Martin Browne (Tipperary, Sinn Fein) | Oireachtas source

I will read some formal notices. I remind members of the constitutional requirement that they must be physically present within the confines of the place in which Parliament has chosen to sit, namely, Leinster House, in order to participate in public meetings. I will not permit a member to participate where he or she is not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting.

Our next business is our engagement regarding petition No. P00036/21, reform of insurance for thatched heritage buildings and related European Commission correspondence. The petition is from Ms Katie McNelis and the correspondence received from the EU Commission relates to EU Directive 2009/138/EC Solvency II. Ms McNelis appeared before the committee on 28 September 2022 to present her petition. Unfortunately, she is unable to be with us in person today but is viewing the proceedings online and we welcome her. The committee has agreed that I will read Ms McNelis's submission into the record at this meeting.

This engagement will be split into two sessions. First, from 1.30 p.m. to 2.30 p.m. we will hear from the Minister of State at the Department of Finance with special responsibility for financial services, credit unions and insurance, Deputy Carroll MacNeill, and the Minister of State at the Department of Housing, Local Government and Heritage with special responsibility for nature, heritage and electoral reform, Deputy Malcolm Noonan. From 2.30 p.m. to 2.45 p.m. we will have a brief meeting with the Ambassador of the Republic of Kenya, H.E. Mr. Michael Mubea Kamau. Second, from 2.45 p.m. to 3.30 p.m. we will meet representatives from the Alliance for Insurance Reform: Mr. Brian Hanley, CEO, and Mr. Peter Boland, board member; and with representatives from Insurance Ireland; Ms Moyagh Murdock, CEO; Mr. Florian Wimber, director of advocacy and public affairs, and Solvency II lead; and Mr. Michael Curtin, manager of regulation and policy development.

Before we begin, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if witnesses' statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Before we hear from our witnesses, I propose the committee will publish the opening statements and submissions on the Oireachtas website. Is that agreed? Agreed. I have a submission from petitioner Ms Katie McNelis, which the committee has agreed I read into the record, and then we will hear from the Ministers of State. The submission from Ms Katie McNelis begins with a brief background to the insurance issue:

The insurance market for thatch properties doesn’t function normally. There are currently no insurers open for business in terms of quoting for new business at affordable prices. So, even thatch owners

who have insurance are unable to shop around to find better quotes. By our estimate, up to 50% of thatch properties are not insured. This is due to insurance cover being either unavailable or unaffordable. On the flip side of this, there is a considerable cohort of thatch properties which are insured. Many of these are insured at affordable rates and have been for many years. As far as we know, these owners are all covered by the same Irish owned insurer - FBD. FBD clearly has managed to maintain their thatch insurance business as profitable. Why else would they continue to renew these thatch policies at stable and affordable rates? FBD (a publicly quoted Irish PLC) is very profitable overall. It’s accounts and financial statements are publicly available. However, whilst FBD continues to renew its existing thatch policies at affordable rates, it has decided not offer any new thatch policies and is effectively closed to new thatch business. This is disappointing. But their thatch policy rates are available as examples of Irish insurance industry thatch benchmarks. The remaining thatch owners who are not fortunate to be covered by FBD are stuck with (mainly non-Irish) providers at unaffordable rates. Many of these insurers have no long term commitment to the Irish insurance market. They simply see Irish thatch as a way to make a quick buck. Their insurance rates are not viable in the long term. One company - OBF - which has a considerable number of these policies has decided to exit the Irish market and is consequently increasing their premiums (at rates way beyond inflation – 27% - on average in 2023) presumably to force policyholders to abandon their cover. We understand that OBF has recently taken a decision not to renew thatch policies with a reinstatement value above €250k. This is a very worrying new development. A recent report by the DHLGH points to the fact that thatch insurance premiums are high because of an increased incidence of thatch fires. However, this doesn’t explain the affordable thatch premiums by the Irish insurer FBD. If thatch fires were such a problem why haven’t their thatch insurance premiums increased in line with this increased risk? Even thatch properties which are fitted with heat pumps and have no open fires, woodburners or boilers are regarded by the insurance industry as high risk simply because of one single feature – a thatch roof. Properties with mixed roof types – thatch and tiled - are similarly risk assessed as if the entire property is thatched. This is so even where they are separate buildings on the same property. The reality is the insurance industry doesn’t carry out any meaningful risk assessments on thatch properties. It pigeonholes all thatch properties as high risk regardless of the details.

The Ministers will probably refer to a number of insurers such as O’Callaghan Insurance or Dolmen Underwriting or Reidy Insurances (ERGO) as companies who are offering thatch insurance and offer

this as evidence that cover is available. These providers offer thatch insurance but it is completely unaffordable. It is charged at rates which are multiples of the premiums offered by FBD. Also, in most

cases the policy terms offered by these companies are totally inferior despite the ridiculous price. For instance, O’Callaghan do not cover contents. Dolmen do not cover fire. The policies offered by these insurers are sub-standard and their prices are completely out of reach. The Ministers will probably say these companies are evidence that thatch insurance is available and so they should not intervene. But this is a false argument. Precisely the opposite is true. The Ministers are pointing at the wrong things and not asking the right questions. They should be asking - Why is there a two tiered market with low / normal prices charged by FBD and high prices charged by everyone else?

