Vol. 524 No. 1
11 Mr. Connaughton asked the Tánaiste and Minister for Enterprise, Trade and Employment the measures she plans to put in place to deal with escalating motor insurance costs; and if she will make a statement on the matter. [21640/00]
14 Mr. Ring asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans she has to introduce measures to reduce the cost of motor insurance for young drivers; and if she will make a statement on the matter. [21663/00]
58 Mr. Callely asked the Tánaiste and Minister for Enterprise, Trade and Employment the options available to her to address matters relating to the cost of car insurance; the issues that have been taken into consideration in this regard on the cost of car insurance for people under 30 years of age; and if she will make a statement on the matter. [21247/00]
I propose to take Questions Nos. 11, 14 and 58 together.
The high cost of motor insurance in Ireland is directly attributable to the cost and frequency of claims incurred by insurance companies in settlement of claims following road accidents. This factor is especially relevant to young drivers whose adverse claims experience contributes to their consideration by motor insurance companies as a high risk category. The National Roads Authority accident facts report 1998 showed that 40% of drivers killed or seriously injured on our roads were between the ages of 18 and 34.
EU law prevents me from intervening directly with insurance companies in the matter of premium levels or in respect of the risks that they are prepared to underwrite. It is abundantly clear that the primary focus of initiatives, aimed at reducing the cost of motor insurance for motorists, including young drivers, must be on reducing the frequency of accidents and subsequent claims. There are a number of such initiatives in place. For example, the Irish Insurance Federation, in conjunction with the Driving Instructors Register, has introduced a scheme of insurance premium discounts for the learner driver on completion of a required number of driving lessons. The National Safety Council, in co-operation with the Garda Síochána, continues to promote anti-speeding and anti-drink driving media campaigns. Greater attention to safety on our roads can further reinforce insurance cost reduction measures at Government level. The work of the Motor Insurance Advisory Board is aimed at providing me with information and advice on trends in motor insurance costs and policy recommendations for addressing these costs.
The most effective way to ensure the most competitive quotes are available to the consumer is to have as many insurers as possible competing in the market. It appears that the implementation of EU legislation opening up the EU market to competition from authorised insurers in all member states has had a beneficial effect on competition in the market.
I wish to ask the Minister of State a simple question. We are all appalled at the carnage on our roads and the overwhelming involvement of young drivers. When will the Government move on the penalty points system? Insurance companies point the finger fairly and squarely at the Government. This will be an important measure in restoring sanity on our roads.
I am delighted the Deputy is in favour of a penalty points system. Consensus in the House would expedite consensus across the nation on the issue which is being considered by the Minister of State at the Department of the Environment and Local Government, Deputy Molloy. Tremendous work is being done by the unit under his control. Various measures are being considered. There are many actors involved, including the Garda Síochána, the Department of Justice, Equality and Law Reform, the Department of the Environment and Local Government, the National Roads Authority and many others.
And the Minister of State.
We must ensure that the system that is introduced is fair, sustainable and legal. Many measures are being considered.
The Minister of State mentioned the Driving Instructors Register which provides an insurance discount. What is the net benefit to a young driver in undertaking the Driving Instructors Register programme? Taking into account the cost of the programme, there is a loss of £50. What recommendations has the MIAB made to the Minister of State on a reduction in the cost of motor insurance to young drivers?
I congratulate the Deputy on his appointment to the Front Bench and wish him well in his new position. To say that there is a loss of £50, taking the cost of lessons into account, is to adopt a narrow focus in assessing the net benefit. A more confident and assured young person in control of a mechanically propelled vehicle will pose less risk and contribute to the protection of other motorists and road users, be they pedestrians or cyclists. It is a good initiative which must proceed and which we must endorse. The Motor Insurance Advisory Board is doing excellent work. It comprises, among others, representatives of the insurance industry, the National Roads Authority, the various Departments involved, the haulage business, the motor trade and young drivers. I am awaiting its final recommendations.
Is the Minister of State familiar with the protests taking place in Dublin and Cork by young drivers who cannot gain access to motor insurance cover? There was such a protest outside the House a couple of days ago. Law abiding young people who need access to a motor vehicles to go to work cannot get insurance.
Is the Minister of State familiar with the sheaf of correspondence I received today on behalf of the Oireachtas Select Committee on Enterprise and Small Business? It includes a letter from his colleague, Deputy O'Flynn, saying he had attended such a meeting in Cork last week and was appalled to find that young drivers were being asked to pay premiums of £4,000 and £5,000 to get insurance cover, that this is a breach of the republican cornerstone of Fianna Fáil of equality for all and that these young drivers—
Did he say that?
Yes.
I would like a copy of his letter.
Am I to take it that Deputy O'Flynn did not write to the Minister of State responsible?
That question is not appropriate for Question Time.
He may have. There was a great deal of correspondence on my desk this morning.
I am reassured he has written to the Minister of State responsible, because otherwise one might have thought he was playing games and I know he would not do that. What is the Minister of State's reply to the point raised by Deputy O'Flynn that young drivers cannot get insurance cover?
If I could have resolved this issue yesterday, last week, last month or last year I would have done it. I have given the issue a huge amount of time. I have had discussions and negotiations with insurance companies, people in the industry, the Motor Insurance Advisory Board, the Garda Síochána and many others. We are doing our utmost to see if anything can be done to resolve this.
