asked the Minister for Industry and Commerce the average cost of motor insurance for (a) a single person with full driving licence aged 25 years and (b) a married person with full driving licence aged 30 years for each of the years (i) 1980 (ii) 1985 (iii) 1987 and (iv) the forecasted average cost for 1988 and 1989.
Written Answers. - Motor Insurance Costs.
21.
Insurers take many underwriting factors into account in calculating a motor insurance premium. These factors include: the nature and scope of the cover required e.g. third party, third party fire and theft, or comprehensive cover; the age of the proposer for insurance; the insured value and horsepower or cubic capacity of the vehicle; full or provisional licence status; the address at which the vehicle is ordinarily kept; no claims bonus entitlement; previous claims history; endorsements or convictions under the Road Traffic Acts; whether cover is required for social and domestic or commercial purposes. Contrary to the implication in the Deputy's question, marital status is not an underwriting factor for premium rating purposes.
I proposed to circulate a table with my reply in an attempt to provide meaningful information of the kind sought by the Deputy covering the years 1980, 1985, 1987 and 1988. As the House is aware, the cost of motor insurance in this country is largely attributable to the number and level of claims and the associated legal and other expenses.
Significant measures to tackle these problems are already in train. The reduction of high insurance costs is an integral part of the Government's Programme for National Recovery. The Government is moving quickly to facilitate a reduction in costs, by proceeding with legislation to abolish juries with effect from 31 July 1988 and to limit the level of legal representation in personal injury cases, and by promoting greater awareness of the need for road safety. The scope for promoting the publication of a book of Quantum of Damages and for introducing a pre-trial procedure system to help reduce legal costs is also being examined.
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 claims bonus to young drivers taking out their first policies if they have been named drivers on their parents' policies for two full years, have a full licence and have been accident free. I will be pressing for further improvements. Indeed, it is apparent that motor premium levels have been reducing in recent months as a result of increased competition in the market and in anticipation of the improved framework which we are introducing. This is reflected in the fact that the premiums as at 1 January 1988 in the table to be circulated with this reply are up to 8 per cent lower than those applying a year earlier.
The Deputy will appreciate that it is not possible at this stage to forecast exact motor premium levels for 1989. However, I am hopeful that the current favourable trends will continue to benefit consumers.
The fact remains, however, that it is only when the overall burden of accidents and claims costs is reduced that significant reductions in insurance premiums will be achieved. For this to be brought about it will be necessary, in addition to the measures being taken by the Government, for the motoring public generally, and young drivers in particular, to improve standards of driving and road safety.
Table
Comparison of Motor Premium Rates
1. The following underwriting factors have been assumed for the purposes of the premium comparisons sought by the Deputy:
third party only insurance cover; eight horse-power vehicle; social and domestic use; Dublin area rating; full driving licence; claims-, endorsements-and convictions-free.
2. The simple average of the rating schedules employed on 1 January in each year by motor insurers representing over half of the total Irish market was used for premium comparisons purposes. The rates were calculated on two bases:
(i) assuming full no claims bonus entitlement, and
(ii) without allowance for no claims bonus with the following indicative results:
|
1 January |
1980 |
1985 |
1987 |
1988 |
|
£ |
£ |
£ |
£ |
|
|
25 year old |
||||
|
(i) full NCB |
72.65 |
191.42 |
204.16 |
190.45 |
|
(ii) no NCB |
138.65 |
395.25 |
431.47 |
424.43 |
|
30 year old |
||||
|
(i) full NCB |
72.65 |
178.90 |
195.52 |
181.29 |
|
(ii) no NCB |
138.65 |
370.53 |
414.55 |
394.30 |
Note: The figures quoted for the years 1985, 1987 and 1988 include a 3 per cent surcharge arising from the 2 per cent Insurance Compensation Fund contribution and the 1 per cent Government insurance levy.