Written Answers. - Motor Insurance.

Jack Wall

Question:

109 Mr. Wall asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the major increase in car insurance for all vehicle owners; if her attention has further been drawn to the fact that young drivers are being charged exorbitant premiums which do not logically reflect the insurance premium or value of the vehicle being insured; her plans to rectify the matter; and if she will make a statement on the matter. [10750/03]

I am very much aware of the high cost of insurance in the State and I am concerned about the difficulties this is causing for many people, including young drivers.

On 25 October last, I announced my programme for fundamental insurance reform. The programme reflects the commitments given in An Agreed Programme for Government and comprises a comprehensive set of inter-related measures designed to improve the functioning of the Irish insurance market. The key measures include: establishment of a ministerial committee, chaired by myself, to oversee implementation of the reform programme, including the 67 recommendations in the Motor Insurance Advisory Board, MIAB, report. This committee meets on a monthly basis; publication of the action plan to give effect to the MIAB recommendations within a target timeframe. This report was published last October. A number of the recommendations have already been implemented, some by the insurance industry and some by the relevant Government Departments. Progress on the other recommendations is continuing; publication of the report of the implementation group on the PIAB. This report was published last October; establishment of the Personal Injuries Assessment Board, PIAB, on an interim basis. The chairperson and ordinary members of the interim PIAB board were appointed on 27 November 2002. Agreement on the initial drafting of legislation to put PIAB on a statutory basis has been reached and the general scheme of the Bill for the establishment of the PIAB on a statutory basis is intended to be published around the summer of 2003, after Government has given approval for drafting.

I am committed to bringing about improvements in the functioning of the Irish insurance market. My Department, in conjunction with the Competition Authority, is undertaking a joint study into insurance. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. It is envisaged that the bulk of the work will be completed this year and that a report will be produced in the early part of 2004.
While EU law precludes the imposition of price controls on insurance, I have made it clear that I expect a quid pro quo from the insurance industry, in the form of reduced premiums, in response to the reform programme. The insurance industry's response will be carefully monitored. The acid test will be the impact felt in the consumer's pocket. In this regard, it is heartening to note the recent reported comments from a number of the major motor insurers here that further increases in premiums may not be necessary at present and, in one case, that they have already reduced premiums since the beginning of this year. As implementation of the measures contained in the reform programme continues, I would expect this trend to continue.