JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 1 Jun 2005

Reform of the Irish Insurance Market: Presentations.

Chairman

To assist us in our examination of reform of the Irish insurance market we are joined by our consultants, Mr. Myles O'Reilly and Ms Linda Morris. From IFSRA we have Mr. Patrick Neary; Ms Anne Troy, head of insurance supervision, and Ms Sharon Donnery, deputy head of consumer information. Representing FBD Insurance we have Mr. Philip Fitzsimons, chief executive; Mr. Martin Moran, FBD director of insurance, and Mr. Niall Higgins, claims manager. From the Irish Insurance Federation we have Mr. Michael Kemp, chief executive, and Mr. Michael Horan, manager of non-life insurance.

Before asking Mr. Neary to commence I draw the attention of the witnesses to the fact that while members of the committee have absolute privilege, the same privilege does not extend to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. Mr. Neary will be followed by Mr. Fitzsimons and Mr. Kemp. I ask the witnesses to confine their remarks to approximately ten minutes as the Order of Business takes place at 10.30 a.m. and I want to facilitate members who want to attend.

Mr. Patrick Neary

The Chairman has already introduced my colleagues, Ms Anne Troy and Ms Sharon Donnery. I thank the Chairman for the opportunity to address the committee on its ongoing work on reform of the insurance market. In my opening statement I want to inform the committee of developments that have taken place since my colleague, Mr. Liam O'Reilly, chief executive of the financial regulator, appeared before the committee in April 2004. I wish to refer to our responses to the recommendations contained within the committee's interim report that relate to the work of the financial regulator. Our statutory mandate is to protect consumers. We do this by helping them to make informed financial decisions in a safe and fair market and by fostering sound, dynamic financial institutions which, in the case of insurance companies, provide a fundamental safeguard for policyholders and potential claimants.

I will describe some of the work we engaged in in the past 12 months relating directly to the issues discussed today. We published and issued for public consultation a draft consumer protection code to apply to all financial service providers. The aim of the new code is to ensure a consumer-focused standard of behaviour by financial institutions in their dealings with purchasers of financial products and services, both individual consumers and the small and medium-sized business sector. It will also ensure that the same level of protection is offered to consumers regardless of the type of financial services product or channel they choose.

While the new code is being developed, an interim code of practice has been introduced for all insurance undertakings in the State. Consumers and industry have shown significant interest in the draft code, and the reaction was such that the consultation period was extended to ensure all those who wished to express their views would receive the opportunity to do so. As a result, more than 60 detailed submissions covering a large range of issues were received. We are pleased with this level of response.

We will dedicate significant resources over the coming months to ensure that all views are carefully considered and weighed before the final code is produced. The views of this committee, through its interim reports, and the views of the Competition Authority, through its recent report on the insurance industry, will also feed into this process.

We recently commenced a review of fee and commission structures and transparency in the intermediary sector, and there was also an extensive and detailed response to this from across the consumer and industry sectors. Our ultimate aim is to ensure that all commissions are structured to allow the sale of appropriate products and that the incentive structure does not work against the interests of consumers and small businesses. Significant work must be undertaken now to achieve this.

We continue to publish regular independent cost surveys. These have included surveys on motor insurance and home insurance which clearly highlight the considerable savings that can be made by shopping around, either directly or through the broker network. This plays a key role in informing consumers. We also published a series of consumer information booklets, leaflets and fact sheets covering various financial services and products, including home insurance and motor insurance. We plan to publish information shortly for the small and medium-sized business sector on employers' liability and public liability insurance.

A number of far-reaching policy papers on mandatory competency requirements, fitness and probity and our administrative sanctions regime have been issued for public consultation in recent months. This forms part of our principles-based approach to regulation and building the new regulatory system. Consultation with our stakeholders is a key element in this approach, as are opportunities such as that which the committee has afforded us today.

The insurance statistical review for 2003 was published in October 2004. This represented a four-month advance on the publication of the 2002 review. We will continue to work with the insurance industry this year to improve further on the publication date.

We carried out a best practice review of our insurance regulatory regime in 2004. We examined the solvency regime and supervisory practice of four countries: Norway, Sweden, the United Kingdom and the Netherlands. We found that all countries applied minimum solvency rules based on the provisions of EU directives. However, beyond minimum rules, we found that existing solvency regimes are not directly comparable. Member states' rules vary as to reserving strength or capital requirements or solvency margin requirements.

The best practice review confirmed that our supervisory regime needed to be strengthened and, using what we learned, we took a number of measures to do so, including moving towards a risk-based approach to supervision. A programme of on-site reviews is under way so that each of the more than 180 insurance companies supervised by us will receive an on-site visit by the end of this year. We will consult the industry shortly with a view to introducing more frequent prudential reporting.

The consumer directorate also undertook a best practice review of our developing processes and procedures with comparator regulators in Australia, Canada and the UK, where the consumer protection remit is broadly similar to our own. In undertaking this review, our objective was to identify the most effective and appropriate approach to policy, processes and measuring effectiveness to enable us to meet our strategic objectives. We learned a great deal and have implemented some changes to our approaches and processes.

The EU has embarked on a major overhaul of insurance solvency rules, which is known as the solvency II project. One intention of this project is to introduce greater uniformity in reserving and solvency margin standards across the EU. Accordingly, common standards for reserving for non-life insurance, capital requirements and solvency margins will be provided in the new regime. We participate in all aspects of the present intensive work aimed at developing a draft directive to set out the principles of future solvency regulation in the EU. The European Commission leads this work and aims to have a draft directive ready for approval by late 2006.

Since we addressed this committee last, significant progress has been made on the regulation of reinsurance. The draft reinsurance directive is likely to be agreed by the European Parliament and the Council this year. This will require the financial regulator to introduce a regime to supervise reinsurers based in Ireland. It is our intention to introduce supervision from the date of implementation of the directive and, to that end, we are developing the elements of a supervisory regime, particularly in the framework for finite reinsurance.

Before discussing the recommendations contained within the committee's interim reports, I will speak on the Competition Authority's final report and recommendations on competition in the non-life insurance sector. The report contains 47 recommendations, of which 37 are directed to the financial regulator. Categorising the Competition Authority's recommendations in broad terms, those made on the provision of consumer information are generally accepted. Recommendations concerning the conduct of business rules will be considered further in the context of the ongoing codes consultation process. Those on the gathering and publication of insurance market statistics are under active examination, and recommendations concerning the publication of guidelines on solvency levels are also accepted.

The committee has already received our detailed response to the recommendations of its reports specific to the financial regulator. While I do not propose to repeat what we outlined in the response, it might be useful to address the themes identified by the committee and place them in a broader context. Viewed in their totality, the financial regulator would support the main thrust of the recommendations.

