Legislation will be passed to force insurance companies to change the way they treat customers, Minister of State for Finance, Michael D’Arcy, has declared.
His declaration came after it was revealed that Insurance Ireland, the body representing insurance firms, had complained in writing to the Government about earlier criticisms from the Minister.
“Instead of asking them what to do, we’ll tell them what to do,” he said. “The era of insurance companies saying ‘this is the way it is’, that’s not going to continue.
“We have to change the culture of insurance companies, which is all about profit. Their clients, their most important people, come last,” he said.
Saying he was “deeply dissatisfied” by the behaviour of insurers, Mr D’Arcy, who has responsibility for the industry, said he now planned a legal code to lay down rules.
He will lay down amendments to a Sinn Féin-proposed Private Members Bill currently before the Oireachtas to strengthen consumer rights and demand extra disclosure from firms when premiums rise.
In an interview with the Irish Independent in January, Mr D’Arcy said “sharp practice” by insurers after Storm Ophelia and Storm Emma had left people with smaller payouts than they should have received.
Then, he signalled that he was considering a voluntary code of practice for insurers, but now he had hardened that stance and intended to put the code on a legal footing, he said.
However, his January intervention prompted a backlash from Insurance Ireland, according to records released to The Irish Times under the Freedom of Information Act.
Having expressed "concern" about the Minister's charges, Insurance Ireland sought a meeting with him. Later, Insurance Ireland chief executive Kevin Thompson complained in a letter that Mr D'Arcy had used "anecdotal data".
During the meeting with Mr Thompson, Mr D’Arcy accused the industry of trying “to ‘catch out’ policyholders”, according to the letter, though the industry group cast doubt on his claims.
Claims should be investigated, as “in the absence of such action, the assertions remain anecdotal and untested”, said Mr Thompson, writing to the Department of Finance.
Defending the use of staggered pay-outs, which Mr D’Arcy criticises, Insurance Ireland they were “practical and prudent” and protected the interests of policyholders.
More than 12,000 claims were made after Ophelia and Emma, and led to no rise in complaints to the Central Bank, it went on: "No evidence was provided to show that where a valid receipt was produced, a claim was rejected by an insurer."
Responding yesterday, Insurance Ireland said it was “disappointed” with Mr D’Arcy’s remarks and added that his plans now for a legal code were not backed up by evidence.
“The vast majority of claims are genuine. However, where fraud exists it must be challenged for the benefit of all policyholders,” it said, adding that firms offered “essential protection” to the public, backed up by the Central Bank’s code.