John Ellis
Question:166 Mr. Ellis asked the Minister for Industry and Commerce if he will outline his proposals for the provision of insurance for young people at a reasonable cost; and if he will make a statement on the matter.
Written Answers. - Car Insurance.
I would like to remind the Deputy of what I have said in this House on numerous occasions, in that, as the insurance supervisory authority I have a responsibility to ensure that insurance companies meet their statutory solvency and reserve requirements. I do not have responsibility for the day to day operations of insurance companies. Therefore, I must respect the right of insurance companies to make their own underwriting decisions in the light of their particular circumstances and assessment of the market.
In 1988, insurers sustained underwriting losses of £48 million on their motor portfolios, the corresponding figure for 1989 was more than double that at £116 million and is expected to be even higher for 1990. Confronted with losses of this magnitude and in order to maintain their viability, 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.
The cost of motor insurance for young drivers tends to reflect the claims experience of motor insurers. Statistical evidence has shown that they are more likely to be involved in accidents and, therefore, to cause claims. These claims can only be met by insurers if an adequate premium is forthcoming to cover the risk involved and one cannot expect the cost of insurance to come down or even stabilise when the number of accidents/claims and the cost of those claims are going in the opposite direction.
Having said this, however, I am aware of the difficulties being experienced by motorists at present and in particular the problems being faced by young drivers. In the context of improving the environment for insurance the Government have set up an inter-ministerial group to examine ways and means of improving the environment for motor insurance in particular. This group are focusing on strict and sustained enforcement of existing road traffic legislation, amendments to the Road Traffic Acts designed to reduce the motor accident rate, suggestions to improve the cost and availability of motor insurance and improvements/alternatives to the courts system for the resolution of personal injury claims. I am hopeful that this will result in a number of positive proposals which can be implemented in the very early future. I would add, however, that Government action of itself will not reduce or stabilise motor insurance costs. Consumers must play their part by increased awareness of the need for safety.