The first theme I wish to address is that of the solvency and reserving regime operated in Ireland. The committee is aware that the purpose of solvency and reserving requirements is to ensure that insurance companies are in a position to meet their financial obligations as they fall due. We are committed to ensuring that non-life insurance companies are in a position to meet the claims made by consumers under policies sold. Solvency and reserving requirements are therefore the first line of consumer protection offered by the financial regulator, and the requirements we impose on both existing and potential market participants are not out of line with standards internationally, particularly within the EU. There is no fully uniform approach to the prudential standards applicable to insurance companies within the EU, as borne out by our best practice reviews. The development and implementation of the solvency II project, with its emphasis on a more explicitly risk-based approach, will lead to greater pan-European harmonisation in the way that prudential standards are applied and in the way in which reserves are calculated.

The Competition Authority stated it had not received evidence that the financial regulator's capital requirements have deterred insurers from entering the Irish market. This is consistent with our own view of the effect of solvency and reserving requirements on competition.

The second theme I will address is that of the quality and timeliness of information that insurers should provide to consumers. In framing the consumer protection code, we will have regard to the recommendations made by this committee, the Competition Authority and other bodies. When finalised and put into effect, it is intended that the consumer protection code will be a flexible document capable of being adjusted to reflect the evolving developments in retail financial markets.

The issue of employer liability and public liability insurance for small businesses is of particular interest to this committee. The financial regulator will publish guidance shortly aimed at assisting small businesses to shop around for employer and public liability insurance. It will also draw the attention of businesses to ways of reducing the risk profile they present to insurers. In addition, we are conducting a survey of insurance companies to identify and publicise which insurers are likely to quote for a range of typical risks. As part of our work on this survey, we have inquired if insurance companies are willing to quote for a business that has recently had a claim and give quotes to a number of brokers for the same risk. The analysis of the information received is continuing and I assure the committee that any issues of concern that emerge will be addressed.

The broader context within which I would like to place the committee's recommendations is that of the financial regulator's strategic planning process. The financial regulator, the consumer director and the registrar of credit unions are required by legislation to prepare annual strategic plans and to submit them to the Minister for Finance. Each strategic plan is the subject of consultation with the statutory consultative industry and consumer panels. We will endeavour to ensure that the recommendations addressed to the financial regulator by this committee and the other relevant bodies referred to earlier are introduced, in so far as possible, within our current planning period.

I thank the Chairman for inviting us to attend this committee meeting. My colleagues and I will be happy to answer any questions members wish to pose.

Chairman

Deputy Hogan has indicated that he must leave the meeting at 10.15 a.m. to attend to matters on the Order of Business in the Dáil. Therefore, the Deputy will address some brief questions to Mr. Neary now.

Deputy Hogan

I convey my best wishes to Mr. O'Reilly who has indicated that he is retiring from the Irish Financial Services Regulatory Authority during the course of this year. I am not surprised that he wants to retire given all that he has gone through.

There is a perception, some of it valid, that Ireland is becoming an excessively regulated country. Is the regulator receiving complaints to that effect from its constituent bodies? One area that was brought to my attention recently is that of insurance brokers, who are issuing a considerable amount of documentation to policyholders at the time of renewal of their premiums, much of which is unnecessary in their view. Is there any way in which the amount of paperwork can be reduced? How does the regulatory regime here compare with other European Union member states?

Chairman

When will the blue book be published? Is the regulator committed to publishing it this year?

Mr. Neary

I will try to deal with some of those questions, Ms Sharon Donnery will respond to the issue of insurance brokers and Ms Anne Troy will deal with the question on the blue book.

There is excessive regulation, without a doubt, given both EU and the domestic agendas. The financial services action plan had approximately 43 directives which had to be implemented in a very short period. Quite apart from the insurance area, there are directives in the banking and securities fields and the list is as long as my arm. There is an overwhelming workload emanating from the EU and whether we like it the directives must be implemented here. There are also issues arising from domestic legislation and most of the negative reaction stems from the fact that many of them are coming on stream at the same time. There is a consultation paper on fitness and probity, which derives from high profile events of recent years and there is an administrative sanctions regime to be implemented, emanating from the recent Central Bank Act. That gives members a flavour of the workload of the regulator.

In terms of providing some comfort, it is our job to ensure that the final framework is proportionate and fair. We aim to take note of as wide a collection of views as possible in order that the framework can be tailored to the realities that we face while achieving a balance between the needs of industry and those of the consumer. I cannot say more than that or provide any further comfort in this context. Ms Donnery will deal with the issue of insurance brokers.

Ms Sharon Donnery

As Mr. Neary stated earlier, the new draft unified code is the subject of consultations at present. Some of the issues being examined in the consultation process include the question of how detailed the requirements are and the correct balance between principles and rules. We have only recently received the consultative submissions and they will be analysed over the coming months with a view to taking on board the feedback received from consumer groups and industry representatives.

Deputy Hogan

Does the regulator receive similar submissions from insurance companies as part of this review?

Ms Donnery

The issues being raised vary across firms but everyone is conscious of the need to balance the requirement to ensure consumers are fully informed while also ensuring that industry is not unduly burdened by the detail of the rules.

Chairman

Mr. Neary said that the review only covers the commission paid to insurance brokers. Will the regulator undertake a full review of the intermediary sector? The committee would be anxious to see that taking place, if possible.

Mr. Neary

At present we are conducting a review of the commission structures and transparency in the intermediary sector to ensure there is full transparency in and disclosure of the way in which fees and quotes are delivered to those consumers who deal with intermediaries. Our priority is to ensure that the best interests of consumers who deal with either product producers or intermediaries are served at all times.

Deputy McHugh

With the exception of CIE, is the regulator aware of any other company that is self-insuring for motor risks? If there are no other companies in such a position, what is the reason for that in the view of the regulator?

Chairman

I would appreciate it if the question of the blue book could be addressed.

Mr. Neary

I have not forgotten about the blue book. Ms Troy will answer the Chairman's question now.

Ms Anne Troy

We hope to advance the publication of the blue book this year. However, there are two difficulties. The first is that the advisers of insurance companies have a rhythm in the way they operate and the company law accounts take precedence over the regulatory accounts. Therefore, we may have to ask the advisers to re-order their priorities. The second difficulty is technical, in that life companies are still sending in returns on paper rather than electronically. Ensuring that we receive electronic returns from life companies is a priority within our organisation but it will take some time to achieve this. These difficulties mean that we are not in a position to publish the blue book by June of this year, but we will aim for a June publication date in future years, as recommended by the Competition Authority.

