Vol. 502 No. 4
30 Mr. Naughten asked the Tánaiste and Minister for Enterprise, Trade and Employment the discussions, if any, her Department has had with other Departments regarding the cost of car insurance for young drivers; the proposals, if any, she has in this regard; and if she will make a statement on the matter. [7807/99]
The Deputy may be aware that I have spoken to the House on many occasions on the subject of the relatively high motor insurance burden borne by young drivers. I would refer again to the 1996 Deloitte & Touche report on insurance costs and its findings that universally motor insurance costs are high for all young drivers, relative to rates charged to more mature motorists. Adverse statistical facts of a detailed nature relating to claims frequency and claims cost for young drivers have been noted and enumerated in the House, and it is evident from available data that the key to reducing insurance costs for young drivers is to improve their standards of driving and their appreciation of road safety.
As I mentioned in previous replies, a number of initiatives have been and are being 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 and the introduction of road safety educational programmes for students and advertising campaigns by the National Safety Council to discourage speeding. I have also exhorted my Government colleague, Deputy Noel Dempsey, Minister for the Environment and Local Government, to pursue his Department's examination of a graduated licensing system for learner drivers.
In addition, I have re-established the Motor Insurance Advisory Board which is to advise me on the charges for motor insurance and the methods for providing motor insurance between different risk categories of drivers having regard to accidents and claims. The expanded membership of the new board, which includes a member representing young drivers' interests, a Garda representative and members nominated by the Departments of Justice, Equality and Law Reform and the Environment and Local Government respectively, is broadly representative of the consumer, insurance user, and road safety and departmental interests.
Certain concessions to young drivers have been introduced by major insurers in the Irish market against the background of increasing underwriting losses in motor insurance. The 1997 annual insurance report prepared by our Department showed that motor insurance underwriting losses increased from £90 million in 1996 to £114 million in 1997. The deteriorating underwriting situation has led some insurers to announce increases in certain insurance categories in 1998. In those circumstances, any reductions or discounts offered to young drivers must effectively be subsidised by lower risk categories of motorists. It does not make good commercial sense, nor is it equitable, that safer drivers should subsidise less responsible drivers. That simply reduces the incentive for safe driving among all classes of motorists, leading to increased claims costs and a progressive deterior ation in the insurers' underwriting account. The end result is that average motor insurance premiums in the economy will operate at a higher level than would otherwise obtain if the principle of risk based premium setting is strictly applied to all motor insurance categories.
There is clearly no soft option for reducing motor insurance premiums for young drivers. As a group, they represent a very high risk for insurers and many insurance companies are reluctant to quote for that risk. As in any other branch of insurance risk, reductions in premiums can only be achieved by improved safety standards and, in the case of the young Irish motorist, the inculcation of safer driving standards and education in driving skills is the key to reducing their high accident rate which in turn should lead to lower premium quotations.
