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Dáil Éireann debate -
Thursday, 4 Nov 1999

Vol. 510 No. 2

Written Answers. - Motor Insurance.

Michael Bell

Question:

46 Mr. Bell asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that some motor insurance companies are declining to quote for business from motorists living in certain parts of the country and motor insurance premiums for male drivers in their early 20s are likely to exceed £4,000 shortly; the proposals, if any she has to ensure that motor insurance is available to all motorists at an affordable price; and if she will make a statement on the matter. [21985/99]

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.

A number of initiatives are in place and are being taken to improve driving standards and safety awareness amongst all drivers including young drivers. The Irish Insurance Federation, in conjunction with the Driving Instructors Register, has introduced a scheme of insurance premium discounts for the young driver on completion of a required number of driving lessons. The National Safety Council, in co-operation with the Garda, continues to promote anti-speeding and anti-drink driving media campaigns including road safety educational programmes for secondary school students. I have also exhorted our colleague, Minister for Environment and Local Government, Deputy Dempsey, to expedite his Department's examination of a graduated licensing system for learner drivers based on the Ontario model which, I believe, could have a significant impact if introduced here.
My re-establishment of the Motor Insurance Advisory Board was a major initiative aimed at providing us with information and advice on trends in motor insurance costs and with policy recommendations for addressing those costs. The expanded membership of the new board, which includes a member representing young drivers' interests, is broadly representative of all of the interests concerned including road safety and enforcement experts.
There is clearly no soft option for reducing motor insurance premia for young inexperienced 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 premia can only be achieved by improved safety standards. In the case of young Irish motorists, the inculcation of safer driving standards and education in driving skills and the early acquisition of a driving licence, is the key to reducing their high accident rate which, in turn, should lead to lower premium quotations.
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