Mr. Neary

On the question of self-insurance, the important issue from our point of view, as well as that of the consumer, is that people involved in an accident should be able to claim against an entity of sufficient means. We believe that entity should have the expertise to manage the risks and provide for them. A recommendation — No. 40, I think — from the committee refers to financially sound companies being able to self-insure against motor, employer liability and public liability exposures. This is a sensitive issue because companies must be able to demonstrate to everyone's satisfaction that they have the capacity to understand the risk and provide for it. The question of self-insurance and the need to hold motor insurance is a policy matter for the Department of Transport.

Let us suppose that there is an entity that wishes to self-insure. In doing so, it would be outside the scope of prudential supervision and of the financial regulator. By means of the captive insurance mechanism they may come under the supervision of the financial regulator. We are willing to explore this route with any entity which can satisfy the registration and authorisation criteria of captive insurance companies.

Mr. Michael Kemp

On behalf of the Irish Insurance Federation, I am glad to have the opportunity to address the joint committee on developments in the insurance market and the progress made on the implementation of the reform programme since we were last here in April 2004. I will first address market developments, followed by brief comments on the implementation of reforms.

Motor insurance continues to be by far the largest sector of the Irish non-life insurance market, although significant reductions in rates have occurred. Last year, the aggregate gross written premium of our member companies in motor insurance was just over €1.7 billion which, by representing a 10% decrease on the previous year despite an increase in the driving population, reflects the reductions made to rates. Notwithstanding this, motor insurance accounted for 43% of total non-life insurance premiums in 2004. Our members' liability insurance premiums in 2004 experienced a marginal increase to €865 million. Liability insurance accounts for about 22% of the total non-life market. Property insurance premiums, which represent 28% of the market, experienced a reduction of 3.6% in overall premium volume to €1.12 billion. Overall, non-life premiums are worth €4.002 billion, which represents a decrease of 5.6% in 2004 from the 2003 value.

Motor insurance rates have continued to fall. In the 12 months to April 2005 which approximates the period since we were last before the committee, the motor insurance element of the consumer price index fell by 12%. The cumulative fall in rates over the two years to April 2005 was 23.7%, implying that motor insurance prices, in real terms, are now at or below 1999 levels. This is supported by market reports from our member companies. In many cases comparisons now show that Irish private motor rates are at or below Northern Ireland and UK levels. When the IIF ran an exercise to compare a number of Irish and English urban and rural risks at the beginning of March, it found that Irish rates were lower in ten out of 12 cases. This is probably the first occasion that such a claim has been made. Similarly, significant reductions in commercial insurance rates have been experienced, particularly in the area of liability insurance.

In our view, the continued reductions in motor and liability insurance rates are due to a number of factors. Until 2004, claims frequencies have experienced significant reductions, particularly in terms of motor insurance. However, Garda figures indicate that the number of fatalities in road accidents increased in 2004 and there has been an increase of about 11% in fatalities so far in 2005, which is extremely worrying.

The average cost of third party injury claims has levelled off or decreased over the last three or four years. We perceive, with the introduction by the Personal Injuries Assessment Bureau of the book of quantum, a tendency towards the upper end of the ranges of damages suggested. There is therefore some concern about renewed claims inflation in the future. However, the introduction of greater consistency into the assessment of damages in personal injury claims as a result of the establishment of the PIAB and the publication of the book of quantum has resulted in a more stable and low cost environment for the settlement of claims. Apart from any savings realised as a result of the reductions in legal and other handling costs associated with the PIAB, greater consistency in the quantum of compensation enables parties to settle claims earlier, which can lead to savings in time and cost.

Fraudulent and exaggerated claims have significantly decreased. We believe that the federation's anti-fraud advertising campaign and insurance confidential telephone hotline for reporting suspicious claims have been very successful in deterring fraudulent and exaggerated claims. Implementation of the anti-fraud measures in the Civil Liability and Courts Act in late 2004 and early 2005 has also been instrumental in deterring fraud.

Insurers remain extremely positive about the reform measures which have been implemented. It is still too early for assessment to made of the impact of the PIAB, although details of the first 25 adjudications by the bureau have been recently released. A significant proportion of those awards were accepted and there were significant savings in legal costs in those cases. Additional costs will be incurred in the minority of cases which are pursued by litigation. However, the increased consistency of damages and reduced legal costs in the majority of cases have the potential to stabilise overall costs in terms of average cost per claim. While long-term developments remain to be seen, a promising start has been made. It is to be hoped that other elements of the Civil Liability and Courts Act, including procedural reforms and the more active role played by the court in bringing cases to conclusion, will assist the streamlining of the procedure and reduce costs alongside the anti-fraud provisions of the Act.

A further development has been the establishment of an inquiry into the system for adjudication of legal costs by the Minister for Justice, Equality and Law Reform in late 2004. The Irish Insurance Federation has made detailed written and oral submissions to this inquiry and we are awaiting the results of its deliberations. It is hoped that the recommendations of the inquiry, if acted upon by the Department, will lead to an improved and more transparent system for adjudication of disputed legal costs in the future.

Insurers, intermediaries and customers have observed greater competition in both the private and commercial motor liability and commercial property liability sectors in the past year. While problems arose in the past in placing certain risks, a choice of insurer now exists in most cases for motor and commercial risks with poor claims experiences.

The Competition Authority reported on its study of the motor and liability markets in March 2005. Its analysis of the market found, as we knew it would, that there are no significant barriers to entry resulting from market practices or excessive regulation. The Competition Authority did not find market agreements or abuses of market positions that were contrary to competition law. It made a number of recommendations to guard against potential abuses of perceived weaknesses in the administration of the funding of the Motor Insurers' Bureau of Ireland and the administration of the declined cases agreement and made a number of recommendations to the Irish Financial Services Regulatory Authority on market statistics. We have indicated our willingness to engage with IFSRA on these issues as required and we stand by that commitment.

The Department of Transport has taken over responsibility for issues arising from the availability and cost of motor insurance from the Department of Enterprise, Trade and Employment with effect from 1 January. Recently, the Minister of State at the Department of Transport, Deputy Callely, consulted the chief executive officers of a number of motor insurers and representatives of the federation on the implementation of the reform programme and some of the outstanding recommendations of the MIAB and of this committee. It is intended that these meetings will continue on a regular basis in order that issues may be addressed.

IFSRA has engaged in a number of consultation exercises to which the federation and its members have made submissions. Relevant recent submissions include the review of remuneration of intermediaries, transparency and the proposed consumer protection code, which will take time to complete. The areas under consideration within these two consultation exercises will have a bearing on the recommendations which will be included in this committee's interim reports.

