Dáil Éireann debate -
Tuesday, 22 Apr 1997

Vol. 478 No. 1

Written Answers. - Motor Insurance.

Mary Wallace

Question:

215 Miss M. Wallace asked the Minister for Enterprise and Employment the steps, if any, he has taken over the past three years to ensure cheaper motor insurance for young people; the success, if any, he has had in this regard; his Department's policy in this regard; and if he will make a statement on the matter. [10810/97]

Ivor Callely

Question:

218 Mr. Callely asked the Minister for Enterprise and Employment his views on the fact that young drivers are categorised by insurance companies as high risk and that insurance premiums for young drivers are extraordinarily high; the proposals, if any, he has to try and reduce insurance premiums for young drivers; and if he will make a statement on the matter. [10534/97]

Minister for Enterprise and Employment (Mr. R. Bruton)

I propose to take Questions Nos. 215 and 218 together.

Insurers on a world wide basis classify young and inexperienced drivers as a high risk insurance category relative to the more mature and-or experienced driver. The availability of insurance cover for the young driver and the level of premiums charged for such cover reflect insurers' claims experience of young drivers as a higher risk category.

In its analysis of young motorists' risk profile, the Deloitte and Touche economic evaluation of insurance costs, commissioned by the Minister of State with responsibility for commerce, science and technology, confirmed that, in a European context, young drivers, as a group, and individual young drivers with poor safety records will have a limited choice of insurers and will face high premium costs throughout the EU. The report found that for the 21 years age group, UK premium rates for comprehensive insurance cover exceeded Irish rates.

Viewing the problem in a strictly Irish context, I understand a survey undertaken by the Motor Insurance Advisory Board in 1993 found that, 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 higher age categories.

The Deloitte and Touche report provided 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 17-24 year old drivers is over twice that for the 36 to age group and that motorists in the 17-24 age group are responsible for over 3½ times the average claims costs of motorists in the 36-40 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. Given all the facts, it is not surprising that young drivers will experience difficulty in obtaining quotations for motor insurance and that insurers, from an underwriting and solvency perspective, must charge high premiums to young and inexperienced drivers.

The Deloitte and 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 that regard, I would draw attention to the specific recommendations by Deloitte and Touche in relation to the possible introduction of a graduated licensing system for learner drivers on the lines of an Ontario model. I understand that 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 co-operated with the AA in the launch of an AA drink driving video aimed at young drivers. I would also point out that 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.

While the benefits of the above measures may not impact on motor insurance costs for young drivers in the short-term, I note that, in their recent adjustments to their motor insurance rates, the Hibernian group, the second largest under-writer in the Irish motor market, has incorporated 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 offer a no claims bonus incentive to reward such claims free driving. This initiative by the Hibernian group is a welcome development and perhaps the first indication that the series of initiatives I have listed above will, in the course of time, impact favourably on motor insurance premiums for young drivers. The Hibernian group's initiative, in particular, is a positive step and one which I hope will be followed by other motor insurers in the Irish market.