Vol. 398 No. 10
17 Mr. S. Barrett asked the Minister for Industry and Commerce if he will outline his plans to set up an injuries awards tribunal to assess damages for personal injuries arising from motor accidents; and if the cost of keeping an average family car on the road has risen by £400 in the last year; and if he will make a statement on the matter.
29 Mr. Ryan asked the Minister for Industry and Commerce if his attention has been drawn to the fact that the continued high level of motor car accidents, which are in the main caused by human error, are pushing up the cost of insurance to motorists; and if he will make a statement on the matter.
40 Mr. Rabbitte asked the Minister for Industry and Commerce, in relation to the speech made to the Irish Insurance Federation on 1 May 1990, if his suggestion for a tribunal for personal injury claims in motor insurance cases is a specific Government proposal; the steps, if any, he intends to take to control the cost of insurance, in view of the fact that a number of insurance companies have announced increases in rates; and if he will make a statement on the matter.
48 Mr. J. Higgins asked the Minister for Industry and Commerce, in the light of the virtual impossibility of young drivers to obtain motor insurance, whether he will introduce a quota system obliging motor insurance companies to accept a specified number of applicants; and if he will make a statement on the matter.
53 Mr. Deenihan asked the Minister for Industry and Commerce if his attention has been drawn to the escalating and excessive costs of motor insurance for young people; and the measures he intends taking to address this problem.
115 Mr. Durkan asked the Minister for Industry and Commerce the steps, if any, he is taking to bring about a reduction in motor insurance with particular reference to insurance for young drivers, having regard to recent increases in insurance costs; if he will indicate the reason for the disparity between such costs in this country and other European countries; if he anticipates any harmonisation in such costs after 1992; and if he will make a statement on the matter.
131 Mr. Durkan asked the Minister for Industry and Commerce if he anticipates a reduction in motor insurance premiums by 1992 or thereafter; and if he will outline the factors or initiatives likely to bring a reduction; and if he will make a statement on the matter.
I propose to take Questions Nos. 17, 29, 40, 48, 53, 115 and 131 together.
I would like to remind Deputies, that my primary and indeed statutory duty as the insurance supervisory authority is to ensure that insurance companies maintain their statutory reserves and solvency requirements. I must, therefore, respect the right of insurance firms to make their own underwriting decisions including the acceptance or rejection of any risk in the light of their particular underwriting experience. No legal obligation can be placed on an insurer to quote in respect of any risk or to quote at any particular premium or in any particular manner. I am not responsible for the day-to-day running of insurance companies or the exercise of business acumen on their behalf.
In 1987, insurers sustained underwriting losses of £32 million on their motor portfolios. These losses increased to £48 million in 1988 and are expected to be even higher for 1989. Confronted with losses of this magnitude and in order to maintain their viability some insurers have considered it necessary to increase their premiums in line with their claims experience and-or to exercise more selectivity in the type of risk undertaken. This more selective approach tends to apply to new business rather than to existing policyholders.
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.
Experience to date suggests that the Declined Cases Agreement is a reasonably satisfactory way of dealing with cases of inability to obtain motor insurance. In effect this agreement provides a mechanism for distributing high risks amongst insurers, including the insuring of young drivers. I do not, therefore, consider that there is a need for the proposed quota arrangement.
I am aware that when an insurance company quotes in respect of risks for young people, the premiums may be regarded by those concerned as excessive. The cost of motor insurance for young drivers, however, tends to reflect the claims experience of motor insurers. While I sympathise with the situation in which young drivers find themselves, statistical evidence has shown that they are more likely to be involved in accidents, and, therefore, to cause claims. The cost of these claims can only be met by insurers if a realistic premium is forthcoming to cover the risk involved and one cannot expect the cost of insurance to come down when the number of accidents claims and the cost of those claims are going in the opposite direction.
Many young drivers get insurance as additional drivers on their parents' policies. Motor insurers give these drivers some credit for their years as additional drivers in that, when they take out policies in their own name, they are given a 10 per cent to 20 per cent no claims bonus if they have been named drivers on their parents' policies for two years or more, have a full licence and are claims-accident-free.