As I mentioned earlier, trends in claim frequency have been positive until recently but are now moving in the other direction in terms of road accidents. We believe that greater political prominence needs to be given to the implementation of the national road safety strategy. In particular, we would like to see further efforts made on the issue of road traffic law enforcement. There have been a number of developments in the establishment of the Garda road traffic corps, which will involve a significant increase in the total number of gardaí and in the number devoted to road traffic law enforcement. It will take two to three years to complete the process. A number of welcome preparatory steps have been taken, typified by the appointment of an assistant commissioner with specific and sole responsibility for traffic law enforcement. A number of these measures will take some time to come on stream but in the short term two things in particular need to be done which could significantly reduce road accident deaths and injuries. Legislation to deal with the introduction of random breath testing and the outsourcing of speed camera operation are the two most important pieces of legislation outstanding in the national road safety strategy. We would like to see them being prepared by the Department of Transport as soon as possible because they will give gardaí the tools to enable them to make a difference on the roads.

On the implementation of the Motor Insurance Advisory Board report, 2002, the assessment of the IIF is that of the 67 recommendations, 38 have been fully implemented, ten have been partially implemented and 19 have not or will not be implemented. We identified 13 of the 67 recommendations as having the capacity to reduce insurance costs. Of those, five have been fully implemented, most significantly the establishment of PIAB and the enactment of the Civil Liability and Courts Act 2004. Another three have been partially implemented, namely the road safety agenda, the review of the taxation of legal costs, which is under way, and the outstanding Competition Authority study of the legal profession. The following five recommendations requiring attention have not yet been implemented — greater deterrents for uninsured driving; removal of discriminatory hospital charges for victims of road traffic accidents under the Health (Amendment) Act 2004; the automatic award of costs for successful defendants in personal injuries cases; greater attention to the medical and legal infrastructure to encourage the use of rehabilitation for people who have been injured; and either the abolition of the 2% stamp duty on motor insurance or its diversion to road safety expenditure. It is hoped the joint committee can use its influence to bring about some progress in these matters.

We submitted detailed views in October 2004 on the second interim report of the joint committee and on outstanding issues arising from the first report. We also responded in April 2005 to a request from the joint committee for an update on action taken by insurers in response to specific recommendations. I do not propose to go through those issues in detail but we urged continuing pressure on the relevant agencies in connection with the following recommendations in the first report which had not yet been accepted — recommendation No. 4, the abolition of the 2% stamp duty; recommendation No. 7, on the establishment of an expert group to compare Irish and other jurisdictions' awards in personal injury cases and to recommend a level of awards appropriate to Ireland; recommendation No. 30 on reforming the taxation of costs, although that may be covered by the current inquiry into the taxation system being carried out by the Minister for Justice, Equality and Law Reform; and recommendation No. 31 on the right of employed barristers to represent their employers in court.

We also asked the joint committee to keep under review a number of the recommendations which have been put in place or accepted for implementation. It is important that a watching brief is kept on the implementation of recommendations to ensure they achieve the purposes for which they were designed. In most cases we indicated that we accepted the recommendations in the second interim report. I would be happy to elaborate on anything I have said or to answer any questions.

Mr. Philip Fitzsimons

FBD Insurance is pleased to have the opportunity to express its views on sundry aspects of the insurance reform agenda and to deal with specific topics which the joint committee requests us to comment on. Mr. Kemp has covered many of the items that I have submitted in my paper but I will deal with them as well.

Considerable progress has been made in reforming the Irish insurance environment. The introduction and implementation of necessary legislation and other measures have improved the insurance climate both for policyholders and insurers. The role of the joint committee has been crucial in advancing, enhancing and monitoring progress of the reform agenda, which is essential. The process whereby specific recommendations are made, implementation plans and timescales are established and delivery is measured gives a clear roadmap for achieving agreed objectives and it is evident in the reports to date from the joint committee that there is a template for identifying progress.

Chairman

I am pleased Mr. Fitzsimons acknowledges the hard work of this committee.

Mr. Fitzsimons

It is an excellent template for what needs to be done. FBD does not necessarily agree with everything that is in it but at least it provides a roadmap, an agenda and a "to do" list, which are hugely important. While it is generally agreed that much has been achieved, it is also accepted that further progress can be made.

In the view of FBD Insurance the major achievements to date include the change in compensation culture whereby the "have a go, there is nothing to lose" mindset has altered. This is reflected in the reduced frequency of personal injury claims. The key measures that have brought this about include the abolition of "no foal, no fee" advertising by solicitors. Much of the delivery of these objectives has been brought about by practical common sense measures including the introduction of punitive sanctions for persons who perpetrate or assist others in perpetrating fraudulent claims. The high profile anti-claim fraud campaign including the confidential fraud line run by the IIF has had a major impact and the tougher stance taken by insurers in fighting and pursuing cases of suspected fraud has also produced results. I remember being questioned by the joint committee at an earlier sitting as to whether companies such as FBD Insurance had the resolve to fight cases of fraud. They do have that resolve and have achieved results even where it was costly to make a stance. The courts, over which of course we have no influence, have taken a different attitude of late and high profile cases have been thrown out on the grounds of suspected fraud.

The establishment of the PIAB has been the other major development. While the full impact has yet to be felt the board has the potential to deliver savings in both the cost of achieving cIaim settlements and in the time taken to do so. Any amendments to existing legislation required to ensure PIAB is not thwarted in its role should be enacted by the Oireachtas and a close watching brief should be kept to ensure it has the wherewithal to deliver on its objectives.

The third item that is vital to the whole environment is the enactment of the aforementioned Civil Liabilities and Courts Act 2004. The provisons of the Act requiring a full statement of claim at an early stage, delivery of proof of earnings, sharing of expert reports, defined timescales and revised legal procedures for processing claims should make for speedier claims and lower processing costs, if the provisions are implemented in the spirit in which they were intended. The legal profession must not engage in delaying exercises such as challenging every step in the process with regard to affidavits, mediation services etc.

One of the reforms urgently awaited is road safety improvement. Everybody knows reduced accidents mean reduced claims. Mr. Kemp referred to the road safety strategy 2004-06 which still awaits necessary legislation on the outsourcing of speed cameras and random breath testing. I noticed in the papers this morning a statement to the effect that proposals are being considered as to how any barriers to introducing random breath testing can be dealt with by the Oireachtas in the course of the enactment of legislation. Greater enforcement and the full roll-out of the penalty points system is contingent on the establishment of the Garda road traffic corps. It has been set up to some degree but additional resources and manpower are essential to progress.

