Motor insurance premia are normally based on underwriting experience including trends in the level, frequency and cost of claims for particular risks and classes of risk and are a matter of judgment by individual private insurance companies. Any changes in circumstances affecting the risk insured would have to be assessed by the insurer from an underwriting standpoint. The premia charged and the availability of a quote will reflect any material increase in the risk.
In the light of normal practice in this regard, I was surprised by the recent press reports concerning some insurance companies declining to quote for business in certain parts of the country. Accordingly, I requested our Department to urgently seek clarification on the issue. The company concerned assured the Department that it was continuing to quote for new business throughout the country but that, from time to time, there may be specific individual cases where a quote may not be forthcoming. In cases of refusals to quote for motor insurance, the declined cases agreement between the Minister for Enterprise, Trade and Employment and the Irish Insurance Federation offers the motorist the opportunity of a motor quotation subject to certain criteria. I have asked our Department and the Motor Insurance Advisory Board to continue to monitor the situation in the public interest.
The cost of insurance is primarily related to insurance claims experience. The relatively high cost of insurance for young drivers is directly related to their adverse claims experience as a risk category. The 1996 Deloitte & Touche report on an economic evaluation of insurance costs found that the average cost of an insurance claim for 17-24 year old drivers is twice that for the 36 to 40 age group and that motorists in the 17-24 age group are responsible for over three and a half times the total average claims costs incurred for motorists in the 36 to 40 age group.
The previous Motor Insurance Advisory Board survey of 1993 found that under both comprehensive and non-comprehensive cover, the frequency and cost of claims for the 17-24 age group was significantly higher than in the higher age categories.
It is abundantly clear that the primary focus of initiatives aimed at reducing the cost of motor insurance must be on reducing the frequency of accidents and the associated cost of claims. The key, therefore, to reducing insurance costs for young drivers is to create appropriate conditions for improving their standards of driving and their appreciation of road safety.