asked the Minister for Industry and Commerce the measures, if any, he proposes to take to reduce and control the cost of motor insurance in particular, insurance for younger drivers.
Ceisteanna—Questions. Oral Answers. - Motor Insurance.
11.
With the permission of the Chair and Deputy Barry, I shall reply to this question. I am aware of the burden which high insurance costs impose on all sections of the motoring public and I intend to do everything practicable to alleviate this burden where possible. I am particularly anxious to improve the position of young drivers. However, the cost of insurance is directly related to the level of claims occurring.
The motor insurance industry in Ireland has had significant underwriting losses in recent years. In the absence of a change in the underlying claims experience, lower insurance rates for young drivers would mean higher rates for other categories of driver. More mature drivers have been statistically proven to be somewhat safer than their younger counterparts whose rates reflect the higher risk.
As the insurance supervisory authority, my primary responsibility is to ensure that companies are maintaining their solvency margins and reserve requirements. I must, therefore, respect the right of insurers to charge economic premiums in the light of their underwriting experience. The initial loadings imposed on first time insureds and more specifically young drivers can be offset over time by earning a no-claim bonus. However, many young drivers have several years of claims free driving as drivers on their parents' policy, when they first take out insurance in their own name. Many of them get no credit for this. I have had discussions with motor insurers and they have undertaken, when the Courts Bill is enacted, to give a 10 per cent to 20 per cent no claim bonus to young drivers taking out their first policies if they have been named drivers on their parents' policies for two years, have a full licence and have been accident free. I will be pressing for further improvements. Benefits should also come from tackling legal costs, uninsured driving and road safety, which are being considered in the context of the current joint Government/insurance industry discussions on how to reduce the cost of insurance.
A major motor insurance company has recently introduced a special young drivers scheme on its own initiative, which sets down a maximum premium in absolute terms while at the same time allowing a young driver to commence earning an entitlement to a no claims bonus in the ordinary way. I would urge other motor insurance companies to follow this lead.
The fact remains, however, that it is only when the overall burden of claims costs is reduced that insurance companies will be able to reduce premiums. For this to be achieved, it will be necessary for the motoring public generally, and young motorists in particular, to improve standards of driving and road safety — standards which are all too often lacking at present.
The Minister of State's reply is not too consistent with his Minister's utterances during the summer. When is it proposed to abolish the jury system?
The Bill you are talking about is the juries Bill which I understand is on the agenda for this session.
During the summer the Minister of State made a number of comments in relation to the high level of senior counsel representation in civil liability cases. Can he tell us when he envisages this number being reduced in High Court cases?
I invited the Bar Council to have discussions with me on a voluntary basis on how together we could tackle the question of legal costs in insurance cases. The Bar Council listened to what I had to say and are now considering the points which I put to them. I am awaiting a reply from them. I simply invited them on a voluntary basis to consider whether or not the level of legal representation in insurance cases was something they could stand over and I am awaiting hearing from them in that regard. Assuming we get a positive response, it will help to reduce costs.
Given the contradictory statement which emanated after the meeting which the Minister of State referred to between himself and the Bar Council of Ireland and the umbrage taken by the officers of the Bar Council in relation to the Minister's presentation of that meeting, could the Minister of State inform the House what points he put to the Bar Council with a view to reducing fees in insurance cases?
I put to the Bar Council the large number of lawyers involved in insurance cases and I pointed out to them a number of cases where the number of lawyers involved was eight and that eight lawyers on an insurance case was something I felt the country would not put up with much longer. I asked them to consider on a voluntary basis, as has happened in other countries, whether they would take an initiative in that regard and I am awaiting hearing from them. There were some differences of opinion in regard to who precisely said what and who heard what but when you ask a profession to consider some voluntary redundancies they might not hear as carefully as they would normally hear.
Could I ask the Minister of State if, by the same token, he has called in and had discussions with the insurance industry regarding what measures they could take within that industry to reduce their costs and charges and could he tell us what was the outcome of those discussions?
I have had a number of discussions with the Insurance Industry Federation. As I outlined in my reply, the Courts Bill will enable them to introduce this new scheme which will give between a 10 per cent to 20 per cent no-claims bonus to young drivers taking out their first policies if they had been named drivers on their parents' policies for two years, have a full licence and are accident free. Also, the Minister for Industry and Commerce pointed out during the summer to the insurance industry that he will not necessarily approve increases in insurance premia just as a matter of course.
Is the Minister of State satisfied that all we are going to see from the passage of the Courts Bill is a 10 per cent no-claims bonus for young drivers? Are we not going to see a general reduction in premia as a result of the implementation of the Courts Bill?
That is a good point. We have made it quite clear to the insurance companies that for a long time now they have been saying that if they get the Courts Bill they will bring down costs. We intend to hold them to that commitment.
How will you hold them to it?
Let me just say that it is our intention as soon as the Courts Bill is enacted that we will look towards the insurance companies for a reduction in their premia. As the Minister for Industry and Commerce pointed out, he will not necessarily be sanctioning any increases in their premia.
We are talking about reductions, not increases.
Reducing insurance premia is only one part of a programme. The programme includes items such as the Courts Bill, the number of lawyers involved in a case, a book of quantum of damages if that is possible, looking at pre-trial procedures, what various Departments can do about greater safety on the roads and the question of uninsured drivers which adds about £70 to £80 on every premium in the country. All those matters are being looked at very carefully. Other Departments are involved. Both the Minister for Industry and Commerce and I are working on a programme to reduce insurance costs. There is no one spot on which you could put your finger on and say by tackling that it will make a major difference.
All of this is touching spots and is no more than tinkering with the system. Is the Minister of State considering in his discussions and negotiations with the insurance industry the introduction of a nationalised scheme of no-fault liability? That is the only effective way one can get over the overloading of these matters, with costs by lawyers and insurance brokers. Are we just going to have an endless tinkering with the system which is what the Courts Bill and the many other things will really do?
I do not consider the programme which I have outlined, which is only part of the programme which I hope to unfold, tinkering with the system. There is a range of areas on which we are trying to make some progress. Let me say in this regard that the Fine Gael insurance policy document which was released during the summer was helpful in that it also pointed to a large number of areas where we can and are taking action. The proposal of a no-fault liability was not made by anyone in the insurance industry or the other parties involved but it is something——
Certainly, you will not get it there.
It is something I will have a look at.