The abolition of the 2% insurance levy was recommended in the MIAB report and by the joint committee. It has not been abolished and if it is not to be abolished, the revenue, which could be approximately €80 million per annum, should be applied to road safety initiatives.

Another matter mentioned is the reduction of uninsured driving. Implementation of the legal provision whereby uninsured vehicles should be impounded is, in effect, non-operational because of insufficient Garda budgets. This impediment needs to be removed. Development of a centralised vehicles database containing insured driver information on individual vehicles, to which the gardaí would have immediate remote access, is crucial.

A further reform identified, which we would like to see prioritised, is taxation of legal costs. Michael Kemp also referred to this. The MIAB and the joint committee have highlighted the excessive legal cost framework surrounding claim settlements. This expenditure continues to rise at a pace exceeding inflation, and the system for taxing legal costs, in our view, compounds the problem. I will only reiterate the need to address the problem quickly as it imposes extra expense on the system. The introduction of scale fees would be an important step in solving the problem.

We were asked to consider suggested amendments to existing legislation. The Houses of the Oireachtas will have the key role in any amendments that arise. We feel that section 26 of the Civil Liability and Courts Act 2004, which deals with fraudulent claims, should be amended. The amendment should remove the court's discretion to disregard fraudulent actions where the dismissal of the action would be perceived to result in an injustice. A fraud is either a criminal offence or not. Providing discretion seems to contradict the purpose of the legislation.

Section 28, which deals with undeclared income, should be amended to remove the court's discretion to disregard undeclared income if it so decides. If measures are introduced as deterrents, too much discretion seems to negate them. I realise that courts need discretion, but as the situation is currently being weakened, some balance is required.

Legislation should be enacted to permit a rejected award from PIAB to have the same effect as a tender in any subsequent legal proceedings on the basis that the tender would be effective from the commencement of the proceedings. This is critical in supporting the PIAB. With regard to the book of quantum, ownership should be vested in the Judiciary and the courts system instead of the PIAB. This will be referred to later.

Another suggestion is to monitor court awards. An effective monitoring system needs to be implemented to track the level of court awards in order to establish whether damages are in line with guidelines in the book of quantum. It was suggested previously in this forum that a comparison be published of damage award levels in Ireland against levels in other EU countries.

The Competition Authority's final report and recommendations on competition in the non-life insurance sector concluded that there was little or no evidence of price co-ordination in either the motor or liability insurance market in Ireland. We welcome this conclusion, which refutes statements from many commentators and widespread public perception. We do not agree that rivalry is not vigorous in motor, employers' liability and public liability insurance markets. The contrary is the case. The high levels of advertising and the pricing differentials emerging in surveys are evidence of competition in the market place.

The report also recommended that the Department of Transport should establish guidelines, procedures and reporting requirements permitting eligible firms to self-insure motorists. Deputy McHugh referred to this earlier and Pat Neary responded. In our view, the cost of delivery of the regulation required to ensure that injured parties would be fully protected under the Road Traffic Act 2004 in the event of claims against self-insured firms would be extremely onerous and difficult to deliver. Although there is reference to captive insurance companies being regulated, it is difficult to see how the proposal in the Competition Authority's report is viable in terms of protecting the interests of third parties.

The report made a number of key observations and suggestions with which we agree, and the following are important to bear in mind. First, the legal system sets the benchmark for awards. Also, the operation of the Irish legal system has resulted in claims levels, both small and large, that are far in excess of other EU countries. This is the fundamental reason for high insurance costs. The report also recommends that the Courts Service publish the results of all personal injury cases. This would be in the public interest and would give details which could be fitted in to or compared with the book of quantum. Another recommendation is that data on legal costs should be published, including information relative to total damages. In conclusion, the Competition Authority has made some key observations that we would support.

Regarding the joint committee's second interim report and its recommendations, we fully endorse recommendations Nos. 41 to 44, inclusive and 46 and 47. The committee asked whether recommendation No. 45, which suggests that insurance companies should provide significant incentives and penalties to young drivers aged between 17 and 25 for using governors and cruise control limits on cars, had been implemented by us. It has not, as we are not convinced of the efficacy of the safety aspects of such governors.

Other recommendations are addressed towards IFSRA. We have its response to them but it will respond itself to those specific recommendations. On recommendation No. 51, which deals with renewal notices, our practice is to issue notice 25 days in advance of renewal date. We believe this is adequate. We are concerned that other distribution channels are not meeting the requirement to deliver renewal notices in time. We have experienced the broker channel not presenting papers to insurers within the timeframe required.

With regard to profit levels and premium levels, in 2004 FBD's underwriting results were broadly in line with 2003. The gross written premium fell by 5%, reflecting significant downward trend in premium rates, particularly since the policy count grew considerably in this period.

The committee requested us to examine April 2004 in comparison to April 2005. Considering average premium levels, year on year, customers renewing insurance with FBD in the first quarter of 2005 compared with the first quarter of 2004 enjoyed reductions in premiums ranging from 10% to 30%, depending on policy type. Reductions averaged 17% overall. These are hard facts comparing a run of renewals in 2004 with a run in 2005.

We were asked about experience to date on PIAB and other issues. It is too early to express a definitive opinion on the PIAB's impact because of the small number of assessments made. The outcome of all possible legal challenges to PIAB must be determined before final conclusions can be made. At this stage, we are positive about PIAB's potential. With regard to the Civil Liability and Courts Act 2004, the full impact of its provisions will become clear only when cases signed off by PIAB emerge in the courts process. Experience to date is insufficient to form an opinion.

The committee asked about Irish tort law. In our experience, the grounds for claims and actions have continued to expand, being almost neverending in terms of the imagination and creativity of people in finding reasons to generate a claim. As regards the limitation of court awards, we have some concern that court awards are not paying due regard to the PIAB's book of quantum. If they do not, the role of PIAB could be severely undermined and it would also reinforce the significance of the Competition Authority's statement and view that ultimately the legal system sets the benchmark for awards. The amount of discretion reserved for the courts could impact greatly on the efficacy of the PIAB.

Those are my comments on the different topics and subject matters. As other contributors have said, I will be more than happy to answer questions or to provide clarification.

Chairman

Mr. Fitzsimons seems to have captured the mindset of the members of this committee in terms of where we are going and what we think we have achieved as the conduit for the industry. The Government and the industry have come a long way since we started our deliberations in November when the industry was in serious crisis and policyholders lived in fear of getting renewal notices from the insurance industry. The attitude in Ireland has changed, as Mr. Fitzsimons outlined in the FBD update to the committee. The committee must compliment the industry on the campaign on which it has embarked over the past two and a half years and the amount of money it has spent on marketing and on advertising on radio and television to encourage people in different sectors of the industry to make the insurance of motor vehicles or property a better and safer option and to encourage them away from the fraudulent end of the business.

