Written Answers. - Motor Insurance.

Charles Flanagan

Question:

88 Mr. Flanagan asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the practice among insurance companies wherein payment is made by way of direct debit by the policyholder following the first payment of which the annual insurance certificate issues but should the policyholder default on subsequent payments, the policy is cancelled giving rise to a situation where valid certificates no longer can be regarded as proof of cover; and the steps she proposes to take to deal with this matter. [7006/01

I understand that direct selling by telephone of motor insurance cover has become a feature in recent years and that payment by direct debit has become more common. This is often a convenient method of payment for the policyholder. For many young motorists, in particular, a periodic payment method may be the only affordable means of obtaining insurance cover. Many motorists who accept a quotation over the phone and enter into a direct debit agreement, may later experience difficulties in meeting payment instalments.

Insurance cover is only granted by insurance companies, subject to the applicant complying with certain criteria such as verification of his/her personal details, status of no claims bonus or claims record. In the event that the client fails to produce documentary verification within a set period or more commonly, where the client fails to maintain periodic payments, the insurer may withdraw cover. In such circumstances, the insurer is required to issue a seven day cancellation letter, in order to comply with the road traffic legislation. I understand that the Department of the Environment and Local Government and the Garda are notified of the details of each cancellation. In all cases where cancellation clauses are effected by insurance companies the return of the insurance certificate and insurance disc are requested by the companies and the policyholder is informed that this is a legal requirement.