Dáil Éireann debate -
Thursday, 10 May 2001

Vol. 536 No. 1

Written Answers - Car Insurance.

Noel Ahern

Question:

52 Mr. N. Ahern asked the Tánaiste and Minister for Enterprise, Trade and Employment the reason the State requires car insurance but does not police or control the providers of insurance; the difficulties and problems facing the State in this regard; the EU laws, if any, which prevent action on the matter; the action being taken to prevent churning by insurance providers; her proposals to make insurance cover available to your drivers at more reasonable prices, and if she will make a statement on the matter. [13430/01]

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

Motor insurance is compulsory in accordance with road traffic legislation, for which our colleague, the Minster for the Environment and Local Government, has responsibility. The Department supervises insurance companies, from the overall financial solvency perspective in accordance with EU directives. Since the abolition of price controls in 1986, there is no longer a domestic statutory requirement on the industry, to seek prior approval of, nor are insurers required to justify, price increases to our Department. Furthermore, prior approval or systematic notification of scales of premiums is also prohibited by domestic insurance legislation – S.I. No. 359 of 1994 – which gives effect to the Third Non-Life Insurance Framework Directive. That directive was adopted by the EU, as part of the completion of the Internal Market, some years ago. Our Department has therefore no function in relation, to either prior approval, or prior notification, of price changes; nor can our department intervene, in particular underwriting decisions, by insurance companies, in this country.

Insurance price movements are normally based on underwriting experience, as well as trends in the level, frequency and cost, past and potential, of claims, and are a matter for judgment by individual private insurance companies. Decisions on the risks, that the companies are prepared to underwrite, are also a matter for the companies themselves. The primary focus of initiatives, aimed at reducing the cost of motor insurance for young drivers, must be on reducing the frequency of accidents and the associated costs of settling the consequent claims. The decision of this Government to establish a personal injuries assessment board, by next year, is being pursued by an implementation group. The Motor Insurance Advisory Board will be reporting towards the end of this year. I will take whatever further action is appropriate towards the reduction of the cost of motor insurance, after we have received and subsequently examined the report.