Vol. 566 No. 2
4 Mr. Hogan asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on whether the objective of reducing the cost of insurance by 31% as outlined in the action plan on insurance will be achieved; and if she will make a statement on the matter. [12536/03]
The insurance reform programme, which I announced on 25 October, comprises a comprehensive set of interrelated measures designed to improve the functioning of the Irish insurance market. I chair a ministerial committee established to drive the co-ordinated implementation of the reform programme across the relevant Departments. Substantial progress is being made on a range of measures that will radically overhaul the functioning of the insurance market here.
I have already brought in regulations requiring insurers to give policyholders 15 working days notice for renewal of motor insurance policies and also requiring no claims bonus information to be provided with renewal notices. These are designed to facilitate policyholders make price comparisons.
The interim Personal Injuries Assessment Board is up and running and legislation is being prepared to establish PIAB on a statutory basis. I intend to bring an outline of the Bill to Government for approval shortly and publish it immediately with a view to having the final Bill introduced in the Oireachtas in the autumn and passed by the end of the year.
Penalty points for speeding offences have been introduced by the Minister for Transport and it is intended to extend them to other driving offences such as not having insurance and not wearing seat belts. Initial indications are that they have a very positive effect and the Minister is seeking reduced insurance premiums for non-offending motorists in return for access to the penalty point data.
The Minister for Justice, Equality and Law Reform is preparing a Bill to reform the law on personal injuries which will include measures to deal with spurious and exaggerated claims, the issue of costs arising from unsuccessful claims and double compensation.
My Department and the Competition Authority are undertaking a joint study into the insurance market. 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 final report will be produced in the early part of 2004.
The 31% reduction in the cost of insurance, referred to by Deputy Hogan, was an estimate by the insurance federation of the reduction that could be anticipated if all the recommendations in the insurance reform programme were implemented. In view of the short time which has elapsed since the announcement of the reform programme, it is too early to say what the precise reduction will be. I am, however, determined that significant reductions will be achieved across all insurance headings as a result of the implementation of the programme.
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.
In her statement on the announcement of the action plan last October, the Minister stated that she would reduce insurance premia by 31% over a period of, I think, 18 months. The Irish Insurance Federation, if it gave her those figures, will therefore have to justify the figures, just as the Minister will.
Giving people the opportunity, as consumers, to shop around is laudable, but what purpose is there to shopping around? There are only four or five undertakings in this jurisdiction quoting for insurance at present and therefore there is no competition. If you go into an insurance broker looking for motor insurance or public liability cover, you will be told about the finite market and implementation of that recommendation will have no effect in the absence of competition in the market.
Behind all the spin of the insurance companies, motor insurance premia have gone up by an average of 15% since the beginning of the year, there has been a 10% increase in household insurance premia and a massive 25% increase in public liability insurance. The latter increase is in addition to the 100% increase, approximately, in the premia for public liability insurance cover in the past two years, which is crippling small business.
Another sector which is finding this issue increasingly difficult is the community group sector, particularly in the case of playground facilities. I received representations today from Newmarket Community Council. Even though the people in charge of the town park were able to hand over the children's playground facility to Cork County Council to take on the risk of insurance cover, they now cannot get insurance cover. Up to March 2003, they were paying €1,000 a month for it. They are now unable to get insurance cover from the insurance companies for the rest of the year for facilities such as pitch and putt, annual parades such as the St. Patrick's Day parade or even for anything to do with casual labour employed to do the odd job in the town park. It is a worry for those conducting summertime activities and communities, but also for business.
If the PIAB is the key proposal in the Minister's action plan, which it is, that needs to be fast-tracked as quickly as possible. The heads of the Bill were supposed to be published after Easter and we are waiting for it. If this is to be the panacea towards reducing costs of insurance, however, it should get the support of every one of us to ensure that this is brought forward as quickly as possible and implemented without delay.
I appreciate Deputy Hogan's support for the legislation.
I have not seen it yet.
The interim committee is drafting the legislation. It has completed its work and submitted it to me, and I will bring it to the Government with a view to its publication. There is competition, although perhaps not enough, but five companies is four more than there are in some sectors where there is no competition. We will not get increased competition in a market that is archaic and that is why the reforms to which I referred on the courts' side are so urgent.
The cost of taking claims here is excessive because of the number of experts and lawyers involved and that is why PIAB will provide an informal cheaper paper-based way of settling claims where liability is not in dispute.
On the issue of insurance for community groups, as far back as 1991 the council, when I was a member, had stopped putting in playgrounds, believe it or not, because it could not afford to take out the public liability insurance on them. There are real issues for communities and local authorities. That is why the reform programme is my No. 1 priority. It is getting more attention than anything else and by the end of this year the Deputy will certainly see results.
