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Explainer: Why are hundreds of creche owners worried about having to close?

Childcare providers have warned of a crisis as the cost of insurance increases.

CHILDCARE PROVIDERS HAVE warned of a crisis in the sector. The rising cost of insurance, coupled with a dearth of providers, have thrown staff and parents into a state of panic amid fears that creches could close en masse. 

The crisis has dragged in the insurance sector, Oireachtas committees, ministers and even Taoiseach Leo Varadkar – yet no long-term solutions have so far been found. 

So what exactly is the issue – and what is at stake for childcare companies?

The beginnings of a crisis

Earlier this month, the Sunday Business Post reported that one of the biggest insurers of the childcare sector, Ironshore Europe, was pulling out of the market. 

The global company had been acquired by new management, Hamilton Insurance – leading to the company to withdraw from the childcare sector in Ireland. 

The decision prompted panic among childcare providers, with many forced to seek a new provider when their insurance is up for renewal on 1 January 2020.

Elaine Dunne, a spokesperson for the Federation of Early Childhood Providers, said the sector was dealing with an array of issues and challenges.  

“If insurance was the only issue, that would be great. But it’s not,” she said. 

The sector has faced a difficult six months. Over the summer, the RTÉ Investigates programme revealed significant issues at the Hyde and Seek creche chain.

Children were filmed being roughly handled in the footage recorded by RTÉ Investigates, and concerns were raised about fire safety, food quality, and staff to child ratios. 

The pre-school company and two directors face prosecution, accused of alleged childcare failings, as a result of the programme. 

Ironshore provided insurance to Hyde and Seek. It had tried to cancel its policy with the company, following the revelations, but was prevented from doing so by a High Court injunction. 

Rising costs

The loss of Ironshore from the market caused significant concern. Insurance broker Padraic Smith and Co had told over 1,300 childcare providers that it hadn’t been able to secure cover for them. 

One potential option for childcare companies is to sign up with insurance provider Allianz. 

However, many have warned that that would mean a significant jump in costs – meaning many providers would struggle to pay. 

Dunne warned that childcare companies are not earning enough money to cover the escalating costs of insurance. 

“When I work in the morning with my staff, I don’t make a profit,” she said, as an example. It’s only her after-school work, she said, that allows her business to survive. 

It’s the same for creches and childcare providers across the country, Dunne said. One estimate, put forward by Minister for Children and Youth Affairs Katherine Zappone, was that the average creche was facing a 100% increase in their insurance premium as a result of having to move to Allianz.

tuam-mother-and-baby-homes-3-390x285 Minister for Children Katherine Zappone has provided a €1,500 one-off payment for childcare providers. PA Images PA Images

Last night, in an hour-long interview with Virgin Media, Varadkar didn’t sound too perturbed by the prospect of Allianz having a monopoly on insurance. 

“Allianz are still in the market and there’s the possibility at least that another insurer will come in,” he said. 

Rising insurance costs have been a major concern for many industries. Rising premiums, and the reasons insurance companies give for the increases, have been under scrutiny in recent months, while in July leisure businesses also warned about the rising cost of insurance.  


The Oireachtas responded yesterday as the scale of the crisis became clear. 

The Joint Committee on Children and Youth Affairs announced that it would hold an emergency meeting, while Zappone, as well as Finance Minister Paschal Donohoe, said that the government was working to reassure parents. 

“We are working hard to see if we can come up with a plan to ensure that families know where the crèches are going to be, if they’re going to be open next year. I have a lot of experience of the anxiety that can be caused by families not being aware if they will have a creche in the future,” Donohoe said. 

On Wednesday afternoon, Zappone announced a one-off €1,500 payment to be given to each childcare provider to help them deal with extra insurance costs.

The funding of €7 million will facilitate an additional payment of about €1,500 on average to individual providers with the actual amount varying according to the size of the creche or daycare centre.

The payment, which will be paid in the coming days, had been suggested by Sinn Féin leader Mary Lou McDonald – but was dismissed by Varadkar as “reckless”. 

Only a few hours later, Zappone was confirming that this is exactly what the government would do. 


Childcare companies have warned that this doesn’t mean the problem is solved. 

Dunne said that the funding wouldn’t help childcare companies cover the cost of insurance. 

“It’s hush money to keep us quiet,” she said. “It’s not going to help us in any way.”

Dunne argues that the real problem is non-compliance regulations. 

Put simply, these are the regulations in place to ensure children are kept safe in creches that are properly run.

The problem, says Dunne, is that these non-compliance regulations are a blunt tool that leave both companies and insurance providers none-the-wiser over whether the fault at is creche is a serious childcare failing or only an administrative mistake. 


The solution, says Dunne, is for Tusla to introduce a grading system so it’s easier to separate minor and major issues in creches. 

“In general, they are small non-compliances. But because Tusla have no grading, that’s the issue.”

“Speaking to insurance companies, we will have an easier job getting underwriters into the country if we have grading,” Dunne said. 

What’s next?

The crisis isn’t going away. However, with an election expected before the summer of 2020, it’s likely that the government will want to be seen to be listening to creche owners and parents. 

It remains to be seen what will happen next and whether there will be a breakthrough before the end of the year. 

Nonetheless, many parents and staff still seem to fear that crippling insurance costs could lead to the closure of companies in the new year. 

Dunne said that the Federation of Early Childhood Providers is working to try and find a solution.

“We’re not going to sit back here and let the minister get away with what happened yesterday,” she said. 

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