Vol. 476 No. 1
6 Mr. Callely asked the Minister for Enterprise and Employment his views on the cost of motor insurance to people under 30 years of age; the loadings which are likely to be applied in this regard; the categories to which they are likely to be applied; the measures, if any, he has considered to address this situation; the measures, if any, he will introduce in 1997 to help reduce the high cost of motor insurance; and if he will make a statement on the matter. [6070/97]
96 Mr. Ellis asked the Minister for Enterprise and Employment the action, if any, he proposes to take in relation to the provision of insurance for young drivers in view of the fact that insurance is being offered in Northern Ireland as a perk towards the sale of new cars to drivers from 17 to 80 years of age. [6414/97]
102 Mr. Callely asked the Minister for Enterprise and Employment if he will give details of the studies and other such reports, if any, available to him on the high cost of motor insurance for young people; the recommendations, if any, arising out of such reports; the measures which are required to curtail the high cost of insurance; and if he will make a statement on the matter. [6420/97]
103 Mr. Callely asked the Minister for Enterprise and Employment the average cost of motor insurance for young people in Ireland; if he will give comparative figures for our EU counterparts; and if he will make a statement on the matter. [6421/97]
I propose to take Questions Nos. 6, 96, 102 and 103 together.
Insurers worldwide tend to classify young and/or inexperienced drivers as a high insurance risk category relative to the more mature and/or experienced driver. The degree of risk tends to decrease with age and maturity and the level of premiums charged to young drivers reflects the insurer's claims experience of such drivers as a higher risk category. Accordingly, as a general rule, they will pay more for insurance cover, although there may be exceptions depending on the circumstances of each individual case.
In analysing young motorists' risk profile, the Deloitte & Touche consultancy report on insurance costs in Ireland confirmed that, in a European context, young drivers as a group and individuals with poor safety records will have limited choice of insurers and face high premium costs throughout the EU. Indeed, the Deloitte & Touche report found, in its survey of motor insurance premium levels, that for the 21 years age group, UK premium rates for comprehensive insurance cover exceeded Irish rates.
The Deloitte & Touche report concluded that the inculcation of safer driving standards in young drivers and education in driving skills is the key to reducing their high accident rate and to obtaining lower premium quotations. In this regard, I draw the Deputy's attention to the specific recommendations by Deloitte & Touche in relation to the possible introduction of a graduated licensing system for learner drivers similar to a model in force in Ontario. My colleague, the Minister for the Environment, is to undertake an examination of the Ontario model in the context of current law and practice in Ireland. The Department of the Environment has also cooperated with the AA in the launch of an AA drink driving video aimed at young drivers.
An insurance incentive scheme has been established by agreement between the Irish Insurance Federation and the Driving Instructors Register whereby insurance discounts will be offered to young drivers who have completed an agreed number of driving lessons over a calendar year. The National Safety Council is also working to produce course material on road safety to fit in with the new primary school curriculum and has recently adopted a five year road safety programme which includes the development of educational material in 1998 for transition year students in secondary schools. Some schools are also offering driving training courses on a commercial basis.
In relation to the incentive of free insurance on the purchase of new cars in Northern Ireland, this is a marketing matter concerned with the determination by motor traders to increase the sale of new cars rather than any benevolent attitude on the part of insurers in that jurisdiction. With regard to the reports and studies on the cost of insurance for young drivers, a survey undertaken by the Motor Insurance Advisory Board in 1993 found that, in the age groups examined — 17-24 years, 25-30 years and over 30 years — under both comprehensive and non-comprehensive cover, the frequency and average cost of claim in the 17-24 age group was significantly higher than in the other age categories.
The Deloitte & Touche report on an evaluation of insurance costs in Ireland provides further evidence of the high cost of claims associated with the young driver. The consultants found that the average cost of an insurance claim for a 17 to 24 year old driver is over twice that for a 36 to 40 year old driver and that motorists in the younger age group are responsible for over 3.5 times the claims costs of motorists in the 36 to 40 age group. In addition, the National Roads Authority annual report of 1995 indicated that almost 38 per cent of the motorists involved in fatal and personal injury accidents in 1995 were young drivers and that 41 per cent of the road casualty victims in 1995 were between the ages of 18 and 34 years. Given the facts, it is not surprising that young drivers may experience difficulty in obtaining quotations for motor insurance and that from an underwriting and solvency perspective insurers will quote relatively high premiums to young and inexperienced drivers.
Generally, a young person with a provisional licence and little driving experience can expect to pay a premium in the region of £1,550, although given the number of different conditions and/or loadings which may attach to such policies and other individual circumstances, some young people may pay more and some may pay less than this amount.