Why is there no arbitrage? Why is there no price competition? Maybe if you found the answers to those questions then you might draw the right conclusions.

To us the answer is obvious. The thatch insurance market in Ireland is broken and needs Government intervention to fix it.

Impact of Protected Structure legislation

Most thatch properties have protected structure status simply because they are thatched. They are part of Irish heritage. It is generally unusual for them to be designated because they have significant architectural merit. It is all about the thatch.

Protected structure status places obligations on thatch owners to keep and maintain the property including the thatch. Whilst thatch owners recognise there is a state grant system in place to support owners doing that – these grants are wholly inadequate. They haven’t maintained pace with inflation and are inconsistently available throughout the country. They are also skewed towards capital items such as replacing the thatch or a ridge (which might occur every 10 years) as opposed to annual maintenance which is also costly but not covered by grants.

Protected Structure status limits the property rights of thatch owners.

Because the insurance issue has persisted over such a long time, many thatch owners have sought to resolve the insurance issue by removing their thatch. The protected structure legislation prevents many from doing that. Consequently, thatch owners expect their Government to provide a solution to the insurance problem and if none is forthcoming would regard the protected structure legislation as onerous and unjust. It is simply not sustainable or acceptable to expect thatch owners to live and maintain these properties (as Protected Structures) without affordable insurance cover.

Thatch Insurance Action Group

Since the Thatch Insurance Action Group was formed in 2022 our objective has been to find a solution to this problem. One solution we have considered was to get enough thatch owners together to form a thatch insurance group scheme. Group schemes can be a solution by pooling similar risks together and having one single insurer bear the portfolio risk. These have been attempted in other sectors where insurance cover was either unavailable or unaffordable with mixed success. We understand that some of the early group schemes are now having difficulties due to increased premiums despite an absence of claims with no explanations from insurers.

Despite this we have tried to pursue it. Advice on this was that we needed circa 1,000 thatch owners to make the group scheme commercially viable. Less than that number would result in a lack of interest from both potential insurers and brokers. This is because there is a considerable amount of work to be carried out to create these schemes. To date we have 320 members. This is clearly not enough. There would not be enough premium to cover the overheads of the scheme never mind if there were any claims.

We don’t know how many thatch properties actually exist in Ireland. But at the rate we are adding new members it is unlikely we would ever get enough owners together to make a group scheme commercially viable. We reluctantly have come to accept that a thatch insurance group will never be possible in Ireland.

Government Inaction

Thatch owners have written many letters to Dáil Deputies and Government Ministers outlining all these issues. The responses have been many and varied but in one respect they were all consistent. They all stated that the Irish Government’s hands were tied by the EU Single Market Framework for Insurance (the Solvency II directive). This legislation categorically and absolutely prevented any intervention by the State.

Based on the recent EU letter obtained by the Chairman of the Committee on Public Petitions and the Ombudsmen, these statements by Government Ministers were at best an over generalisation.

Thatch owners are eternally grateful to the committee, its Chairman and secretariat, through their persistent hard work for pursuing this issue with the EU Ombudsman and EU Commission and exposing the truth about Irish Government excuses for inaction.

The Government needs to intervene. In all fairness to thatch owners, it can’t continue to allow a position where, through protected structures legislation it forces thatch owners to maintain and keep their thatch and not produce legislation or a Government sponsored scheme to provide affordable insurance cover. It needs one if it wants to keep the other. Otherwise the fair thing to do is to remove protected structure status from thatch properties and let thatch owners have free rein over their properties.

There are better minds than ours to produce a solution to this problem. But it seems to us there are 2 ways to go 1. The Government legislates to make the market provide a solution; OR

2. The Government decides to put in place and run its own thatch insurance scheme There are models available in other EU countries for both of these solutions.

In recent weeks the Government has made policy decisions to support the victims of flood damage caused by the recent storms. Many of these property owners (even if they have insurance) will not have flood cover because the insurers may have removed it from their policies. Whilst we support such actions it seems strange and unfair that flood victims from Midleton, Co Cork get State support, but uninsured thatch fire victims like Laura Lindholm and her family in Co Offaly did not.

One thing is clear, under EU law the Government is not powerless to intervene because the thatch insurance market is a non-functioning part of Ireland's insurance market. If the Government continues with its current approach then it is making an active policy decision not to support thatch owners. If that is the Government's decision and it is not going to fix it, then give us back our confiscated property rights and let us make our own choices and arrangements. But please don't ignore us and continue to do nothing.

I reiterate that is a statement on behalf of Ms McNelis, not on behalf of the committee.

On behalf of the committee I extend a warm welcome to the Minister of State at the Department of Finance, Deputy Carroll MacNeill, who has responsibility for financial services, credit unions and insurance, and the Minister of State at the Department of Housing, Local Government and Heritage, Deputy Noonan, who has responsibility for nature, heritage and electoral reform. I also welcome the staff from the various Departments.

I understand that the Minister of State, Deputy Carroll MacNeill, will make her opening statement first, followed by the Minister of State, Deputy Noonan. I suggest that they take approximately ten minutes each for their opening statements and we will then have questions and comments from members. Each member will get five minutes for questions and answers. We will let people in for a second round of questions if they want. I invite the Minister of State, Deputy Carroll MacNeill, to make her opening statement.