There are two areas in which this committee will take an aggressive approach in the third interim report. We feel that a premium reduction of at least a further 20% can be achieved. I would like to hear the industry's views on greater enforcement and the full roll-out of the penalty points system. We have been to America where we discussed the traffic corps issue at some length with the New York state police. The committee is concerned about the 10% of uninsured vehicles in Ireland and the premium holders who may have a no-claims bonus for ten or 20 years, but who are charged an extra 10% because of the uninsured vehicles for which the industry is liable. We were impressed with the handset scanning code unit which the police in New York have to tell them if insured vehicles are out of date and if they need to impound them. We are taking this matter seriously and we are organising a visit to the state of Victoria in Australia to see if the industry there can give us any assistance in that regard.

We are also heartened by the fact that when the traffic corps was set up in New York there was a 30% reduction in crime in some areas. The reason was that criminals, including those involved in drug trafficking, could not get from one place to another without being monitored. We will extend the length of time of this committee's hearings on the third interim report to allow the committee to visit Melbourne and to give the PIAB an extra six months to continue its work so that we can review its progress. The views of the groups which have already been before the committee will be taken seriously in terms of the setting up and success of the PIAB.

We also want to see what we can do to assist the industry in the area of uninsured vehicles. If we convince the Government to introduce amending legislation and to set up a traffic corps, will the industry reduce premiums by a further 20%? I was heartened to hear Mr. Kemp say in his submission that we have reached UK and Northern Ireland levels. He has all the statistical data which is of great importance to Mr. O'Reilly, our consultant, and his team and to the committee in our deliberations for this third report.

Deputy Pat Breen wants to ask a few questions. I will then call on the delegation to respond to the few points I made. The committee has responded to the requests of the industry in terms of setting up the PIAB and convincing the Government to introduce the Civil Liability and Courts Bill. I have taken note of the request for the two further pieces of legislation which Mr. Kemp made this morning. We will endeavour to use our influence to do what we can in that regard. The Minister of State, Deputy Callely, has been appointed by the Taoiseach to examine this issue and I hope he will be able to accompany us to Australia. We have the full support of the other three Ministers in our deliberations. We will not hold back on this interim report. It will delve more aggressively and vigorously into how we can further reduce premiums and how we can make Ireland a safer place for the industry and for the consumer, whether that is a small family business or a motor insurance policyholder.

Deputy P. Breen

I welcome the group here this morning. Garda resources and the enforcement of the law, as the Chairman mentioned, are the keys to success in terms of detecting uninsured drivers. The Chairman said that approximately 10% of drivers on the road are uninsured. As regards Garda enforcement, enforcement usually takes place on our national primary and secondary routes. However, the statistics show that uninsured drivers drive and most accidents occur on our regional and local roads. It is unfortunate if someone has an accident with an uninsured driver. I know there is an insurance fund, but it takes years for a driver in an accident with an uninsured vehicle to get a settlement. Will we soon get the centralised database about which we have spoken? Such a database would help the situation. However, how can we enforce the law when we do not have the resources or the Garda cars to monitor all our regional and local roads? Following the accident in County Meath, have the insurance companies made any recommendations to the companies they ensure regarding safety and the provision of seat belts, given that throughout the country coaches packed with young people are going to sports fields or to matches and are not equipped with seat belts?

Chairman

Will Mr. Kemp respond to the various points made by me and by Deputy Breen?

Mr. Kemp

On uninsured driving, I am not sure the level is quite as high as 10%. Our estimate in terms of costs is approximately 7% or perhaps slightly lower. It was lower at one stage. In the aftermath of the introduction of discs the rate came down significantly. The last Garda survey suggests it is beginning to creep up again. There has not been a survey for several years. It is probably time another survey was undertaken using the same methodology to get some idea of trends.

Chairman

Has the load on premiums reduced as well?

Mr. Kemp

It has, to the extent that the number of uninsured claims has reduced in comparison. The tendency is for the uninsured claims to be higher than the average cost. Therefore, the burden borne by the law-abiding policyholder is slightly greater than the incidence of uninsured driving. The loading is approximately 7% in terms of claims costs. Clearly there is a need to do something about that and certainly a more targeted enforcement effort linked to a more accurate database of insurance details is important.

We have been talking to the UK regarding what it has done recently. It has put a better database in place. One of the suggestions was that if this were being done again it would seek change in legislation in advance to make it a requirement that once a vehicle is registered there must be an insurance policy in force on it. This would effectively put the onus on the owner of the vehicle to demonstrate that he or she does not need to have insurance, for example, if the vehicle is laid up and not being used on the public road. The difficulty with the database is that even if we get it 100% accurate in real time, the Garda Síochána still cannot target people who are not registered on the database as having insurance. Under the current law, people must still be found using a vehicle in a public place without adequate insurance. Therefore, some consideration must be given to changing the compulsory insurance requirement in that regard. That is something we intend to discuss with the Department of Transport.

In terms of policing generally, a much better structure is in place now within the Garda Síochána in terms of operational autonomy, quite apart from resources. Previously, the problem was that while there was a national traffic policy bureau, operational control rested with local divisions, and there were other priorities that could impact on it. Now, with the appointment of Assistant Commissioner Rock to be in charge of traffic policing generally, there is more operational control over what happens on the ground. As resources are built up and there is a commitment to increase the number of traffic gardaí, and effectively double the number over the next couple of years, he will be in a position to direct them to where they are needed around the country. I understand the Garda has recently taken delivery of significant hardware in terms of motorcycles and cars, which will be of great assistance to it. I would, therefore, be quite optimistic that the situation will improve.

I also believe the Garda is making better use of information regarding the location of accidents. Therefore, there will be less concentration in future on national roads and more concentration on where accidents are happening and dangerous black spots. From discussions with the Garda on a bilateral basis and also in the high level group on road safety, the indications are that we will get more efficient and effective enforcement in the future.

Chairman

How many vehicles does the 7% encompass? Is it 5,000 or 10,000?

Mr. Kemp

It is 7% in cost terms. We reckon it is probably approximately 4% to 5% in terms of the number of vehicles.

Chairman

How many vehicles are we talking about?

Mr. Kemp

It would be roughly 60,000 to 70,000.

Chairman

That is 60,000 to 70,000 uninsured vehicles in Ireland.

