asked the Minister for Industry, Trade, Commerce and Tourism if he is aware of the crisis position that exists in the writing of non-life assurance; the number of insurers who are sustaining substantial losses each year and the difficulties that creates for insurers and consumers alike; and if he will take steps to insure the protection of all interests involved.
Ceisteanna—Questions. Oral Answers. - Insurance Industry.
6.
I do not accept that a crisis exists in the writing of non-life insurance business in this country. Non-life insurers in Ireland are operating in difficult conditions, in common with most other insurance markets worldwide. The industry has taken corrective measures, including premium rate increases, to improve matters and these are already showing fruit. Excluding the largest motor insurer which as the Deputy knows is under administration, and the inclusion of whose reported results would distort the true picture, underwriting results improved in 1983 over 1982 with losses reduced from 21 per cent to 18½ per cent of premiums written. Market underwriting performance improved in five of the seven main accounting classes, and two of these classes recorded an underwriting profit during 1983.
It is important to bear in mind that, while financial results may vary from year to year, the Irish insurance industry is basically sound and customers need have no worries about doing business with it.
It is becoming increasingly more difficult to get the Minister of State to accept that there is a crisis as far as the insurance business is concerned in the non-life area. Would the Minister now confirm that the 40 non-life companies operating at present sustained losses in excess £40 million last year? Does he regard that as satisfactory? No company in the non-life sector returned a trading profit last year.
I emphatically refute the suggestion that there is a crisis in this industry. There is not. As a former Minister in the Department it is somewhat irresponsible of the Deputy to put down this question and to pursue it in the manner in which he has done. Not only is there not a crisis but my Department are not aware of any insurer intending to pull out of the market.
It is bordering on the incredulous that the Minister cannot comprehend——
We should not have argument.
The dogs in the street are talking about it. In order to allay all our fears, will the Minister of State give an indication of when the blue book on insurance will be published for this year so that we will all know the truth as far as losses are concerned?
I hope the blue book will be published in February.
In relation to the problems created for consumers as a result of these difficulties does the Minister have any specific information with regard to the problem of companies getting employers liability and the effect this is having on jobs and industry generally?
I answered that yesterday.
We will try again today.
The Deputy should realise that as a supervisory authority my powers are ones of supervision and ensuring that each heading is on balance. This is the objective of the examination of each application which comes before my Department.
That is an examination for each new company which applies but is the Minister aware of the problems faced by existing companies in trying to get employers liability?
Yes. As I said yesterday, I have expressed my concern to the industry.
For some reason or other Question Time is moving at a slow rate today. We have only succeeded in disposing of six questions in 40 minutes.
Questions of vital national interest.
There are about 200 other questions of considerable national importance being held up.
Some of them do not even get on to the Order Paper.
7.
asked the Minister for Industry, Trade, Commerce and Tourism if he is satisfied that the freedom of services that now exist in so far as the provision of insurance is concerned resultant from EC directives is in the best interest of the consumer; and if he is satisfied that insurance companies traditionally operating in Ireland are not placed at a commercial disadvantage because of the new arrangements.
There is no EC directive in force relating to freedom of services in insurance, which in the context of the Treaty of Rome means the freedom for an insurer to write insurance in another member state without having to establish there by way of a branch or subsidiary.
I take it therefore that the Deputy in referring to EC directives is referring to the EC Non-Life Directive of 24 July 1973 (73/239 EEC), the EC Life Assurance Directive of 5 March 1979 (79/267/EEC), which were implemented here in 1976 and 1984 respectively. Both these directives relate to the freedom of EC insurers to establish by way of branch or subsidiary in another member state of the community.
I am required under these directives to grant an authorisation to EC life or non-life insurers wishing to establish here, once they meet the requirements of the relevant directive. I am specifically excluded by the directive from examining an application for authorisation in the light of the commercial effect on existing insurers in the market. The new entrants to the Irish market have obviously had an impact but by and large the existing insurers appear to be meeting the challenge. As for consumers, I have no reason to believe that the entry of new insurers had militated against their interests.
Does the Minister of State agree that the advent of some insurers into the Irish scene over the past few years has had a debilitating effect on the progress made by native insurers and that they have cut their premiums substantially in order to compete with these outside insurers and that they have lost a considerable share of the market? This is the reason the insurance business is in such turmoil and crisis.
For the information of the Deputy, since 1976 six head office and 13 branch office authorisations have been issued to non-life insurers. For life assurers, seven head office and no branch office authorisations have been issued. With regard to the Deputy's statement, I am aware there have been price wars under certain headings which have led to a difficult situation for some companies. However, this has been relieved somewhat by the companies themselves who realise that price cutting has had some damaging effects on their profitable position. This is evident in the manner in which they are now approaching the market.
Will the Minister of State agree with me that Deputy Flynn's question shows the typical timorous protectionist attitude that has the commercial sector damned? Will the Minister of State encourage the Irish companies instead of whinging and whining about competition on their doorsteps, to avail of the freedom of establishment which EC membership gives and to move into the other countries and grab some of their insurance business?
The Deputy is now making a comment.
(Interruptions.)
I am in sympathy with what Deputy Kelly has stated.
I may be accused of many things but being timorous is not one.
Have I got the floor or has Deputy Flynn got the floor?
Will the Minister please continue?
We must accept that competition is important in the insurance industry as it is in other industries. It has been to the benefit of the public and Irish companies. The directives Deputy Flynn thought existed but which do not exist may come into operation in future years. That will pose competitive problems for existing insurance companies. They will have to measure up and understand that we are in a highly competitive situation in the EC.
Provided there is fair trading.
At the same time, it also offers opportunity. There is nothing stopping Irish insurance companies from going to the international market and selling their services. In that connection I should like to mention Irish Life.
