Dáil Éireann Debate, Thursday - 18 December 2025
168. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance the operating profits of motor insurance companies and public and employer liability insurance using a standard definition of operating profits, that is, after paying all business expenses but before tax and interest deductions from 2020 to 2025, by year; and if he will make a statement on the matter. [73162/25]
View answerI raise with the Minister the profits that insurance companies are making in Ireland. When we talk of profit margins, we are talking specifically about operating profits, which, as we all know, have a specific meaning that is well understood internationally. It is always before tax and interest deductions. Will the Minister set out the operating profits of motor insurance companies and in the public and employer liability insurance market using this standard definition?
At the outset, I pass my sympathies, and those of everyone, to the Minister of State, Deputy Robert Troy, whose father, Paddy, has passed away. Robert is, obviously, a Minister of State in the Department of Finance and we think of him and his family at this time of loss.
I thank Deputy Doherty for his question. The programme for Government, Securing Ireland’s Future, sets out a range of commitments to build upon the reforms delivered to date in the insurance sector. On 24 July, the Government launched its Action Plan for Insurance Reform, which includes a comprehensive set of targeted actions aimed at improving affordability, availability and transparency across the insurance sector. I thank the Minister of State, Deputy Troy, for his work on this. It will build on its predecessor which was the catalyst for many changes, including the implementation of the personal injuries guidelines to replace the book of quantum, the commencement of legislation to enhance and reform the role of the Injuries Resolution Board in order to reduce the number of claims proceeding to costlier and time-consuming litigation, and the establishment of the Office to Promote Competition in the Insurance Market within the Department of Finance.
As part of the development of the new plan, the Department of Finance undertook a wide-ranging public consultation that received over 70 detailed submissions. There are ten priority actions, focused on the areas of greatest impact. I will come back to some of that information in a moment.
With regard to the operating profits for motor insurance companies before interest and tax deduction, the position shows that operating profit displays annual variability and has fallen from 13% in 2020 to 5% in 2024. To break this data out, operating profit was 13% for 2020; 16% for 2021; 13% for 2022; 9% for 2023; and 5% for 2024. I can provide those figures in writing. The data published in the latest national claims information database, NCID, private motor report 7 shows, on page 29, that operating profits for motor insurance companies, taking account of tax, interest costs and other expenses deducted, have also displayed variability over the years. The relevant figure was 12% for 2020; 14% for 2021; 12% for 2022; 8% for 2023; and 4% for 2024. I will have to come back in on the operating profits for the liability insurance market in my next response.
The Minister knows I am raising this because of the invaluable reportage we get from the Central Bank every year that is reported upon and understood by us. It has its own definition of operating profits. When we talk about the operating profits of any company, that means operating profits before tax or interest is deducted. That is the standard definition.
The Central Bank uses its own definition which has under-reported the profits of the insurance industry by not using the standard definition. In the past five years the Central Bank has under-reported operating profits just in the motor sector by €114 million. This is money that is extracted from people to keep their cars on the road. Will the Minister for Finance engage? The Central Bank is transparent. It has its own definition and all the rest. It is not doing anything different there. However, when people see operating profits they think it is the way that it is reported right throughout the world but the Central Bank has used a different definition. Will the Minister engage for the sake of transparency and a common understanding of what profit this industry is making? These profits, which we all thought were very high, are now even higher than what we understood before.
I will speak to the Central Bank as part of my regular engagement, raising the points the Deputy has raised. I am very happy to do that. The establishment of the National Claims Information Database, NCID, has greatly improved oversight of claims' costs and trends in the insurance market. Indeed, it is one of the most comprehensive and respected insurance data sources internationally. The Central Bank of Ireland, which was tasked with developing and operating the NCID, has advised my Department that operating profit comprises total income with tax, interest costs, and any other expenses deducted. This is fully consistent with previous NCID reports and ensures alignment with other reporting requirements for insurance undertakings issued by the Central Bank. However, my officials have contacted the Central Bank of Ireland and sought the additional information so as to assist with the Deputy's question, some of which I will put on the record. I can provide the Deputy with the operating profits for the liability insurance market. The broader point is that regardless of whether you look at the data supplied-----
Will the Minister provide those?
I can provide them. I am very happy to do that now if the Cathaoirleach Gníomhach will bear with me for one second.
In terms of the operating profits for the liability insurance market before interest and tax is deducted, it should be noted that in 2020 a loss of 15% was recorded, a profit of 11% in 2021, a profit of 15% in 2022, a profit of 16% in 2023 and an operating profit before interest and tax of 12% for 2024, the latest year for which the information is available. The data that is published in the most recent NCID, EL, PL and Commercial Property Report 5, published last week, shows on page 30 the operating profits for the liability insurance market with those taxes and expenses deducted. I will set is out in a letter, which might be easier.
I appreciate that. I have engaged with the Central Bank in relation to this and it has provided me with the operating profits as commonly understood for motor insurance. It did not have them for the public liability. This is why I welcome this. This shows us two things. The insurance companies are making bumper profits. We know from the National Claims Information Database, NCID, reports that they are making three times what they told us they were targeting. However, it is worse than that because the Central Bank is using a definition of operating profit that nobody else uses. It makes that clear in the report but that is in the subtext. We need to be using standard definitions here. If we were using the standard definitions, these companies are making bigger profits. Instead of making 14% in one year, they are making 16%. This is the same in motor and in public liability. This is millions and millions of additional euro in profits. In motor insurance alone, it is a €114 million difference between using the Central Bank definition or the definition that everybody else uses. It is really important that this industry is called out for the price gouging that is going on and the bumper profits that are being made. The Central Bank does great work but it should not be using its own definition of operating profits. These figures get reported faithfully by the media and people understand it as something that it is not.
I am conscious that I put a lot of information very quickly on the record of the Dáil in the interests of the finance spokespeople here and Deputy Doherty. I will perhaps put it in a letter to the finance committee. I did not get a chance to go through all of the data in the brief time available in these back and forth exchanges. I would just make a couple of points to the Deputy. First, I will engage with the Central Bank, as he has done, in relation to the points he has made. Second, what is of particular interest is that there is some variation over the years, even as opposed to which definition one uses. This is important when we look at the sector over a longer period. Of interest is that if we look at the sector from 2010 to 2024, which is a longer period of time, there is an average operating profit of 5% across all firms for private motor insurance and a 2.1% profit for the liability insurance market. That is across a much longer period, 2010 out to 2024. I am also advised that insurers have released capital reserves, positively impacting profitability in recent years. Profitability trends may not be reflected in future years as a result of reserve releases. That is worth monitoring. It is also important to note that wider cyclical and long-term trends provide a more accurate reflection of market profitability. I also point out we are trying to attract more players into this market for obvious reasons.
