Dáil Éireann debate -
Wednesday, 1 Dec 1999

Vol. 512 No. 1

Written Answers. - Motor Insurance.

John McGuinness

Question:

125 Mr. McGuinness asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps, if any, being taken to open up competition in the car insurance market in view of the ever increasing cost of insurance to young drivers in particular; the Government's policy in this area; and the EU directives, if any, which will assist or encourage competition in this area. [25631/99]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

The Deputy will be aware that a number of initiatives have been undertaken to identify the underlying causes of motor insurance costs in Ireland, including the high cost of insurance for young drivers. A major report on the economic evaluation of insurance costs completed by Deloitte & Touche in 1996 indicated that there was no uniform market price for motor insurance due to factors such as differing assessments of claims histories by insurers, strategies towards niche markets, specialisation and segmentation of the market. Within these parameters, motor insurers quoted widely different premiums for similar risks and this is characteristic of a competitive market.

It would appear that the implementation of EU legislation, opening up the EU market to competition from all European insurers, has had a beneficial effect on competition in the Irish market. More recently, the abolition of the cap on brokers commissions should introduce further competition into the market.

While mature drivers with good safety records benefit from competition between insurers, in particular segments of the motor insurance market, the Deloitte & Touche report found that young drivers were regarded as a high risk cate gory. It is abundantly clear that the primary focus of initiatives aimed at reducing the cost of motor insurance to young drivers must be on reducing the frequency of accidents and the associated cost of claims. 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 gardaí, continues to promote anti-speeding and anti-drink driving media campaigns including road safety educational programmes for secondary school students.