asked the Minister for Industry and Commerce the total percentage increase in motor car insurance premiums since June, 1974.
Ceisteanna—Questions. Oral Answers. - Motor Insurance.
6.
Mr. Kitt
The total cumulative increase in basic motor insurance premium rates since June, 1974 was 73.6 per cent, but against this reductions in loadings equivalent to 10 per cent of overall income were made in conjunction with the 1974 increases in basic rates.
Mr. Kitt
Does it not seem from the very large increase which the Minister has indicated that the insurance companies are dictating terms and rates and the unfortunate motorist has to suffer as he has had to suffer in the recent budget?
The increase in the period referred to in the Deputy's question is, as I have indicated in my reply, 73.6 per cent, but I think it is fair to put the increase in motor insurance premiums into a longer time frame. If one takes the period from 1970 to 1975, over a five-year span, the consumer price index increased in that time by 93.09 per cent, whereas the motor insurance premium increased by 90.96 per cent, in other words a lesser increase for motor insurance premiums than for the consumer price index over that period. If you take the period 1962 to 1975, a longer period still, we find that the consumer price index went up by 190 per cent, whereas motor insurance premiums went up by 147 per cent. Therefore, taken over a 12 year period, the increase in premiums has been slower than the increase in the consumer price index, though it was particularly dramatic over the period——
Is it not true also to say that in taking the period from 1962 the rise would be far more exaggerated on a percentage basis than in taking 1974? The 1974 prices were high but the 73 per cent increase on that would be far greater than on the 1962 figure.
The point I was making was that if you compare the increase in the consumer price index with the increase in insurance premiums since June, 1974, then motor insurance premiums have gone up much more rapidly, but if you take it over a 12-year period, they have gone up less rapidly than the consumer price index.
May I ask the Minister, in view of the growing monopoly situation developing in the structure of motor insurance and the substantial cost to the individual persons concerned if, in the national interest, he has given any thought to the idea that at some future date it may be desirable to have a system similar to social insurance, to occupational injuries, to redundancy funds, set up on a State-sponsored basis, and that useful discussions might be held——
The Deputy is raising another matter.
The question refers to the percentage increase in motor insurance premiums, and the matter now raised by the Deputy is so wide that, while I would be happy to respond to it on an appropriate question, I do not think it arises on this.
Could I ask the Minister on what basis he deems it valid to make a comparison between the consumer price index increases and the increases in insurance premiums? If the price of potatoes increases rapidly, is this a justification for increasing insurance premiums?
Potatoes and insurance are not connected, but the consumer price index is a very carefully designed wide sampler of general price increases, and a correlation between insurance premium increases and the increase in the consumer price index is a perfectly natural reflection of the economic process they both measure.
Could I ask——
I want to get off this question.
You do not have a car insurance policy. We have.
Is the Minister aware that 73 per cent is not the real figure, because over that year insurance companies shed a number of clients, the age of the car and so on, being brought into consideration? That big percentage of shedding, if brought into consideration, would have resulted in a much bigger increase than 73 per cent.
Brief questions, please, Deputies.
I assure the Deputy that those figures are prepared by civil servants without arm twisting from anybody else. In general I find that statistics of this kind are reliable, and I have no reason to think that that figure as given in answer to the Deputy's question is not an accurate one.
Is the increase justified?
It is a guessing game.
Mr. Kitt
Could I ask the Minister if he is satisfied that the insurance companies are accepting new business and are reducing their loadings on young drivers, first time drivers? Could he also tell me the number of complaints his Department have had from people who tried——
The Deputy is extending the scope of the question.
In regard to the latter part of the question, I cannot give a factual answer without prior notice. I shall certainly get the information for the Deputy if he puts a question down or if he communicates with me. In regard to the availability of insurance, I cannot say I am satisfied with the position, but I know it is vastly better than it was 18 months or two years ago when the return on motor insurance was so small that it was very difficult for people to get new policies, and some major insurers were threatening to withdraw from our market entirely. The position is not entirely satisfactory but it is a good deal better than it was.
7.
Mr. Kitt
asked the Minister for Industry and Commerce if he will explain the recent massive price increases in motor insurance in view of the fact that the company (name supplied) which spearheaded the demand for the increases made a net profit of over £400,000 for 1974 according to their own audited accounts and substantial profits in 1975.
The recent increases which I sanctioned following on advice given to me by the Motor Premiums Advisory Committee and the National Prices Commission were designed to give the companies a chance of breaking even by the end of 1976. The reasons for the increase —principally, the need to provide for inflation — are set out in the published report of the committee to which I refer the Deputy. The profit made by a particular company in 1974 could be no guide to the company's probable results in 1976, principally because of inflation but also because the 1974 results reflected a very heavy call on the company's re-insurers which inevitably will result in much increased re-insurance charges in subsequent years.
Would the Minister not accept that it would be a good idea if a person who wished to renew insurance on his car could be given a firm, not a variable, quotation, depending on which official he happens to see in the insurance company? Does the Minister not realise that when a motorist wishes to renew his insurance, he can get anything from £50 to £100 of a difference in the same office, or by going from one rural office to another, of the same company? That is an absurd and unfair situation.
In the instances where it occurs it is an absurd and unfair situation. The Deputy is right to suggest that such instances do occur, but I am satisfied that they are few. I am not telling the House that the situation in regard to motor insurance is entirely satisfactory because I do not think it is. We are having it very thoroughly investigated. In the meantime, I will certainly follow up anomalies of the type the Deputy describes when anyone in the House brings them to my attention because they are unreasonable.
Would the Minister be prepared to comment on the feeling abroad that when certain companies made submissions to him with regard to increasing their premiums he decided the increases should be even greater than those sought? Has the Minister any comment to make?
I simply do not know to what the Deputy is referring. If he would again like to put down a question with some hard facts in it that I can investigate, I will reply to him.
(Interruptions.)
Order. This is becoming argumentative.
Would the Minister tell me if this has happened? Has it ever happened that a company seeking an increase was granted a greater increase than that sought?
I cannot explicitly deny that it happened because it might have, but if it did I am not so aware.
Is the Minister perfectly satisfied that the increases granted were justified?
I have two sources of advice: the Motor Premium Advisory Committee and the National Prices Commission. The National Prices Commission is balanced in regard to different social interests. I find them thorough and professional. Unless I have some extraordinary contrary information, I am impressed by the things they tell me as being balanced and accurate. When I get two sets of advice of that sort, I am disposed to accept it.