Dáil Éireann debate -
Tuesday, 3 Jul 1990

Vol. 400 No. 9

Written Answers. - Insurance Coverage.

Brian O'Shea

Question:

142 Mr. O'Shea asked the Minister for Industry and Commerce the action he proposes to take to assist a person (details supplied) in Tramore, County Waterford in obtaining fire, storm, flood and employers liability insurance, having regard to the fact that he has been unsuccessful in obtaining such insurance; and if he will make a statement on the matter.

Minister for Industry and Commerce (Mr. O'Malley)

I should explain that as the insurance supervisory authority, my primary responsibility is to ensure that insurance companies maintain their statutory reserves and solvency requirements and, therefore, I must respect the right of insurers to accept or reject risks in the light of their underwriting experience.No obligation can be placed on an insurer to quote in respect of a particular risk or to quote at any particular premium.

However, there is an arrangement with the Irish Insurance Federation to assist in cases where difficulties are experienced in obtaining liability and fire insurance. Before any case can be referred to the federation, it is necessary that at least half the market — approximately 12 companies including Lloyds — be approached without success. Evidence of these approaches, e.g. a letter from a broker, together with a brief synopsis of the risk should be forwarded to the insurance section of my Department who will refer the matter to the federation for consideration. I must emphasise that, while this arrangement is reasonably successful, no guarantee can be given that cover will be forthcoming in every case.

Dermot Ahern

Question:

143 Mr. D. Ahern asked the Minister for Industry and Commerce if his attention has been drawn to the fact that as of 1 June 1990 most motor insurance companies are refusing to quote to persons under 25 years of age, who are without no claim bonuses, and that other companies who are quoting are doing so at grossly exorbitant figures; and if he will take action to alleviate this situation.

Minister for Industry and Commerce (Mr. O'Malley)

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 premium.

I understand that in order to maintain their viability 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.

Notwithstanding this, my information is that a number of companies are continuing to offer insurance cover to persons under 25 years of age who are without no claim bonuses. Indeed the Irish Insurance Federation has indicated to me that this is the position.

In any event, 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.

With regard to the level of premia charged to young drivers I feel it is only right to point out again that the fundamental cause of high motor insurance prices for all motorists 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 cost of motor insurance for young drivers tends to reflect the higher claims experience of motor insurers in this area. 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.