Government caught on the horns of an insurance dilemma

Cantillon: Underlying issues in a dysfunctional insurance sector remain unaddressed

The Government has refused to step in to help restaurants and coffee shops, despite warnings that hundreds could close in the new year due to a lack of available insurance. Photograph: iStock

The Government has refused to step in to help restaurants and coffee shops, despite warnings that hundreds could close in the new year due to a lack of available insurance. Photograph: iStock

 

The Government appears to be getting itself into a right muddle over insurance.

Earlier this week, it committed to giving additional funding averaging €1,500 to crèches within a matter of days – at the precise moment they battled with rising insurance costs and as one of only two insurers covering childcare risk left the Irish market.

Later in the week, as four insurers were reported to be retreating from the hospitality and leisure market, the Government refused to step in to help despite warnings that hundreds of restaurants and coffee shops could be forced to close in the new year as a result.

For different reasons, both are wrong decisions. The Government should not have become involved in covering private sector insurance costs. But, having chosen to do so in one instance, it is then on very weak ground in arguing that it cannot do so for another sector.

Ministers have been forced into increasingly jesuitical justifications of the conflicting actions: essentially their argument appears to be reducible to there being a convenient budget heading in one instance, but not in the other.

Nothing to do with the fact that the voting intentions of hard-pressed young parents are seen as a danger in a looming election, while restaurants and over-priced coffee are considered to be luxuries that most voters will do without if required.

Even by the standards of modern political doublespeak, it was patent nonsense for Minister for Children Katherine Zappone to insist: “Let me be perfectly clear: this is not a State intervention in relation to insurance. ”

Of course it was. The Government is to provide immediate extra funding to crèches, in Minister for Finance Paschal Donohoe’s words, “to ensure that as we move into Christmas and beyond that parents can be assured that crèches in which their children are looked after will be open in the new year”.

And in her own statement, Ms Zappone said she would consider a review of insurance in the childcare sector with Mr Donohoe.

It appears the Government will happily contort itself into any shape rather than address the underlying issues in an increasingly dysfunctional insurance sector.

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