Ceisteanna-Questions. Oral Answers. - Insurance Rates Survey.

Joe Sherlock


10 Mr. Sherlock asked the Minister for Industry and Commerce if his attention has been drawn to the recent survey published by the Belgian Consumer group Test, Achat, and the EC consumer group BEUC that Irish drivers pay the highest insurance rates in the EC; and if he will make a statement on the matter.

The survey referred to confirms what I have been saying for the past number of years about the level of motor insurance costs in Ireland. In this connection, I would refer the Deputy to the comprehensive reply which I gave to parliamentary questions as recently as Thursday, 5 March 1992 — Dáil Official Report, volume 416, No. 8, columns 1751-1766.

Motor insurance rates in Ireland will be out of line with those of other countries in Europe as long as the extent and level of awards for injuries are out of line.

I am familiar with the detailed answer to which the Minister referred. However, the fact remains that the report referred to here shows that, for example, a young driver in Greece will get insurance for one-tenth of the cost in Ireland. Is the Minister aware that in Britain a young driver can get insurance for, on average, three to four times less than here? Is the Minister now saying that motorists, having been disappointed that the abolition of juries did nothing to lower insurance costs, will find that the advent of Single Market conditions will be a cause for no hope for drivers who are so heavily penalised by the cost of insurance here? There are barriers at present to European countries offering insurance to people resident outside that particular country. Will Single Market conditions offer any hope for improvement in the conditions experienced by drivers generally, young drivers in particulars?

As the Deputy said, premiums in Greece and Britain are only a fraction of what they are here. However, the claims and awards in those countries are only a fraction of what they are here, inevitably one reflects the other and will continue to do so. As far as the opening up of the market is concerned, I understand it will take place at the end of November this year; it will no longer be necessary to be established here. However, as I pointed out to the House, it would be misleading to suggest to the public that that opening up will lead to a dramatic drop in premiums or anything of that kind because, irrespective of where the insurer is, if he is writing business in Ireland his premium rate will be determined by his costs in Ireland. Unfortunately, whether he is Irish based, German based or indeed based anywhere else in the Community, his costs will be higher than they are anywhere in the Community. For that reason, his premiums are likely to be higher. At present 70 per cent of non-life insurance here is written by non-Irish companies so we do not lack foreign investment or competition in the market. I welcome the fact that there will be broader competition from the end of November but, nonetheless, the costs here are so high that it is unlikely that any foreign based insurer will be able to write policies at premium levels which are substantially below existing levels until such time as we get our costs and awards system in line with the rest of Europe.

If, as the Minister says, the ill we are talking about, the high cost of insurance premiums, is due to high court awards, does the Minister intend to do anything about that, and, if so, what are his proposals and when will they be implemented?

High Court awards is one factor. This matter has been examined thoroughly by a Cabinet committee to which I referred, chaired by me, which met on numerous occasions in the past two years. The Cabinet committee promoted legislation, some of which has already been passed and some of which I hope will be in the House shortly. In particular, the Minister for the Environment will introduce within the next month or so a Road Traffic Bill that I hope will improve the enforcement of many road traffic requirements and strengthen those requirements in an attempt to reduce the very high accident rate in this country. Within the next couple of months, the Minister for Justice will introduce a Courts and Courts Officers Bill, which, I hope, will make a significant contribution towards the reduction of legal and other costs associated with court cases. Of course, that Bill will also make various other changes in procedure that are thought advisable to try to reduce the length and complexity of hearings in relatively simple cases.

A Cheann Comhairle——

Order. I am anxious to dispose of a few more questions in the interests of Deputies who are present and anxiously waiting for their questions to be dealt with. Time is fast running out. I ask for brevity.

I point out to the Minister that none of the items in the list he gave is the ill he identified, namely, the amount of court awards. I again ask whether the Minister proposes to do anything about that matter which he enunciated in his first reply as the cause of the problem.

