There is a Market Failure in insurance supply and it must be called out – Doherty
Sinn Féin Finance Spokesperson Pearse Doherty TD has said that there is a market failure in insurance in the State affecting at least some markets that must be called out, saying by doing this, the Irish government will be freed up to intervene.
The Donegal TD was speaking as leisure companies across the State were rocked by news of the withdrawal of the main supplier of insurance. He said it must be made clear to insurers that, if they do not fix the market failure, the State will move in.
Deputy Doherty said:
“It is time to stop beating around the bush and call this out for what it is - a market failure. Unless the insurers move quickly to rectify the market failure, the State must mobilise its resources. By declaring this fact and engaging with Brussels on that basis, there will be scope for more direct State intervention to save jobs and businesses in the immediate term.
“This is not a step to be taken lightly, but we cannot ignore the reality. An immediate meeting with insurers must take place at which it is made clear to them that if they do not act, the State will. Furthermore, it should be indicated to them in the strongest possible terms that any State intervention will not be limited to unprofitable areas of the market but will be cross-cutting.
“The worst of both worlds would be the State allowing insurers to cherry pick what areas of the market they wish to serve while the State carries the burden in unattractive parts of the market. Insurers are making large profits and must uphold their part of the deal - to provide insurance at affordable prices to a guaranteed market. This week, it is the leisure market, but next week could be another domino in the chain of businesses hurt by this failure.
“For businesses, in certain sectors at least, there is a complete failure of the market to provide necessary insurance. When the market fails, the State must act to protect jobs, businesses and services.
“I have written to the EU Commission drawing their attention to this crisis. The State must be ready to act immediately through guarantees or other assistance to certain sectors or help mutual funds set up to weather this storm.
“In the longer run, we must look to other solutions to this type of market failure through a State company or a genuine EU wide insurance market.”