Vol. 384 No. 6
asked the Minister for Industry and Commerce the steps he is taking to ensure that motor insurance costs are reduced to take account of savings arising from measures introduced at the request of the insurance companies such as the compulsory wearing of seat belts, the compulsory display of insurance discs and the removal of juries from personal injury cases; and if he will make a statement on the matter.
25.
asked the Minister for Industry and Commerce if he will make a statement on the level of insurance premiums in the areas of motor and industrial insurance; the steps he is taking to secure reductions in premiums arising from re-organisation in the legal system; and if he will make a statement on the matter.
I propose to take Questions Nos. 25 and 23 together.
Savings arising from the compulsory wearing of seat belts are already reflected in motor premium levels as the measure was introduced in February 1979.
The introduction of the compulsory display of windscreen insurance discs in 1986 has made identification of uninsured vehicles easier for the Garda and this is reflected in the latest estimated national level of uninsured driving of 6.8 per cent, which compares with an estimated level of 15-20 per cent prior to the introduction of the disc. While this improvement is to be welcomed, I should stress that this level of uninsured driving adds on average about £28.60 to the cost of each motor policy, or £28.6 million overall.
It is already apparent that premium levels, particularly in motor insurance, have been reducing in recent months as a result of increased competition in the market place and in anticipation of the benefits arising from reorganisation in the legal system and other Government measures to improve the environment for insurance.
Members of the Irish Insurance Federation have delivered on their commitment to offer 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 years, have a full licence and have been accident free.
The results of a published survey on motor insurance premium levels carried out by my Department indicate that decreases of between 3 per cent and 4 per cent in specific third party motor rates and 13 per cent in young drivers' rates have occurred within the last 12 months or so. The latest Automobile Associations survey of motoring costs reports similarly encouraging trends. These positive indications are borne out by the Consumer Price Index which has recorded a reduction of 1.6 per cent in motor insurance costs in the period from May 1987 to August 1988.
In addition, the largest motor insurance company in the State has, with effect from 1 October 1988, implemented rate adjustments on the comprehensive elements of private motor insurance policies equivalent to an overall reduction of 3 per cent in its private motor premium income.
With regard to insurance premiums for industry, the most recent Confederation of Irish Industry survey indicates that, on average, employers liability insurance rates have fallen from 2.78 per cent of payroll costs in 1986 to 1.85 per cent of payroll costs in 1988. This is a significant improvement in an area which may have acted as a disincentive to employment in some cases in the past.
It is clear that competition and Government action have already created the momentum to bring about actual reductions in insurance premium levels for both industry and the motoring public. My Department, in co-operation with the CII and other relevant bodies, have made arrangements to monitor premium movements in these areas on an ongoing basis.
The Deputies will appreciate that the cost of insurance is directly related to the number and cost of claims. Only when the number of accidents, settlement and award levels and other associated costs are reduced will the problem of high insurance premiums be resolved.
The Government are fostering the environment for lower premiums. However, I am also very conscious of the dangers involved if an insurer were to reduce its rates below a financially viable level and I am certainly not advocating that. My Department will continue to keep a close eye on developments in this area to ensure that the interests of the insuring public are protected both in relation to the cost of their insurance and the solvency of their insurers.
