Shane Ross

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Archive for February, 2004

Driving Competition in the Insurance Industry

I am concerned that when the Competition Authority, having thrown questions into the public arena, makes its recommendations on insurance brokers, it will be ignored because of strong political lobbying in this House and the Lower House.

Is there any need for insurance brokers at all? Can we do without them? This is the fundamental question which the Competition Authority did not address. Senator O’Rourke last week told the House that she had telephoned various companies when renewing her car insurance. By doing so on her own, she managed to reduce her premium by €200. Do insurance brokers do this? Consumer inertia is the greatest benefit for the financial services industry.

The most tangible item in the report concerns the commissions from which brokers earn their money. A simple question must be asked. Why in God’s name do brokers not put the commission charged on every bill sent to a customer? I was a stockbroker once. On every contract sent out, people were told how much we were ripping them off. People could at least see the amount paid on stamp duty, VAT and the brokers’ commission. It also allowed them to complain.

Insurance brokers do not inform consumers how much they are charging and they get away with it. It is indefensible, particularly with cosy payments from insurance companies to brokers, that large bills go out from insurance brokers that do not inform the person involved how much he or she is paying in commission.

It begs the question: what would happen if the brokers were not there? It is unarguable that, as commission would not have to be paid by the insurance companies, the cost to the consumer would be cheaper. Insurance brokers must justify what they are doing, but by refusing to let one know what one is being charged, they cannot do so.

Almost all insurance brokers earn their money from percentages, not from fee-based commissions with the result that their incomes have rocketed as premiums rose. They are doing just as much or as little work as they ever did yet are benefiting by the increase in value of the assets and the penal premiums and doing nothing extra to earn that, which cannot be justified. I query whether it is right that auctioneers, stockbrokers, lawyers and insurance brokers should be paid on the basis of percentage commissions. The report highlights the fact that because insurance brokers benefit from commissions it is in their interests to see that premiums are high. How can they act in the interest of the customer if they receive money for a higher premium?

The Most Vulnerable People Suffer from Bank Abuses

I am tired of hearing the Revenue Commissioners will prosecute hundreds of small individuals and then tell the Oireachtas committee they will do nothing about the banks. In some cases, the individuals concerned were traduced into this by people in the banks. The only penalty that the banks or those working for them have paid in the case of tax evasion through bogus non-resident accounts is a payment of €30 million in the case of Bank of Ireland and somewhat more in the case of AIB. They have paid with other people’s money for offences committed by their staff. This is not acceptable. (more…)

Promised Review of Auctioneers Has Not Yet Materialised

The Minister came to the House and pledged that a commission would be set up to look into the activities of auctioneers and to make recommendations with a view to regulating the area or introducing legislation. No such body has been set up. I ask the Leader to consider making representations to the Department that if pledges of that sort are made to this House, they should be kept.

It is not good enough that promises made by a Minister in this House should be ignored by his officials. I am not pointing a sword or a finger at the auctioneering business. I am just looking for a review, which was promised last May and has not materialised.

E-liminate E-Voting

I regret the introduction of electronic voting. I take on board the argument that it will be overseen by public servants and therefore be as impartial as anything else they oversee.

However, I believe that the old system had something special. My regret has nothing to do with technophobia. The count went on for so long and was exciting – an adventure in itself. People participated! It was an adventure. We had something special – a PR system that went on and on.

There is a real danger that, when we introduce electronic voting, we will have lower rather than higher polls. There is a serious danger, at a time when participation in politics and voting patterns are falling, that this will further undermine the democratic process, because fewer people will participate. The timing is wrong, and it is unfortunate and unnecessary.