In this regard, it may interest Deputies that quite recently, the Hibernian Group carried out a reassessment of young drivers' insurance risk profile resulting in a new insurance scheme which will take into account a young motorist's claims-free experience as a named driver on his or her parents' motor insurance policy and a no claims bonus incentive will reward such claims-free driving.
I am disappointed with the Minister's reply. I asked him the loadings to be applied, the measures required to curtail the high cost of insurance, the comparative figures for our EU counterparts — he referred to the UK only — and the measures to be introduced in 1997 to help reduce the high cost of motor insurance. The Minister failed to answer these questions. He also misled the House by saying that the cost of premiums for provisional licence holders is £1,550——
I ask the Deputy to reconsider his allegation that the Minister of State misled the House.
He was wrong to say the cost is £1,550. I say this because earlier today I rang two insurance companies to find out the loadings and premium for a person under 25 years of age with a car valued at less than £2,000. The premium quoted by both companies was in excess of £2,500. The Minister is aware——
The Deputy is embarking on a speech rather than asking questions.
The Minister is aware of the loadings on males up to the age of 30 years and on females up to the age of 29 years.
The Deputy is giving information rather than seeking it.
Loadings are also applied to Dublin and other areas. What steps will the Minister take to address these issues?
We are living in nervous times but there is no need to get excited——
Is the Minister saying we should stop driving?
No, I am saying that mammy is out of the House and the young Deputies in Fianna Fáil should behave or I will complain them to her. The charges that I misled the House etc. are wildly exaggerated.
The Minister of State would never do that.
What about the letter that was supposed to rock the foundations of the State?
I did not select the UK, rather I instanced the European context. I went to great pains to give Deputy Callely a detailed and comprehensive reply. In any event it seems that the Deputy is particularly well informed. The information I gave was compiled by the officials in my Department who work in this area on a full-time basis and who went to the trouble of consulting the Insurance Industry Federation and individual insurers. The claims pattern for young drivers under 30 years of age reflects the number of accidents.
In other words, that is the end of the story and we should put the lid on it.
I am amenable to considering suggestions from the Deputy on what I should do about this matter. However, I would like to know if he is challenging the claims pattern——
The Government is anti-Dublin at present and there is a Dublin loading.
Let us hear the Minister of State's reply.
I do not know to what the Deputy is referring. I have given a comprehensive reply but if the Deputy has proposals in this area I will consider them on their merits.
My question deals with the issue of major concern to people in my constituency, that is, the provision of free insurance for two years to people on the other side of the Border who buy cars. Some of the companies which provide this cover also operate in the South. We supported the introduction of the derogation as it was designed to protect the insurance industry but perhaps it is time we had more open competition. Does the Minister intend to open up the insurance industry, particularly the motor sector, so that the incentives offered to motorists in the North can be offered to those in the South?
It is clear from what the Deputy said that he does not accept Deputy Callely's charge that I am anti-Dublin. The incentives being offered in Northern Ireland are a marketing strategy by the insurers concerned.
The insurance companies have to meet——
Let us hear the Minister.
That kind of marketing strategy is probably desirable in Northern Ireland given the conditions which obtain there for a variety of reasons. The increase in car sales in the Republic as a result of our strong economic performance is such that that kind of marketing strategy is not necessary here.
There may be some merit in the Deputy's point about competition. The insurers concerned would argue vigorously that there is cut throat competition in the marketplace but I have an open mind on this issue. Given that we operate in a single market, it will be interesting to see to what extent there is intrusion from outside the jurisdiction to provide greater competition. We will not be able to get away from the underlying statistical relationship between the number of accidents and fatalities in which young drivers are involved and the level of premiums charged.
Will the Minister take action to deal with companies which give three or four quotations to the same individual through different brokers? Depending on the cc of the car and experience, the premium quoted can range from £1,800 to £3,000. Will the Minister introduce measures to ensure companies quote the lowest premium? Because different premiums are quoted through various brokers many people end up paying more in insurance than they paid for their car. It is unbelievable to think that people who buy cars for £1,500-£2,000 can pay double that amount in insurance.
The cost of insurance for young drivers is high and almost prohibitively so in some cases. On this and previous occasions I have sought to explain the reasons for this to the House, that is, the obligation on insurers to provide prudentially for anticipated claims in the future. I am not aware of the phenomenon to which Deputy Ellis referred. Part of competition in the marketplace is that one should shop around to get the best deal. I do not know why the same ultimate insurer would quote different premiums in respect of the same case provided the circumstances are described similarly each time.
There is no proper assessment of applications and it is a case of thinking of a number.
