On 8 December 2020, the Government published its first "Action Plan for Insurance Reform" in Ireland (the Action Plan). The publication of the Action Plan reinforces the Government's emphasis on insurance reform in its "Programme for Government – Our Share Future" (the Programme for Government) published in June 2020 (see our article here).
The Action Plan is a product of the Cabinet Committee on Economic Recovery and Investments Sub-Group on Insurance Reform which is chaired by An Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar T.D. The Action Plan seeks to support enterprise and job creation by making the insurance sector in Ireland more competitive and consumer friendly, particularly in light of the impacts and aftermath of COVID-19.
The Action Plan sets out a number of principal actions to drive insurance reform in Ireland. They include:
- Commence the Consumer Insurance Contracts Act 2019 (CICA). Most provisions came into effect on 1 September 2020 and the remaining provisions will come into effect from 1 September 2021 (see our briefing here).
- Examine the Central Bank of Ireland's (CBI) review of differential pricing in the motor and home insurance markets (see our briefing here).
- Establish an office within Government to encourage greater insurance market competition.
- Provide recommendations regarding changes to be made to reduce insurance fraud. This will include the examination of penalties for insurance fraud, the recommendation to introduce legislation where required, and recommendations that fraudulent claims are forwarded to the Director of Public Prosecutions.
- Amend the process for compensation for personal injuries including through legislative amendments.
- Publish the Personal Injuries Guidelines to replace the Book of Quantum, and enhance and reform the role of the Personal Injuries Assessment Board (PIAB).
How the Government Intends to Deliver Reform
The Action Plan includes a table which identifies the actions being led by the Government in response to the commitments set out in the Programme for Government, along with implementation timelines (where possible). An Tánaiste has stated that it is his intention to have updates on the timelines on a quarterly basis. Some key commitments and implementation timelines include:
- The publication of a post-enactment scrutiny report in relation to CICA by December 2020 and engaging with industry and consumer stakeholders to ensure issues arising from the implementation of CICA are examined.
- Engaging with the insurance industry
in relation to its response to the pandemic in light of the needs
of customers, with particular regard to handling of business
interruption claims and forbearance measures.
Supporting the CBI's "COVID-19 and Business Interruption Insurance Supervisory Framework".
- Setting out proposals to regulate claims harvesters / claims management companies by June 2021, including the introduction of legislation (if required) by January 2022.
- Increasing cooperation between An
Garda Síochána and the insurance industry.
Requesting industry and stakeholders to give an assessment of the expected impact on premium levels arising from the Action Plan reforms by December 2020.
- Publication of National Claims
Information Database reports on employers' and public liability
insurance claims by June 2021, and private motor insurance claims
by October 2021.
Establishing an insurance databank for new entrants within the CBI by June 2021.
- Highlighting costs incurred by insurers which currently influence the cost of motor and public liability insurance premiums by December 2021.
- Completing the CBI review of
differential pricing in the motor and home insurance markets,
publishing its final report by September 2021, and taking any
actions deemed necessary in light of the findings of the final
report by December 2021.
Establishing an office within the Government to encourage greater competition in the Irish insurance market by December 2020.
Further Actions to be Taken
Finally, the Action Plan provides detail on further actions to be taken in the future. These include, a number of actions concerning personal injury compensation reform and the feasibility of establishing a fully functioning integrated insurance fraud database for industry to detect patterns of fraud by June 2021 (which will be particularly relevant to industry).
The Government reforms are far reaching in nature and have been welcomed by many industry bodies already. It is hoped that this renewed cross-departmental effort at insurance reform will help to tackle the high cost of claims in Ireland. This combined with the exploration of capping personal injury insurance awards could potentially be a catalyst for real change in the claims culture in Ireland. The reform measures would seek to deter and penalise insurance fraud, which would be a welcome development. The new reforms, if and when implemented, will be a step in the right direction for the insurance industry in Ireland. We will continue to monitor the developments in this area.
Originally Published by William Fry, December 2020
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