) Bill talks about a producing a report, he said. “Publication of a report is not going to shame insurance companies into reducing premiums.”
Mr Doherty pointed out that average motor insurance premium has risen by 35 per cent over the past decade despite the cost of claims reducing over the same period by 9 per cent.
Consumers need to see “immediate and significant reductions in insurance premiums” but that is not happening, he warned.
Mr Doherty said more than 1,300 people replied to a Sinn Féin survey where 58 per cent of those who received a renewal quote since the new guidelines came into effect saw their premiums increase with only 22 per cent seeing a reduction.
The Judicial Council Act led to the personal injuries guidelines which came into effect in April. They cut the level of damages for personal injury awards from between 38 per cent and up to 69 per cent with an average overall cut of 50per cent, Mr Doherty said.
He pointed out that in 2019 the chief executive of Zurich insurance told the Finance Committee that if awards were cut by 50 per cent premiums should be cut by 10 per cent to 15 per cent with a fall of 20 per cent for business insurance.
The Judicial Council (Amendment) Bill requires insurance companies to provide information to the Central Bank each year for the next four years including the amounts paid by the insurance company in personal injuries claims, the amount that would have been paid had the personal injuries guidelines not come into effect.
The Central Bank would then be required to compile a report for the Minister to be laid before the Oireachtas
Mr Fleming said the Government had made great progress in its “whole of Government” action plan and the key achievement was the implementation of the new personal injury guidelines delivered seven months ahead of schedule.
He said there were a range of different costs that make up the price of premiums that had to be understood and it was important that one individual aspect should not be “singled out as a silver bullet”.
However he added that the Government would take on board “the principle behind the Bill when drafting legislation” as part of overall action plan on insurance reform.
Mr Doherty’s legislation is the second insurance-related Bill he has introduced following legislation designed to ban dual pricing by insurance firms.
Last December the Central Bank confirmed the industry was engaged in dual pricing - a “price gouging activity that targets loyal and vulnerable customers and hits them with artificially high premiums whenever they renew”, the Donegal TD said.