The insurance industry would expect me to say that that is not the case and that because of the risks associated with this category of driver they assess applications in great detail and that while premiums may be high this is not because they are not assessed on their merits.
Last November the cost of insurance was increased by 5 per cent and we are now threatened with a further 10 per cent increase. I take it that the Minister is not satisfied with these increases. Will he appoint an inspector from the insurance section of his Department to investigate this proposed increase and the high cost of insurance?
The Minister said that the number of cars on the road has increased as a result of our buoyant economy. An increase in car sales should lead to lower insurance costs. What is the Minister's view of the recommendations on young drivers in the Deloitte & Touche report and the introduction of a curfew system for young drivers?
I dealt with last year's premium increase on a number of occasions. It is not referred to in these questions but I take Deputy O'Keeffe's point that in an environment of persistent, unprecedented low inflation it is unacceptable that we should be asked to anticipate a further increase this year. I have done precisely as Deputy O'Keeffe requests. I initiated a detailed study in my Department on this issue as a result of the public statement from a particular insurance company to the effect outlined by Deputy O'Keeffe. I am also concerned about the implications of the new transparency requirements arising from a particular EU directive which, for the first time, separates investment income from the normal operational performance. That is being examined also.
On the Deloitte and Touche report, the expert group set up to put in place some of its more important recommendations, specifically the personal injuries tribunal, is well advanced. I understand that work is likely to be concluded before the end of this month. A number of initiatives are suggested in the Deloitte and Touche report relating to the category of young driver, to which I referred in my formal reply. I have been in discussions with the Minister for the Environment who is contemplating the introduction of a number of those initiatives. Some insurers are also taking account of the widespread public concern about the issue the Deputies opposite have raised. I hope progress will be made as a result of those initiatives, but, regardless of who is sitting in this seat, it will not change the underlying statistical facts of life unless we have greater success in terms of inculcation of safer driving techniques among young drivers.
I want to bring this question to a conclusion. I will call Deputy O'Keeffe and ask him to be brief.
Will the Minister agree there is a necessity for the appointment of an inspector from the insurance division to investigate claims for an increase by the insurance companies? Will this matter be investigated thoroughly?
Deputy O'Keeffe misunderstood my reply. That inspection is ongoing and I am about to invite the Irish Insurance Federation to discuss it. I do not wish to say more than that at this stage. The Deputy entirely misunderstood what I was saying.
I notice a change of tone in the Minister of State's replies as more comprehensive questions are put to him. I offer him an opportunity to correct a reply he gave to Deputy Ellis on the comparison between insurance costs here and those in Northern Ireland, the thrust of which seemed to be that the reason there was no competition with regard to insurance costs was because of the number of cars being bought here; in other words, there was no real need for competition in this area. Will the Minister of State clarify that rather dangerous statement?
I did not say that. I said the marketing ruse being used in Northern Ireland to boost car sales was unnecessary in the Republic because of our strong economic performance. Car sales are at an all time high, and presumably insurers consider that a similar ruse, giving away free insurance for two years, is not necessary here. Deputy Ellis referred to a separate matter, namely, that in his view there is inadequate competition among insurers here. I said the insurance industry would argue there is cut throat competition in the marketplace here. I have an open mind on that. We are examining this whole area. I commissioned the Deloitte and Touche report to address some of those questions. There is a broad measure of agreement in terms of the parameters applied by all insurers in respect of this category of young and inexperienced driver, and that is not necessarily a pointer to the absence of competition in the marketplace.
The Minister of State referred in jest to the conduct of the Fianna Fáil boys now that their female colleague has gone. The Minister is not in a position to lecture us about conduct, particularly in the light of recent newspaper reports.
The Deputy should put a relevant question and not refer to personalities.
The reason for the high cost of motor insurance is the loadings applicable. They are based on age, gender, occupation, driving experience and address.
I asked for brevity. Relevant questions, please.
Will the Minister indicate the measures available to him to address the inequality in relation to these loadings? Will the Deloitte and Touche report be published?
Deputy Callely either misunderstood or does not wish to understand the reply I gave which focused on answering that particular point. The loadings are directly related to the connection between young drivers and the incidence of accidents. They are directly related to that phenomenon. The Government can try to create an environment where a greater premium attaches, for example, to safety on roads, better quality of roads, some of the initiatives in the Deloitte and Touche report referred to by Deputy O'Keeffe and to the schemes some insurance companies are taking on. I instanced the Hibernian one which would give some credit to young drivers for their previous record as a named driver on their parents' driving licence. I do not know of a magic solution that will deal with impetuosity in driving terms.
