Dáil Éireann debate -
Wednesday, 4 Jul 1990

Vol. 401 No. 1

Written Answers. - Motor Cycle Insurance.

Eric J. Byrne

Question:

53 Mr. Byrne asked the Minister for Industry and Commerce whether a near monopoly situation exists with regard to motor cycle insurance, in view of the fact that a company (details supplied) has 95 per cent of the market; that motor cycle premia are excessively high; and if he will make a statement on the matter.

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. Therefore, I must respect the right of insurers to accept or reject risks in the light of their under-writing 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 am aware that the company to which the Deputy refers has by far the largest share of the motor cycle market with over 90 per cent of motor cycle risks on its books. However, I would point out that this position has developed over the years primarily because of the reluctance of other companies to give such cover. Therefore, it is not a question of that company seeking a monopoly on the market but rather that it is the only company prepared to do a large volume of business in this area.

As with other types of insurance cover the cost of motor cycle insurance is directly related to the number and cost of claims. The losses which insurers have incurred on their motor business in the recent past have been well documented with losses for 1989 expected to exceed £100 million. The position in the motor cycle sector is even more difficult. Available statistics show an extremely high accident rate for motor cyclists. Moreover, a significant factor in the cost of motor cycle insurance is the age of the insured. Insurance rates for motor cyclists under 25 are substantially higher than the corresponding rates for more mature policyholders — reflecting the greater risk levels involved. The fact is that motor cyclists have been statistically proven to have a high accident rate and, therefore, to cause claims. The cost of these claims can only be met by insurers if a realistic premium is forthcoming to adequately cover the risk involved.