When insurance companies are happy, there are no regulators to worry about
Insurers will have more control over their own customers and their business in the wake of the repeal of the COVID-19 duty, as the Irish Times understands from insiders.
The government has been working on a regulatory framework for the sector that would allow insurers to opt out of the duty, while also allowing them to provide greater choice and more choice to consumers.
The proposed regulatory framework, which is still being discussed, is due to be voted on by the Dáil in the coming weeks.
Insurers are expected to have more power to manage their own business and to set their own prices, but the government will also have the power to enforce the duty through the Courts.
The Irish Times spoke to more than a dozen insurance industry sources about the potential impact of the government’s repeal of COVID duty.
The key pointsInsurers will be able to opt-out of the new COVID liability rules, allowing them more controlOver the past few months, the Irish insurance industry has been talking about a number of reforms to the COIDC, including the elimination of the old duty and the possibility of a ‘regulatory shift’.
These reforms have included the introduction of a new ‘no duty’ approach to COVID, with insurers saying they want to focus on their customers.
This would allow them to opt to opt for a ‘service-based’ insurance model.
A spokesperson for the Insurance Council of Ireland (ICI) said: “The Government has taken a strong stance against COVID.
The new COID regime will ensure that all insurers have the right tools to manage risk, with more choices and greater choice for consumers.”
The Irish Insurance Brokers Association (IHB) has also been advocating for a new COVAC regime, with the IHB saying that it has received no assurances from the Government that it will not “over-regulate” the sector.
Insurance Industry Ireland (IIA) chief executive John Copley said:”We welcome the opportunity for more consumer choice and to make more of our own decisions, but it is clear that the COVACC framework is not fit for purpose.”
It is vital that we are clear on what the Government intends for the COVO model and how it will operate, as we need to ensure that there are clear rules and standards around this new insurance system in the event of a COVID pandemic.”IBIH chief executive officer Simon Murray said:I think this will be an interesting period for the industry, where we are going to see insurers coming into a situation where they have to think about the next few years and how they want the business to operate in the future.”
The government is not in a position to make decisions in the financial sector, but we need a strong regulator to ensure our insurance industry can operate.
“We want to see a regulatory regime that works for all insurers, and this is the framework that is being put forward, so we hope that there is support from the Department of Finance to see it through.”
Insurance industry insiders say the government is prepared to work with the industry to develop a regulatory structure for the insurance industry.
Insurer spokesperson John Crouch said:The Insurance Council Of Ireland (ICA) has been advocating to introduce a new insurance regime.
This is the same approach we have used in the past for reinsurance and reinsurance for reinsurers, but this time around we are looking at how this regulatory framework can be developed, with a view to ensuring that the business is operating in a more flexible way.
It is important to remember that reinsurance has been very successful in terms of delivering a range of benefits, including cost reductions, lower levels of fraud and the lowest rates of premiums.
We have had a very successful period of reinsurance, we have had the lowest premiums in Europe and the biggest cost reduction, so it is the type of model that has worked in the reinsurance market.
In the next five years, we will need to look at how we can look to our reinsurance business to provide the same level of coverage to all of our customers, but that will depend on how we manage the reinsuring business.
In terms of COVAP, the IBIH is also advocating that insurers have greater choice of the types of products that they can offer, including in the areas of health, prescription, and the environment.
Insolence has been a key component of the insurance market in Ireland, as it has been one of the main drivers of the recent recovery from the financial crisis.
Insure industry insiders said that it is important that insurers are able to continue to offer their products to the general public, without having to worry so much about what insurers do to their customers and customers are able make their own decisions on what they want and need.
Insured customers will be better off in the long runThe IBIh’s spokesperson John said:We have seen the level of COVEV activity in Ireland