The fundamental cause of high motor insurance prices in Ireland is the high claims rate, which regrettably is on the increase, allied to the high cost of individual claims which is also rising. These factors bear on the level of insurance premia quoted to young drivers as well as those quoted to more mature motorists. One cannot reasonably expect the price of motor insurance to reduce, or even stabilise, when the claims rate and the cost of claims is increasing. The international comparisons that are available suggest that this country has a very high accident rate and that the claims rate here is considerably above that in other European countries.
Unless and until the claims experience here mirrors that obtaining in other European countries there will be divergences between motor insurance premia in Ireland and those applying in other European countries.
I would add that statistics are not available to me that would enable an assessment to be made of the overall cost of running a family car as indicated by a recently published survey.
I, and my colleagues in Government, will continue to do what we reasonably can to improve the environment for insurance. I am, of course, aware, that despite initiatives already taken, for example, the Courts Act, 1988, motor insurance premia have continued to rise. The ultimate decisions, however, rest with society itself. Are we prepared to tolerate a high accident rate and abnormally generous compensation for victims of accidents or do we want to see a real reduction in the cost of motor insurance? I propose to stimulate public debate on the question of which alternative our society wishes to adopt and also to suggest for discussion and implementation where possible initiatives which may assist in the attainment of the adopted alternative. Thus, for example, my recent references to the need to give consideration to the establishment of a tribunal for personal injury claims. My Department will be examining the feasibility of such a tribunal in conjunction with other Government Departments and the insurance industry.
I have already recently suggested that the insurance industry itself should propose and support a road safety campaign in conjunction with the Government and am encouraged at the response I have had from the Irish Insurance Federation in this regard.
The Minister has given us a very detailed reply but unfortunately he has not replied fully to the question that I asked him in relation to his proposals for the setting up of a tribunal. Would the Minister agree that it is just not sufficient for him to say that his main responsibility is to see to it that underwriters remain solvent because the public are required by law to insure their motor vehicles? It, therefore, goes beyond the question of solvency.
Would he agree that as long as premiums are allowed to increase at the rate they are increasing there is a likelihood of having more and more uninsured drivers? Would he further agree that the estimated figure for uninsured drivers is between 80,000 and 100,000 at present? Does he agree there is a problem in relation to the laws that exist for provisional licence holders in that if you fail your test the first time, you may drive unaccompanied on the second provisional licence? I find that extraordinary. It is also extraordinary that 50 per cent of those sitting their test, fail it. In 1988 uninsured drivers were involved in accidents at a cost of £31 million. Would the Minister agree that this is unfair to those who pay their premiums?
While we can talk about tribunals and discuss their merits, would the Minister agree that the law as it stands is not being enforced and that there is a need for change in many areas? Would he further agree that there is a need for a co-ordinated effort on the part of the Government to effect change, because many of these changes involve other Departments?
It seems to the Chair that an inordinate amount of time is now being devoted to Question No. 17, clearly to the disadvantage of the three remaining Priority Questions, especially having regard to the fact that a very rigid time limit applies in respect of questions nominated for priority. I ask, therefore, for brevity if we are to deal with the remaining questions.
I pointed out already in my reply that my statutory responsibility lies in the solvency of companies. The Deputy should bear in mind that within the past eight or nine years, two large Irish non-life companies failed with dramatic and catastrophic consequences for everybody——
Because of activities outside motor insurance.
One was virtually writing motor insurance——
——but outside investments went wrong.
——so, I am afraid that is not correct. I cannot get away from the fact that of all the potential horrors, what I least want to see happen is a repetition of either of those two horrors. That should be borne in mind. Subject to that, as I have made it clear, I and my colleagues in Government will do what we can to improve the situation, but there is the basic question that the people of this country have to ask themselves and I posed it in my reply — Are we prepared as we are at the moment to tolerate a high accident rate — the highest in Europe — and abnormally generous compensation for victim of accidents — the highest in Europe — or do we want to see a real reduction in the cost of motor insurance? This country, so far, has been answering that question in the affirmative, that is we want to tolerate the highest accident rate in Europe and we want to tolerate the highest level of compensation. If we get down to normal levels of compensation then we will get down to normal levels of premiums, but so far the people have not really faced up to this question and I am trying to stimulate a debate in which they might.
The Deputy referred to a number of areas where he felt the law was not being enforced or that it might be enforced differently. That may well be the case, and I think changes could be made particularly in regard to provisional licences but the Deputy will understand that I am not trying to evade the question when I say that I am not answerable in this House for those matters.
