asked the Minister for Industry and Commerce whether he has studied the recent changes in the car insurance market covering young drivers; and if he has taken any steps to prevent an increase in the premia chargeable to such drivers.
Written Answers. - Young Drivers' Car Insurance.
43.
I am aware that some motor insurance companies are tending to be more selective in the type of risk for which they are prepared to quote. This more selective approach tends to apply to new business rather than to existing policyholders. While I sympathise with the situation of young drivers, statistical evidence has shown that they are more likely to be involved in accidents, and, therefore, to cause claims. Nonetheless my information is that a number of companies are continuing to offer insurance cover to young drivers.
Over the past number of years insurers have suffered large underwriting losses on their motor accounts. In 1988, insurers sustained underwriting losses of £48 million, these losses have increased from £32 million in 1987. The claims experience of underwriters is worsening largely because of an increase in the number of claims. Faced with losses of this magnitude insurers have had no option but to adjust their premiums and to exercise more selectivity in the type of risk undertaken.
The Deputy will be aware that, as the insurance supervisory authority, my primary and statutory duty is to ensure that insurance companies maintain their statutory reserves and solvency requirements. In this regard I must respect the right of insurers to accept or reject risks in the light of their underwriting experience. There is no legal obligation on any insurer to quote in respect of any risk or to quote in any manner or at any particular level of premium.
Cases of inability to get motor insurance cover can be dealt with under the declined cases agreement. This is an agreement between the authorised motor insurers and the Minister for Industry and Commerce. The declined cases committee, established under the agreement, examines cases referred to it by my Department where motorists have been declined cover by five or more insurance companies, and nominates a company to quote for the risk involved. Before a case can be submitted to this committee for consideration it is necessary for my Department to have copies of written refusals from five insurance companies together with details of any previous insurance held in the last three years. Let me assure the Deputy that the Government are committed to improving the environment for motor insurance and it is my intention to ensure that should the claims experience of underwriters of motor insurance improve, whether on foot of the Courts Act 1988 or any other Government initiatives, appropriate benefits will be passed on to the consumer.