Matt Shanahan (Waterford, Independent)
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116. To ask the Minister for Finance the steps she and her Department are taking to pressure insurance companies to pass on savings, following the publication of an article (details supplied) outlining how the implementation of judicial guidelines has caused a slump in the number of personal injury cases being taken to the courts; if she will consider supporting a windfall tax gain on insurance companies that are failing to pass on considerable savings; and if he will make a statement on the matter. [43836/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will appreciate, neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).

Notwithstanding this, reforming the insurance sector is a key policy objective for the Government. Through the comprehensive Action Plan for Insurance Reform, targeted measures have been delivered across a broad spectrum of policy areas, with the aim of reducing costs and increasing availability of cover.

The Personal Injuries Guidelines represent a key pillar of this reform agenda, and have significantly lowered award levels. According to data from the Personal Injuries Assessment Board (PIAB) for the first six months of 2022, award levels were down on average nearly 40 per cent under the Guidelines. Moreover, since their introduction there has been a year-on-year reduction in the volumes of claims coming to PIAB, with applications falling from 26,009 in 2020 to 8,889 for H1 2022.

In this regard, I welcome the recent findings, as referenced by the Deputy, that the number of personal injury cases before the courts has also been trending downwards. According to the Court Service Annual Report for 2022, there has been “a significant reduction in the number of new personal injury actions commencing in the High Court and the Circuit Court” since the adoption of the Guidelines, while the value of those awards has also reduced. Together with the findings from PIAB, I believe this is further proof that the Guidelines are taking hold and becoming embedded in the system.

It is important to note that the full impact of the Guidelines may take time to affect price levels, due to uncertainty from ongoing legal challenges. Nevertheless, the Government’s focus is now firmly on ensuring that the savings generated by the entire reform programme are realised, for the benefit of consumers, businesses, and community and voluntary groups. In this regard, Minister of State Carroll MacNeill will be meeting with the CEOs of the main insurers here again in the coming weeks, in order to reiterate the Government’s expectation that insurers will reduce prices, and increase their risk appetite, in light of this improved operating environment.

With respect to the question of a windfall tax gain, I would be very cautious about any such measure, as I believe there is a risk that it would be passed directly onto customers, rather than acting as an incentive for insurers to reduce premiums. Furthermore, such a proposal may in fact be counterproductive in terms of increasing competition, which is a key aim of the reform agenda, as evidenced by the creation of a dedicated Office to Promote Competition in the Insurance Market.

Chaired by Minister of State Carroll MacNeill, the Office is working closely with IDA Ireland, and new insurance providers have either established in Ireland or are in the process of doing so. It is vital that industry fully supports the reforms in order to maintain this momentum and generate increased insurance capacity, both from new and existing providers, for the benefit of customers.