Insurance

Addressing the rising cost of personal and business insurance in Ireland, and determining solutions for these increases, is an important part of reforming the country's insurance sector.

The Cost of Insurance Working Group was established in 2016, to examine the factors contributing to the increasing cost of insurance and to identify measures to reduce this cost, taking account of the requirement that we maintain a financially stable insurance sector. The policy objective is to deliver fairer premiums for consumers. The Working Group is chaired by Minister of State Michael D’Arcy TD and brings together all the relevant departments and offices involved with the process.

Since it was established, the Group has carried out a major review of the sector through the Cost of Insurance Working Group. Two reports have been produced, namely the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance.

The primary purpose of both these reports has been to determine the factors and drivers behind the rising cost of personal and business insurance and to make a series of recommendations to try to address this problem. In addition, a number of progress updates have been published detailing progress on the implementation of the recommendations of both reports – further information on the work of the Group including updates are available on The Cost of Insurance Working Group page.

Part of the reform of the insurance sector involves maintaining a stable, transparent and open market place for motor insurance. This involves allowing customers to compare policies and prices effectively and, where possible, make the changes to their circumstances that will reduce their premium.

Competition in parts of the Irish insurance market has decreased in recent years due to several withdrawals of insurers from some sectors (for example, for childcare providers and leisure businesses such as activity centres, and curtailment of risk appetite for certain consumers in motor insurance, etc.) which has generated a lot of comment and controversy. In this regard, the 2020 Programme for Government document includes a commitment to create an office tasked with encouraging greater competition in the Irish insurance market.

Office to Promote Competition in the Insurance Market

A joint review of the motor insurance compensation framework was completed by the Department of Finance and the Department of Transport in 2016. The Report of the Review of the Framework for Motor Insurance Compensation in Ireland was triggered by the failure of Setanta Insurance in 2014 and the uncertainty that followed over the compensation arrangements for third party claimants.

The government's objective is to examine what could be done to address the uncertainties of the existing compensation regime. It also aims to examine the inequity between the Motor Insurers' Bureau of Ireland award levels for third party claimants and the levels paid by the ICF, for any future motor insurance insolvencies.

The key recommendations on coverage and funding have been implemented via theInsurance Amendment Act 2018, which provides that the level of compensation from the insurance compensation fund, for third party motor claims, be increased from 65% to 100%. It also provides that Setanta third party claimants be compensated in full.

The focus of the last number of governments has been to work on the development of a sustainable, planned and risk-based approach to dealing with flooding problems.

This should in turn lead to the increased availability and reduced cost of flood insurance.

In particular, communication is facilitated between the Office of Public Works (OPW) and the insurance industry, in relation to completed flood defence schemes, and to gain a better understanding about the provision of flood cover in marginal areas.

There is a minimum level of protection for policyholders where an insurance company goes into liquidation.

The objective of the Insurance Compensation Fund is to safeguard Irish insurance policies (excluding life insurance policies) that have been sold from Ireland or any other European Economic Area (EEA) Member State.

The Solvency II Directive is the primary legislative framework with regard to the prudential supervision of insurance companies. It applies to all insurance and reinsurance companies with gross premium income exceeding €5 million or gross technical provisions in excess of €25 million. It was transposed into Irish national law by the the European Union Insurance and Reinsurance Regulations 2015.