I will allow a final supplementary from Deputy Flynn who put down the question. After that I am moving to the next question.
Will the Minister of State agree that as the licensing authority he has failed to protect our own insurers and newcomers have been allowed to take on all the soft risks, thereby making it impossible for our own insurers to maintain their market share? It is also an historical fact that just before bad news is announced in this House on budget day Deputy Kelly usually arrives in to get himself psyched up by making derogatory remarks about other people in the House.
Most of the Deputy's interventions require no comment from me.
I will not be timorous with the Deputy.
The Deputies should not allow themselves to become distracted. They should stay in order.
As the supervisory authority in charge of the insurance industry I have an obligation to insure that the companies remain viable——
And the Minister has failed.
I am not failing in my duty in that regard. We have obligations under the EC and we must meet these obligations and not be timorous. If we do not face up to competition in the service industries such as insurance we will have difficulties in years to come and the insurance industry should be aware of that.
Let the Minister talk about our rights in the EC.
We have the same rights as any other country.
8.
asked the Minister for Industry, Trade, Commerce and Tourism if he will give details of the existing price control system for insurance; and if he will specify and changes that have taken place in the system in the recent past.
In accordance with the Prices and Charges (Notification of Increases) Order, 1979, insurers are required to give to the Minister two months notice of any proposed increase in insurance premium rates.
Applications for increases in insurance premium rates are examined thoroughly by reference to criteria set out in the National Prices Commission's report for July 1983 (No. 130, pages 44-53).
I have recently made certain changes to the administrative element of the system of price control which, without sacrificing the detailed examination of price increases generally, will allow the speedier processing of price increases, particularly those of a limited application or of a minor nature. Under the revised system particular applications may be approved within 21 days of notification.
I specifically asked the Minister of State to tell us what new changes had taken place in the system of price structuring. Will he specify now in some detail the new administrative structure he has set up to deal with this matter? That is what the question was about, not the waffle we have had to listen to from the Minister.
I am sorry if the Deputy cannot comprehend answers. That is his trouble, not mine.
I can comprehend answers.
I have to be very simplistic to enable the Deputy to comprehend some of my replies.
The Minister of State is right. I am a simple person.
There is no change in the procedure regarding the two months notification to my Department. In relation to applications of a limited nature or of minor importance, we have decided on a trial basis, which will be reviewed within a year, that we may take a decision within 21 days of notification. Considerable concern has been expressed by insurance companies at the time it takes to get increases and the insurance representative body have welcomed the alteration in the system. I can assure the House that any application of major importance will be examined fully and comprehensively, as has been the case to date.
Will the Minister of State indicate how many applications he has for premium increases and how many have been subjected to the new 21 day administrative procedure?
Since the introduction of the new system in October seven applications out of the 12 received have been dealt with. The increases were small, of minor importance and of limited applicability.
Will the Minister tell the House if he has any special provisions in mind with regard to the insuring of young people?
That appears to be a separate question.
No, it is related.
If the Deputy could be more specific in his question I might be able to answer it.
The specifics are, young people, insurance and exorbitant prices. What is the policy of the Minister of State?
In relation to a price application in any area of insurance, my policy is that there should be an underwriting break even. That is a well understood principle that has been in operation in my Department for a number of years. It allows the cost of insurance to fall where it should fall, a policy that is well understood. I realise that the cost of motor insurance in particular for young people is high but I maintain if reflects the risks involved. Motor insurance for young people is available and if there is any difficulty for young people in getting insurance notification should be given to my Department so that we may examine the matter.
It is so high they avoid taking it out at all. They cannot afford it.
9.
asked the Minister for Industry, Trade, Commerce and Tourism the steps the Government have taken following the recommendations of the Prices Advisory Committee inquiry into motor insurance and the future steps they propose to take in relation to motor insurance generally.
I outlined the steps taken to implement these recommendations in my reply to a similar question by the Deputy on 25 October 1984. Since then, the Motor Insurance Advisory Board have been established to advise me on matters relating to motor insurance including loadings, premium rates and availability of cover.
The draft order requiring insurance brokers to show service charges separately when billing clients has been laid before both Houses and has been approved by the Seanad; I hope to have this order approved by the Dáil shortly.
Other Ministers have various other measures in hands including, for example, the windscreen disc for insurance in respect of which the Minister for the Environment had made regulations.
I will continue to keep under active examination the question of further action in this area.
Is the Minister aware that one in every five motorists on the road today is uninsured? Would he agree with me that some very bold initiatives must be taken to deal with what could be loosely called a national scandal? Can he indicate now what steps he proposes to take to implement the report that has been in his office for the past two years detailing means of dealing with this very great difficulty?
The House will be aware of the press release issued in 1983 in the name of the then Minister outlining the steps the Government had decided to take in relation to this very difficult area. Of the 22 recommendations over 11 have either been implemented or are in the course of implementation. This Government have taken more steps in this insurance area than the party opposite ever even contemplated in their many years in Government.
The only steps the present Government have taken——
A question.
——since they came into office were steps backward. If, as the Minister of State says, 22 recommendations were put to him and he is in the course of implementing 11 of them, what progress has been made to bring about a reduction in the number of uninsured if these steps are so successful?
Many of the recommendations are the responsibility of other Departments, so I cannot comment on them. I am satisfied that the steps now being taken by the Government will go some way towards the resolution of this problem, but one must say that citizens of this country have a responsibility to obey the laws of the land and take care that they themselves have insurance. Why should everyone look to Government to resolve what is in effect the responsibility of the citizens in their own care in matters on insurance and particularly in the matter of motor insurance?
It is depressing to hear the Minister of State reneging on his responsibility.
It is a responsibility which the Deputy's party never took up.