I am fully aware it is a sad situation that young people can be charged up to £6,500 for motor insurance cover. That is very serious. What can we do? We need a consensus that everybody is prepared to support the introduction of reasonably tough measures to help to ensure that if people are expected to behave in a particular way and if criteria are applicable, the insurance industry may respond by taking that into account and provide cover.
We have looked at schemes, such as the smarts car scheme, whereby a two seat car with a small engine would have a limited capacity and performance. The Ontario model for young drivers is under consideration by the Department of the Environment and Local Government and my Department. If we bring all on board, including the driver testers, we hope to make progress. It is extremely complex.
No insurance company in Ireland today will underwrite motor insurance at a profit. As Minister of State with responsibility for commerce, I have a responsibility – as did Deputy Rabbitte – to ensure that there is a liquidity ratio within those companies and that they can discharge their obligation against claims made. I must balance that against the needs of the consumer and those looking for insurance cover. The companies must write off those losses against the profits they make on their investments. That is a very serious situation and it illustrates how precarious it is.
The market is very small and many accidents involve young people between the ages of 17 to 24 years. The average cost of a claim for them is twice the cost of a claim for drivers from 35 to 40 years of age. The mature driver has fewer accidents and is a lower risk. We must find a formula to ensure that young people can get cover at a reasonable price for a reasonable type of motor car that is not overly powerful. We need consensus to achieve it and a great deal of co-operation from many people. It will not be easy. I will not make false promises in the House. I will do my best as quickly as I can to make progress.
Will the Minister of State make any promises?
I promise to do my best.
The Minister of State has again demonstrated he is very long on words on this issue, but there has been no action. Can he give any indication that he has an idea when car insurance will become affordable for young people? Does he intend to implement any plans during the remainder of his term of office?
I hope I am both long on words and action. That is my desire as a politician and a public representative. I established the Motor Insurance Advisory Board, which brought together for the first time every organisation and interest involved in motor insurance. Some 70 different personnel and organisations are involved in that to try to achieve progress. I want all together to make progress on an equitable basis.
When?
I am awaiting the final report from the board and when I get it I will consult the Minister and we will see what we can do to make progress.
Is the Minister saying, in response to the question tabled on measures being taken to reduce the cost of car insurance for young drivers, that his only interim solution is for young people to take the DIR course, so that instead of paying £4,500 for insurance they pay £4,550? For the past three or four years members of the Fianna Fáil parliamentary party have been talking about the Ontario system. When will there be any movement on it and how long must we wait for the Government to take any decision or pro-active stance on training young drivers, encouraging them to be safer on the roads and reducing their insurance costs? The Minister of State is three years in office. Must we wait for another three, six or nine years?
That will not happen.
I hope we will have much progress to report before June 2002, when the next general election is due. I cannot say when exactly we will make it. Deputy Naughten said the Fianna Fáil Party has failed to act in this area. The former Minister for the Environment, Deputy Michael Smith, introduced serious measures relating to speeding and drink driving to attempt to reduce speeding. We know the support he got for that, both in this House and across the country. The Minister of State at the Department of the Environment and Local Government, Deputy Molloy, has continued along the same lines. We are continually working together as a team—
Why not enforce the speed limits or the law on wearing seat belts?
—to make a conclusive Government effort to effect a reduction in the cost of motor insurance. If it was easy it would have been done long ago. It is not an easy issue. We will continue to do our best.
The Minister of State says he is doing his best. We all painfully regret the pointless loss of young lives to the extent we have experienced recently on our roads. What can the Minister of State say to the tens of thousands of law abiding careful young people who need a vehicle to access their employment and who cannot get insurance cover? After all the talk here we have not got one practical proposition.
What did the Minister of State mean when he said if we had consensus in the House it would speed up the implementation of the penalty points system? Nobody in the House has opposed it. It is an administrative question of when the Government will implement it.
This is an acute problem. It is fantastic that young people who previously had to emigrate are working in the economy, but they cannot get to work because they cannot get affordable insurance cover.
Will the Minister of State confirm that this year and last year the Department of the Environment and Local Government, which has overall responsibility for road safety, has revised its 1997 targets downwards because it is unable to meet its commitments in its document, which does not even touch on the issue of training young drivers or reducing the cost of insurance for them? Is it the case that he will go it alone on this matter? When will he get the report from the MIAB and will he take action when he receives it?
If it was a matter of going it alone I would have done it in October 1997. It is not possible to go it alone. I depend on the industry to give the cover, on the Garda to implement the law, on the Department of the Environment and Local Government to have certain regulations in place and on the NRA to make improvements in certain areas, including making changes to traffic, speed limits and so on.
The young drivers divide into four segments. The highest risk includes those aged 17 to 19 years, the next highest risk includes those aged 19 to 21 years, the next highest includes those aged 21 to 23 years and the least highest risk are those aged 23 to 25 years. There are serious losses in terms of human life and insurance underwriting in the lower end of those segments.
We are doing our best. I welcome the evidence of consensus here. I am trying to achieve consensus with all the different interests, players and actors who are deeply involved in this area. When I achieve consensus on which we can make progress, I will be delighted to tell the Deputy. We are doing our best. We do not have a panacea for this serious and complex problem but we will continue to do our best.
We want action, not consensus.
I appreciate that.
Written Answers follow Adjournment Debate.