I consider, as do a great many people, that the level of court awards here is much too high. A recent report commissioned from Coopers and Lybrand concluded that personal injury claims in Ireland were more than four times higher than the level in the United Kingdom and that the proportion of motor insurance claims, which include personal injury compensation, was five times higher in this country than in the neighbouring jurisdiction. I cannot put a stop to the awarding of large sums of money but I shall certainly seek to discourage it. I am advised that for constitutional reasons we cannot impose a limit on the amount of awards made. I am told that that would be found to be unconstitutional. It is my hope that, on reflection, the courts will realise that the unusually high level of awards here is causing a severe problem for drivers, and young drivers in particular. Of course, it is also causing a severe problem for employers in terms of employers' liability insurance and to people who hold public functions or events and find it very difficult to get public liability insurance as a result of the abnormally high awards made here.

Does the Minister accept that his reply about what motorists may expect in Single Market conditions will have the effect of a bucket of cold water, especially for those who need to use their cars as a tool of their trade? The Finance Bill carries the prospect of a registration fee while motorists had expected cheaper cars, and now, in respect of the expectation of cheaper insurance, the Minister is essentially saying that the determining factor will be where the policy is written. Is it not the case that in the United States, for example, the giant insurance companies have a uniform scale of fees and that fees are not determined according to the state in which a resident lives or carries out business?

The Deputy is wrong in saying that I suggested that the determinant will be where a policy was written. That is not the case. The determinant is where the risk arises. In this instance, the risk arises in Ireland. As far as compensation and damages awards are concerned, Ireland is an abnormally high-cost country. Therefore, it does not matter where a policy is written. The principal determinant is where the risk arises and what the cost of meeting that risk will be when the contingency arises.

The Minister referred to legislation likely to be introduced by his colleagues, the Minister for Justice and the Minister for the Environment. Does he foresee a position where he in his own Department might introduce legislation that would have a beneficial effect for the consumer? The Minister also referred to the unconstitutionality of placing limits on awards. In the context of the Maastricht Treaty and future years, does the Minister envisage that difficulty remaining?

The Deputy will be aware that, at the moment, the relatinship between the Maastricht Treaty and the Irish Constitution is one of great delicacy.

I knew that the Minister would be interested.

It might be better if we did not go into the issue in detail. I do not recognise a way in which the Maastricht Treaty could overcome the difficulty I adverted to, the difficulty might be overcome in a Federal European State, if we ever get to the stage, but I do not think that can happen just now.

In relation to legislation, the appropriate areas fall within the jurisdiction of the Minister for Justice and the Minister for the Environment. There is really no legislation I can introduce that would solve the problems.

What about competition?

There is no lack of competition among insurance companies in Ireland.

It is a problem of efficiency.

As Deputies will realise, the insurance sector is not an attractive market. My greatest fear is that several companies, particularly some of the bigger ones, might disappear from the market altogether and there would be even less competition.

That must be the end of questions for today. I am sorry that certain Deputies present have not had their questions answered.

I must make my views known. Question Time has deteriorated into a farce. It is not your fault, a Ceann Comhairle, but only ten questions have been answered today and some extremely important questions were not reached. I ask you to use your discretion to ensure that something is done to break this unsatisfactory impasse.

The Chair does his best in these matters.

I have a question — No. 12——

I have no control over Ministers replies. I strive earnestly to curtail Deputies and to encourage an element of brevity. That is difficult to achieve. I share the Deputy's disappointment.

My Question No. 12 involves the future of 2,500 jobs. That question has not been answered. The problem may have escalated considerably by the time I get a chance to raise the issue.

It would be only fair to say that there are ways other than Questions for Deputies to raise matters in the House.

That is not so easy.

I should like to make it clear that in no way am I seeking to avoid answering questions. I have done a great deal of work preparing answers to 39 questions today; I am happy to answer all of them. Unfortunately, I have been asked many supplementary questions. If I had declined to answer them I would have been criticised by Members of the House.

I am not saying a word against the Minister for Industry and Commerce. The system is chaotic and something will have to be done to rectify it.

The House is supreme in such matters. If Deputies wish to amend the procedures governing Question Time I shall be happy to comply with decisions made. In the meantime, we must proceed.