We will focus on the success of reforms in the market, our own experience, Hibernian's solutions, and the remaining market opportunities and finish with a summary. I have the same team with me today as has attended these presentations since we first appeared before the joint committee two years ago. We have provided written submissions and independently commissioned data from Tillinghast reports for the joint committee. This is our fourth presentation to it. We will try to follow our previous statements and presentations with consistency.
I will start with the success of the market reforms. In the past two years significant progress has been achieved in the market's condition from the perspectives of consumers, legislators and insurers. It is important not to skate over this success, as we have made significant strides, although more needs to be done. It is necessary to maintain the political momentum galvanised two and a half years ago by the crisis in the market, which I will discuss later. Undoubtedly, the market is currently more attractive, even though the prevailing prices are the same as they were in 1999 or 2000. The reforms have made the market more attractive. Although the additional capacity in the market may not have been provided by big names from other markets, there is undoubtedly greater choice available to the customer today than two years ago, which is one of the objectives of reform.
I will talk about the PIAB, the Civil Liability and Courts Act and other emerging supports for reform. The PIAB and the Civil Liability and Courts Act have become realities rather than promises in the year since we last appeared before the joint committee. I will dwell on the Garda traffic corps, a drum on which Hibernian has been beating for a long time. We need to continue to beat that drum hard. We are aware of and welcome the commitment to it but have not seen the evidence.
In terms of new entrants, there is greater choice available to both personal and commercial customers than there was either one or two years ago. The cyclical nature of the market is something about which we need to be cautious. The additional capacity attracted to a market like Ireland needs to be consistent and available in bad times as well as good. For example, two and a half years ago, when we first discussed insurance matters before the joint committee, we referred to people's inability to get quotes, as their insurers had left the market because of difficulties. We need to be cautious about this in the future.
I will now turn to the PIAB and the Civil Liability and Courts Act. Hibernian has been a supporter of the concept of the PIAB from the outset and has tried to champion the concept at every available opportunity. Although it has been in operation for approximately one year, there is a long way to go before it is bedded in. It is a change that is absolutely fundamental to the market, and it would be unfair to judge its success or failure at this early stage. We have seen a small number of adjudications and need to see many more. We encourage the PIAB to do its utmost to increase the volume of cases going through the system to allow a pattern and stability to emerge. However, we continue to support it and continue to believe it is the correct solution for uncontested claims.
As regards the Civil Liability and Courts Act, much has been made of the move to a sworn affidavit and the change in the Statute of Limitations. We continue to support this. Although the Act has only been in force for a short period, some of the decreases in frequency and volume of liability claims were driven by the fact that this reform was in the pipeline. The act of signalling that it would happen, with its implementation, had the effect of reducing liability claims. Undoubtedly, this has been beneficial.
The joint committee has asked us to comment on its second interim report, issued in July 2004. We welcome the report, as we did when it was issued. We welcomed the majority of its recommendations, particularly on the issue of a traffic corps. Half of the insurance market is for motor insurance. We read about the carnage on our roads in the newspapers daily. We are aware that without high levels of enforcement and a dedicated traffic corps, this will not change. We support the extension of the penalty points system with appropriate systems to ensure it runs smoothly and is automated. We also support the abolition of the 2% Government levy on premiums.
One particular recommendation that arises from studies by the Competition Authority and the joint committee's recommendations is the idea that renewal information should be sent to customers earlier. While we support greater choice for customers and providing them with time to shop around, I caution against something that would put information into their hands too far in advance for one simple reason. If one insists that the customer has the information two months before renewal, it means that normally it will be produced three months before renewal to allow for normal distribution. If it is produced three months before renewal, one quarter of the normal claims in a year will occur between the date of renewal preparation and the actual renewal date. If that is the case, the onus will be on the customer to inform the insurer about changes in circumstances if there is a claim. My concern is that an increasing number of customers could get into difficulty because they have not declared all the relevant information around their renewal. We encourage anything that enables the customer to shop more effectively but we should be careful in the way we implement it.
We generally welcome the findings of the Competition Authority's final report in March 2005. I will make two points for the benefit of the committee. One is the recognition of the cyclical nature of the industry. It is a considerable struggle for us to come to the committee to explain the losses and profits, as against the price increases and decreases in the business. The Competition Authority's study recognised that it is a cyclical industry across the globe. It is not an Irish phenomenon and we will not change this situation in Ireland. We can only manage it as best we can locally. Two years ago, when things were very difficult, there was a considerable amount of loose talk about collusion cartels and price fixing in the industry. It was particularly important for me that the Competition Authority's study found no evidence of collusion cartels or price fixing.
