Written Answers. - Motor Insurance.
John Gormley
Question:
75
Mr. Gormley
asked the
Tánaiste
and Minister for Enterprise, Trade and Employment her views on whether it is reasonable that drivers under 25 driving on a provisional licence should have a loading fee of approximately £950 on their car insurance in view of the fact there is a waiting period of ten months for a driving test; and if she will make a statement on the matter.
[22891/99]
John Gormley
Question:
76
Mr. Gormley
asked the
Tánaiste
and Minister for Enterprise, Trade and Employment her views on whether it is reasonable that young people under the age of 25 and driving on a provisional licence should have to pay in the region of £1,500 to £2,725 for car insurance; and if she will make a statement on the matter.
[22892/99]
John Gormley
Question:
77
Mr. Gormley
asked the
Tánaiste
and Minister for Enterprise, Trade and Employment her views on whether car insurance for those under 25 is a case of discrimination on age grounds in view of the fact the penal cost of insurance is leading to social exclusion in many cases and a provisional licence charge is adding to the financial burden of many young rural people; and if she will make a statement on the matter.
[22893/99]
John Gormley
Question:
78
Mr. Gormley
asked the
Tánaiste
and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that car insurance companies are loading young drivers with a provisional licence charge and an age of insured charge; her views on whether these charges are discriminatory; and if she will make a statement on the matter.
[22894/99]
I propose to take Questions Nos. 75 to 78, inclusive, together.
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 3.5 times the total average claims costs, incurred for motorists in the 36 to 40 age group.
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.
The previous motor insurance advisory board survey of 1993, found that under both comprehensive and non-comprehensive cover, the frequency and cost of 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, among 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, the Minister for the 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 in Ireland.
My re-establishment of a much re-vamped 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, including those on provisional licences. As a group, they represent a very high risk for insurers and many insurance companies are reluc tant 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, 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.
