The “Programme for Government – Our Shared Future” ratified by the 3 coalition parties on 26 June 2020 (the Programme) contains significant proposals on insurance reform in Ireland as part of the new Government’s plans for reigniting and renewing Ireland’s economy. The well-documented challenges faced by the insurance industry in recent years have ensured that the new Government’s attention has been drawn to it and this is evident in the Programme. 

It is welcome to all stakeholders that the Programme commits to the newly established Economic Reform & Investment Cabinet committee prioritising the insurance reform agenda, with particular emphasis being on motor, public liability and employer liability insurance. The key areas of focus identified in the Programme include addressing the cost of insurance, fostering market competition and tackling claims fraud. The Programme also declares the Government’s intention to protect customers impacted by the COVID-19 pandemic and specifically states that it will support the direction from the Central Bank of Ireland (CBI) on compensating businesses with disruption cover for infectious diseases. As readers will be aware, the applicability of business interruption polices in the COVID-19 pandemic is an extremely contentious area globally with a number of cases currently before the Irish and UK courts. (see our related article – Insurance Industry Faces Emerging Litigation Threat).

Insurance Costs

In terms of addressing the fundamental issue of insurance costs, the Programme states that the Government proposes to: 

• recognise the work done by the Personal Injuries Guidelines Committee (a committee of the recently established Judicial Council) to provide guidance on personal injury claims;
• strengthen and reform the role of the Personal Injuries Assessment Board;
• consider an amendment to the Constitution to enable the Oireachtas to establish guidelines on award levels;
• regulate claims management companies and claims harvesters;
• consider changes to the Occupiers Liability Act 1995 and the Civil Liability Act 1961 to strengthen waivers and notices to increase protections for consumers, businesses, sporting clubs and community groups; and
• strengthen the provisions of the Solicitors (Advertising) Regulations of 2019.

Market Competition 

The Government proposes to address structural issues in the insurance sector by the stated aim of “increasing transparency, tackling anti-competitive behaviour, and promoting competition”. In this regard, the Programme contains proposals to:

• provide the Competition and Consumer Protection Commission with effective enforcement powers to punish and deter anti-competitive conduct;
• request the industry and stakeholders to provide an assessment of the expected impact on premium levels of the key reforms being fully introduced;
• arrange for the National Claims Information Database to include employer liability and public liability in order to allow the level of claims to be tracked;
• create a databank within the CBI for new entrants;
• prioritise the establishment of a fully functioning European-wide single insurance market;
• work to remove dual pricing from the insurance market; and
• establish an office within Government tasked with fostering greater competition in the Irish insurance market.  

Claims Fraud 

The Programme also contains a substantial number of proposals aimed at combating the prevalent issue of claims fraud. The Programme does not go so far as to support an exclusively dedicated insurance fraud team in An Garda Síochána, as proposed by Insurance Ireland. However, the Government is aiming to expand the Garda Economic Crime Bureau, which deals with fraud and it anticipates that that training and support will be provided to Gardaí in each division, so that expertise and skills are spread out across Ireland. Other measures in the Programme intended to deter insurance fraud include: 

• reviewing / increasing the penalties for fraudulent claims;
• placing perjury on a statutory footing with a view to making the offence easier to prosecute;
• ensuring that fraudulent claims are forwarded to the Director of Public Prosecutions;
• publishing insurance fraud data; and
• exploring the feasibility of obliging fraudulent claimants to pay the legal expenses for defendants.

Keeping Up with Reforms

It is clear from the extensive proposals outlined in the Programme that reform of the insurance sector is high on the new Government’s agenda. Undoubtedly, the insurance industry will need to closely follow the progression of these proposed reforms in light of the far-reaching implications of many of these measures for their business strategy. It remains to be seen if, or to what extent, these proposals will be implemented; however, what does seem clear from the Programme is that the ambition for significant change is there.  

Although not explicitly referenced in the Programme, the insurance industry will also be paying close attention to the timing of the new Government’s proposed commencement of the Consumer Insurance Contracts Act 2019 given the significant implications for the insurance sector.

Finally, we note the recent appointment of Séan Fleming T.D. as the Minister of State at the Department of Finance with responsibility for Financial Services, Credit Unions and Insurance. It is welcome news for the insurance sector that the new Government has maintained the specific financial services portfolio and indeed extended it, to include responsibility for domestic financial services, as well as the existing international portfolio. 

We will continue to keep you up to date on the development of the proposed reforms and what the implications may be for the insurance sector.

Contributed by Shannon O’Neill