I thank the Chair for giving me an opportunity to raise this matter on the adjournment.
The announcement by the Minister for Industry, Commerce and Energy that he had sanctioned an average increase of 35 per cent for PMPA in motor insurance must have come as a shock to many thousands of car and vehicle owners. This announcement was not expected and, coming shortly after the budget which seemed to be all things to all men, it came as a severe set-back to people. The position is that in the Fianna Fáil manifesto there was a promise also to abolish road tax and this promise was fulfilled by the Government on assuming office. However, we find now that in many thousands of cases the relief given in that way is being eroded by the sanctioning of this massive increase to the PMPA. I appreciate that their claim was processed through the normal channels of the National Prices Commission and that the commission, before recommending that an increase be granted, undertake a full examination of the claim in order to ascertain whether it is justifiable.
In his announcement sanctioning the 35 per cent increase the Minister for Industry, Commerce and Energy stated that there were a number of reasons for the increase apart from the normal increases in costs on the administrative side. He mentioned one factor that is rather vague and gave this as one of the reasons for the increase. I refer to his remark about an EEC directive concerning an insurance company's reserve fund. I assume that unless this was an important factor in the decision to allow the increase, the Minister would not have referred to it. It implies that the company in question found themselves in breach of the directive or of some part of it. In all fairness to the company the Minister should have told us whether this was the case, that is, that the reserve fund held by the company was not in compliance with the level laid down in the directive.
It is very strange, too, that only on Saturday last at the Fianna Fáil Ard-Fheis the Minister referred specifically to the PMPA. I happened to be listening to the radio coverage at that time. The Minister referred to that company as being the only one genuinely open for car insurance business and went on to say that other companies were extremely selective and made no effort to be competitive. This was said by the Minister at a time when the claim was on his desk and, perhaps, had been sanctioned. He did not make his audience in the RDS aware of the impending increase because he knew that since on the law of averages 60 per cent or more of those people were insured with the PMPA their reaction would not have been very favourable. Consequently the Minister was very careful on that occasion not to mention the increase.
The Minister did mention though— and this would appear to have been a kind of sop having regard to what follows—that the continually increasing cost of insurance was a worrying factor in the Department and that on behalf of the consumer he would try to ensure that insurance costs were restricted from rising too sharply. He went on to mention some areas in which remedial action might be taken. In this regard he mentioned the jury system for the processing of claims through the courts. I would agree that where such cases are involved juries tend to become emotive when faced with victims of accidents who may be disabled even for life and end collectively to lean on the side of the injured or the aggrieved party. We must remember that the jury system is traditional with us. The system has worked well but the difficulty is that to single out car accident victims for special treatment—for example, to leave it to the jury to decide on liability and then to leave to the judge in consultation with, say, insurance actuaries the task of determining damages—is that there is created a legal technical problem. There are other accident victims too and the question would then have to be asked as to whether they also would have the right to go before a jury as applies at present or would they be lumped in with the system of dealing with car accident victims. I understand that the matter is at present with the Law Reform Commission and I trust that the Minister will seek to ensure that the report on that aspect of the problem will be produced without delay.
There is inherently a system here where it would seem that insurance premiums are allowed to continue increasing at alarming rates. The question of setting up a national car insurance corporation has been mentioned. Be that as it may, there is every case to be made for having in-depth scrutiny of the whole insurance industry for the purpose of ascertaining in which areas improvements can be made and to ensure that at the end of the day the consumer will get a fair deal and will get value for money.
The one aspect of all this which undermines the credibility of the Government and the Minister is the fact that this increase has been allowed on what appear from the Minister's statement to be elements and reasons that are vague. Apart from all that it is a reneging by the Government on their undertaking in that any concessions granted to people in the motor industry are now being negatived by this fell-swoop of an increase.
There is one question I should like to ask at this stage. Does the Minister envisage that a monopoly situation in the insurance industry will be allowed to continue? A few months ago the then Parliamentary Secretary, now Minister of State, Deputy Geoghegan-Quinn, in reply to a question from this side of the House concerning the insurance industry and a monopoly within that industry, said that she was happy that there was sufficient competition in the industry to ensure a fair deal to the consumer. At that time I asked her in a supplementary question to define a monopoly. She refused to do so. It is well known that a monopoly situation exists. It shows the enthusiasm, business acumen and other characteristics of the company who achieved that situation, but to the consumer this flashes a red warning light. This is something with which the Minister must grapple immediately.
I should like to mention one other aspect. At the moment spare parts needed as a result of accidents constitute a very large part of the cost of the claims. Possibly the Minister would consider the introduction of a price control system whereby the aggregate cost of spare parts would not be greater than the collective cost where such parts are used in the assembly of the whole car. This is something that the Minister could do almost immediately.
To me and to every ordinary motorist this is a terrible blow. The amount of the increase seems to be unwarranted and excessive and seems to show little concern for the person who must have a car. We have gone past the stage where a car is a luxury; it is now a necessity. I am sure the Minister knows this but he ignored the importance of the fact.
