Vol. 490 No. 2
76 Mr. O'Shea asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on whether it is fair and equitable that young drivers who, in general, are buying less valuable cars, are paying a very high level of insurance and also a very high level of Government levy as compared to more mature drivers; the proposals, if any, she has to rectify this apparent inequity; and if she will make a statement on the matter. [9993/98]
Many different underwriting factors are used by insurers in assessing the amount of premium payable by all the various motor insurance risk categories, including age of vehicle, type of vehicle, the value of the vehicle and the applicable horse power level, etc. However, the high cost of motor insurance encountered by young drivers is not solely determined by common vehicle assessment factors, but is related mainly to their relatively poor accident and third party claims experience.
Globally insurers tend to classify young and/or inexperienced drivers as a high insurance risk category relative to the more mature and/or experienced driver. The adverse statistical facts, in terms of claims frequency and cost, regarding the young driver category of motorist have been cited many times in the House.
Logically the key to reducing insurance premiums for young drivers is to raise their standards of safe driving. The raising of such standards is not only in the interests of young drivers themselves, but in the wider interests of the community at large, which suffers the consequences of unsafe driving by young motorists.
As I mentioned in my reply on 18 February last, a number of initiatives have been taken to improve driving standards and safety awareness among young drivers. These include the introduction of a scheme of insurance premium discounts by the insurance industry, in conjunction with the driving instructors register, on completion of a required number of driving lessons; the introduction of road safety educational programmes for students and advertising campaigns by the National Safety Council to discourage speeding; and the ongoing examination by the Department of the Environment and Local Government of a graduated licensing system for learner drivers. Such a system would, I believe, assist insurers in refining and segmenting the young driver market in a more scientific manner.
After negotiations which I initiated after coming into office, Guardian PMPA, the leading motor insurer, recently announced the introduction of a special 6 per cent introductory discount for young male drivers aged 17 to 24 years who currently receive a nil no claims discount, with reductions also being given to young female drivers. Hibernian Insurance Company subsequently announced a similar scheme.
I will also shortly be re-establishing the Motor Insurance Advisory Board to inquire into premia and loadings in motor insurance and to advise me on the charges for motor insurance as between different risk categories of drivers, having regard to the claims structure in each category.
It is relevant to point out that concessions to young drivers have been introduced against the background of increasing underwriting losses in motor insurance. The 1996 annual insurance report prepared by our Department showed that motor insurance underwriting losses increased from £41 million in 1995 to £90 million in 1986. The deteriorating underwriting situation has led some insurers to announce increases in certain insurance categories in 1998.