Mr. Kemp

Approximately. On seat belts, the only comment I would make is that in general seat belts, certainly in private cars, are a very effective means of limiting injury in an accident. The problem with seat belts on buses, as the Chairman of the National Safety Council pointed out the other evening, is that they are generally used by a number of different people, and particularly by children of different sizes, ages and weights; in some cases using an adult seat belt is dangerous for a small child. Unless the same people are sitting in the same seats all the time it would be very difficult to have a system that would improve safety. The business of three people sitting on seats meant for two people must be examined. Regarding seat belts, the issue is not quite as simple as it is with private cars.

Chairman

Before I ask Mr. Fitzsimons to respond, there are currently 60,000 or 70,000 uninsured vehicles in Ireland. In Mr. Fitzsimons' professional opinion, and he is a person of very high standing in the insurance industry, is it fair to say that people who have a no claims bonus are being charged 10% on their premiums because of the 60,000 to 70,000 uninsured vehicles? Is that happening and, if so, does Mr. Fitzsimons agree that it must be tackled as a matter of urgency to allow premiums to be reduced in the coming years?

Mr. Fitzsimons

I will respond to the latter part of the question first. There is great urgency, of which we would be supportive. That all of the costs associated with it are being borne by policyholders who have no claims might not necessarily be true. In the heel of the hunt there is a total cost to each insurer for uninsured claims. It is like an operating cost that has to be recovered from all policyholders. In addition, the majority of policyholders have a full no claims bonus.

Mr. Kemp has dealt with many of the issues raised by Deputy Breen. I do not believe a cost benefit analysis has been done in terms of making the case for providing resources. There are people who know more about this than I, but I understand that, taking Australia as an example, Victoria took the lead on road safety — Mr. Eddie Shaw can give the committee information on this — and justified a huge government spend on supporting a road traffic corps on the basis of the economic benefits. Consider the knock-on effects on hospitals and emergency services, apart from the human trauma. There is a strong economic case for spending money in all of the areas referred to. As far as I know, we have not commissioned any similar studies here. However, there must be a purely economic case for expending resources in terms of the value one puts on lives that are saved and accidents that are avoided. A good economist could make the case for Government allocating sufficient resources in this area. If those resources are allocated results would be achieved and the inevitable consequence of that is that premiums would come down. The biggest factor in the insurance business is claims costs. If they fall, as night follows day, premiums will come down as competition drives them down. There is a margin that all companies want to earn. They will not stay otherwise. However, I believe the approach suggested would deliver results.

Deputy P. Breen

What are the views of the insurance industry on the policy of three for two in coaches used for school transport? Is there a belief that it is wrong in terms of safety?

Mr. Fitzsimons

I was amazed to hear, and this is a personal comment, that three children are being asked to sit in seats meant for two people. As a basic principle, the fact that we do not have enough seats for school children astounded me. I am not making a political statement.

Chairman

Anyone from a rural area would know the importance in the 1960s of getting the opportunity to even put one's foot on a bus.

Mr. Fitzsimons

I accept that.

Chairman

We had to walk to school but, thankfully, we have moved on. Ireland's big asset was the change in the education system. When people look back and consider what was the biggest single thing that contributed to our progress, it will have to be education.

Deputy N. O’Keeffe

The Chairman left little for the poor backbenchers to ask.

Chairman

I do not know about that. We will not examine the word "poor".

Deputy N. O’Keeffe

I compliment the representatives, especially those of FBD. I was involved in its start-up and was one of the first shareholders in the late 1960s and early 1970s.

Chairman

Is the Deputy declaring an interest?

Deputy N. O’Keeffe

Yes, I must. I am insured with FBD and I am a shareholder in FBD, as Mr. Fitzsimons will be aware. The organisation had difficult times but it is now one of the most successful insurance companies in the country, on which I congratulate all concerned.

This country is weak in providing statistics on accidents, age profiles and the type and litre capacity of the cars involved. They are rarely published. Most of the accidents one hears about are mentioned on the news reports at the weekend when one will hear about two or three people killed in various parts of the country. The age profile of the people involved is usually around 25 years. It is usually young people who are driving smaller cars of in or around one litre capacity. Is there any mechanism to control the speed of those cars? I am not a mechanical person but is it possible to control the speed of the car in such a way that the driver could not exceed a certain speed?

The gardaí are doing an excellent job and it is wrong to question what they are trying to do in a difficult situation. They have to wait behind bushes, pillars and in all types of places in an effort to detect people. However, the people they detect are mainly law abiding and they never seem to get the people I mentioned, those who are speeding on the hard shoulder of roads and so forth. These are the people who must be detected because it is they who tend to get killed and maimed on the roads. There should be more emphasis on controlling speed.

The other problem is the speed of trucks. I believe 60 mph is the legal limit for trucks and many of our cars travel at that speed as well. Something one regularly sees on the roads and which causes accidents is one truck trying to pass another truck while controlling its speed. It is a mad situation and causes accidents. Something should be done about that. Peripheral matters that are being overlooked are causing accidents. I will not get into too much detail about them but will just point them out.

I oppose the privatisation of anything to do with traffic on the roads. Protection is a function of the State under the Constitution. It is a matter for the police and the State. This country has gone privatisation mad. It is time we examined this and took a more realistic approach. The founding fathers of our State put many systems in place which were State owned and worked well. There should be no privatisation of speed detection functions. It is a matter for the police authority or the traffic corps and the State.

The PIAB was mentioned. It is in place for nearly a year and I am a little taken aback to hear that it has only dealt with 25 cases. In the past when it was getting publicity, large numbers appeared in the newspapers but where are the remaining cases that have not been dealt with? As I assume approximately 1,000 are in the pipeline, what is the reason for the delay in dealing with them? It is obvious that the PIAB will not meet requirements on the basis of the information given to the committee today. Perhaps the representatives will address those questions.

Deputy Callanan

I welcome the overall average reduction of 17% outlined by FBD. I am sure others outlined similar reductions but I had to the leave the meeting for a period. Publishing legal costs is a good point. There is general anxiety that legal costs are still very high and it would be useful to publish them. The book of quantum was introduced by the PIAB but we believed it should be used by all courts. If claims are not dealt with in the same way in the courts as in the PIAB, it will not help the situation.

Uninsured drivers were mentioned. It was suggested that they could amount to between 5% and 7% of drivers. However, there is a 10% loading on everybody. There should not be a cream off by using uninsured drivers as a reason for adding 10% on premia. If there is a reduction in the number of uninsured drivers, the same reduction should be shown on premia.

Some companies provided incentives for young drivers to justify reducing the cost of the premia and to make driving a little safer. Have the representatives' companies anything like that? Another issue we have mentioned time and again is including driving on the school curriculum for the last or second last year in secondary school. It is important that we educate young people about the dangers of driving and explain the cost of insurance to them and what causes that cost.