A number of issues highlighted in the Competition Authority's study require further discussion. The idea of compulsory data sharing may appear, in principle, to make it easier for new entrants to the market. I would caution that entrance to the market should come on the basis that entrants will provide sustainable service. Companies that invest very heavily in proprietary data to support their customers and business should not feel that all of this data will be shared with newcomers on the basis that newcomers do not have to make any such investment. The recommendations regarding renewals information in the Competition Authority's study need to be carefully considered. One of the recommendations was that the renewal information should go from both the intermediary and the insurer to the customer. Implementing this recommendation would merely increase costs and a better way can surely be found. The second issue relates to the longer notice periods for liability renewals, which I have already addressed.
The committee asked us to update the position on Hibernian General Insurance's experience of profits and income in 2004. Our premium income in 2004 was €835 million, which was approximately €100 million lower than it was in 2003. Our profit before tax was €223 million in 2004 and our return on premium over five years up to the end of 2004 was 10.5%, which again meets the return on capital targets of our shareholder. It is the first full year for which Hibernian General Insurance has been able to say that.
I have included a graph on motor premiums to get the committee to focus on the actual change in motor premiums from 2000 to 2004. When we spoke with the committee this time last year, one of the challenges facing us all was to accept the direction in which motor premiums were going. It takes a long time for changes in premium to feed through to the full experience because everyone is insuring once a year rather than once a week. I suggested to the committee on the last occasion we made a presentation that perhaps an independent body, such as the IFSRA index on motor insurance, should be the basis for a price comparison. Maybe the same is true of all insurances and some independent way exists for the committee to be able to monitor increases and decreases rather than relying on testimony from interest groups.
Regarding the solutions and how Hibernian General Insurance sees the future, there were a number of recommendations in the Oireachtas Joint Committee on Enterprise and Small Business report, which focused on technology, such as cruise control and tracking mechanisms. Hibernian General Insurance's solution for inexperienced drivers has been its ignition product, which is an educational product that has been running for approximately three years. We have 37,000 candidates who have participated in that programme and we have invested €10.3 million in that training. It has proved to be a remarkably successful initiative for us and we believe it has proved to be a very successful initiative for customers who have participated. The course is free and has enabled us to enter the inexperienced driver market in a disciplined way and provide more choice for customers in this area. Due to the backlog in tests, we decided in late 2004 to introduce the same type of programme for provisional driving licence holders because committee members will have heard organisations such as Macra na Feirme talk about the fact that people who are waiting for tests for one to two years are paying loaded premiums when they are capable of passing a test. We have invited customers who believe they have the necessary experience to go through a provisional ignition programme and we remove their provisional licence loading if they pass that programme, even though they have not yet sat the driving test.
Regarding penalty points, the committee will be aware that we supported them from their introduction in November 2003. The discounts that have gone to our penalty point-free customers in the interim amount to €37 million. We continue to support the need to roll out penalty points with supporting technology. I again allude to the golden period of six months after the introduction of penalty points when Ireland had the lowest number of deaths and serious injuries of any country in Europe. We can reach this target again if we have the right enforcement.
We talked in our previous presentations about our risk assist product, which attempts to engage customers on the commercial side in management of risk and reduction of risk in their business. It has proved to be quite challenging for us. We have 740 companies registered as risk assist users who are receiving discounts as a result. The reality of our experience is that as prices have decreased in the commercial sector, customers tend to be less interested in risk management and are happier to take the lower premiums. We strongly support the reinforcement of support for health and safety legislation.
Regarding the opportunities that remain, maintaining political momentum is critical. For example, we were concerned at the lack of political response to the court finding on the jurisdiction of the PIAB. We feel it is essential that the initiatives and reforms supported by organisations including this committee continue to receive broad political support. Enforcement is critical for road safety and the long-term effects of such things as a Statute of Limitations and the swearing of affidavits through court reform are extremely important and require continuing support. We would sound a note of caution against any increase in court jurisdictions because they would be inflationary for claims and we would advise the committee to be very cautious if any such recommendations come forward. In summary, we seek to encourage wider customer participation in our risk assist product, which has proved to be successful for our customers and us. We recognise that reform has taken place; a mere year ago, it was in the pipeline. The two reports and the upcoming report of this committee have made an important contribution in that regard. The court reform and the establishment of the PIAB have been equally important. We stress the need to continue the political support for these initiatives and we acknowledge the considerable improvement in the insurance infrastructure in this market.