Written Answers. - Insurance Industry.

John Cregan

Question:

62 Mr. Cregan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement and report progress on her efforts to control insurance rates for business; and if she will now consider for the State to enter the market and set up an insurance agency in view of the failure of private insurance to adequately serve the needs of Irish business and society. [19484/03]

The pricing and underwriting of insurance is a matter for individual insurance companies. EU law prevents any intervention from Governments in the member states, including Ireland, in relation to premium levels or in respect of what risks insurance companies are prepared to underwrite. Insurers make decisions on provision of cover based on their assessment of that risk in the market.

I do not believe that the entry of a State insurance company would be appropriate. Our priority is to reform the Irish insurance market and make it attractive to new private sector entrants.

I am aware of serious difficulties being experienced by businesses due to the high cost of insurance. On 25 October last, I announced my programme for reform. The programme comprises a comprehensive set of inter-related measures designed to improve the functioning of the Irish insurance market. The key measures include implementation of the recommendations in the Motor Insurance Advisory Board action plan within a target timeframe. To date 15 of the recommendations have been implemented and work is in progress on the implementation of the other recommendations. Also included are the establishment of the Personal Injuries Assessment Board. The Government has recently approved the drafting of the general scheme of the Bill to place the PIAB on a statutory footing. It is hoped to enact the legislation by year-end. 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 report will be produced in the early part of 2004.
I chair a ministerial committee established to drive the co-ordinated implementation of the reform programme across the relevant Departments and other bodies concerned. Substantial progress is being made on a range of other measures that will radically overhaul the functioning of the insurance market and help tackle the high cost of insurance. These include measures to reduce the number of accidents and to reform the law in relation to personal injury.
I consider there to be an onus on the insurance industry to ensure that the reforms to be taken will have the effect of significantly reducing the cost of premia to businesses and consumers.