Chairman

That is a good suggestion. I have two more questions. Mr. Kemp, have there been new entrants in the past year into the market? Does Mr. Fitzsimons' company provide any reductions in premia for members of the Pioneer Total Abstinence Association?

Mr. Kemp

There are two aspects to the question of new entrants. One is new players in the market and the other is the capacity of existing players. There are a couple of new players. They are relatively small at this stage but have the potential to make an impact on the market. Underwriting capacity has increased among existing players. There is evidence of——

Chairman

Encouraging trends.

Mr. Kemp

——additional competition in the market. On the other points, we expressed doubts, as did FBD, about the issue of governors and speed controls. This is partly because of the situation mentioned by Deputy O'Keeffe, where trucks, which are subject to them, are trying to overtake each other. If that is extended to cars, there could be the same difficulty. In some cases, not having a limit on the speed is an advantage because one can complete a manoeuvre more quickly.

However, there is clearly a problem with single car accidents and there is an over representation of younger people in the accident statistics, as victims as well as those who cause accidents. The analysis that has been done suggests that the main problem is driver error rather than the condition or power of the vehicles, the condition of the roads or weather conditions. This comes back to policing and ensuring resources are available to police and act as a deterrent to bad road behaviour.

The reason the PIAB has only dealt with 25 cases is that it takes a while to adjudicate on a case. A nine month period is envisaged for the PIAB to issue its adjudication in the majority of cases, with a further six month extension if there are difficulties in having the case ready for adjudication. The PIAB has only been in operation since the summer of 2004 and that is the reason we have only seen the first set of adjudications now. However, there are significantly more cases in the pipeline. If it takes six months to see how it comes through, there will certainly be more information at the end of that period and it will be possible to form a view as to how it is performing.

There is no question of profiting from the uninsured driving. As Mr. Fitzsimons said, it is just one of the costs insurers must take into account when setting prices. If that cost comes down, the pricing of the risk will not have to reflect it to the same extent. The issue of whether it is 10%, 5% or 7% is just a question of establishing the actual cost, but that is what goes through in terms of the impact on people who have policies.

Deputy Callanan

Is that the actual cost?

Mr. Kemp

That is the actual cost that goes through. There is no loading at all. We would support greater road safety education and particularly driving education as part of the school curriculum. The National Safety Council has been doing some work on both primary and secondary school curricula. It hopes to introduce more practical training for future drivers and road users. IFSRA is doing some work on the financial education aspect which may help to give a greater understanding of how the insurance process works.

Chairman

Is IFSRA working with the primary and secondary schools?

Ms Donnery

We have a number of programmes, primarily at secondary school level, one of the key aims of which is to inform students about motor insurance, particularly those who in terms of age will soon enter the market.

Mr. Fitzsimons

Mr. Kemp dealt with many of the items with which I would deal. The Chairman asked about new entrants. We should not forget — IFSRA or Ms Troy may be able to give a precise figure — that the number of authorised insurers in Ireland is significant, in excess of 100. There is no shortage of authorised insurers who may want to compete. Between the headline players there is intense competition. It is not an easy run all the time.

The Chairman asked specifically about pioneers. We do not offer any discount to pioneer members.

Chairman

Is there a reason for that?

Mr. Fitzsimons

I suppose the reason is caution. People might be pioneers when they take out their insurance but by the end of the year they might not be.

Chairman

One could not draw that conclusion about somebody who was a pioneer for 21 years for example. FBD, a wholly Irish-owned company, does not offer any incentive to someone like that. Will the company consider doing so?

Mr. Fitzsimons

We will examine it. Deputy Callanan asked about incentives for young drivers. We provide a discount if a young driver provides evidence that he or she has had driving lessons from a registered driving school. We will give somebody who has had a course of lessons a 20% to 30% discount. After assessing risk, if we think someone has lowered the risk threshold, we will respond.

Chairman

That is substantial.

Mr. Fitzsimons

Mr. Moran is our director of insurance and he watches what comes in to us. Deputy O'Keeffe referred to the speed at which other cars are driven. We have a concern with regard to the number of souped-up hot rod cars with blacked out windows etc. This is a fad, but these are the cars, with their loud exhausts etc. that give us the heebie-jeebies. They are a major concern. In terms of the road traffic corps and the freedom to which Mr. Kemp referred, these cars have given rise to more operational calls. The traffic corps needs to exercise imagination and cop-on. There is no point in the traffic corps looking for these at 3 p.m. It needs to be out at 2 a.m. and to provide the resources for the night time hours, between 10 p.m. and 3 a.m.

No matter what spot checks the traffic corps makes, it needs to wander off the main thoroughfares to catch some of what is going on. I have spoken to some of the lads involved and I know that in Sligo they know what roads to take to do their rallying, not the main thoroughfares. The Garda traffic corps, with a little local knowledge, should know where this is happening and it should be possible to track it. Much of this activity is quite visible. These drivers come out like moths at night.

Chairman

I do not know who is going to take my final questions. What were the profits of the industry in the past year? Were they in excess of €1 billion, as stated in the national press? Who will give us the good news? We heard all the bad news when we started in our deliberations for our first interim report. Does Mr. Kemp have his finger on the pulse with regard to the final figure?

Mr. Kemp

We are working towards it. We do not have the final figures, but we expect to publish some result in July or August. An early estimate suggests profits are at least as good as 2003, but beyond that I cannot be precise.

Deputy N. O’Keeffe

Do not forget the shareholders.

Chairman

Will there be in excess of €1 billion profits in the industry this year?

Mr. Kemp

I doubt it.

Chairman

Are the newspapers wrong?

Mr. Kemp

I think profit was in the region of €750 million in 2003. I would expect the past year's profit to be at least that or possibly more, but I doubt it will be quite as high as €1 billion.

Chairman

I thank the representatives from the three groups who came before the committee this morning. They have been of great assistance to our third interim report deliberations. I look forward to working closely with them with regard to how we can achieve our goals through this report, particularly with regard to support of the traffic corps, how it is set up and how it deals with penalty points. In the first six months of penalty points we saw a marked difference on our roads with regard to respect for speed limits and law and order, but this improvement has slipped backwards. This committee will put its energy into redressing that. We would also like to address the issue of uninsured vehicles.

We look forward to working with the insurance market representatives in the coming year. We will increase our efforts and will be more aggressive with regard to this report. We will not publish our third interim report until the autumn because we need to see the PIAB, to visit the state of Victoria, and to address issues with the Ministers who will come before the committee in the autumn, along with the Minister of State, Deputy Callely, who has been appointed to this sector by the Taoiseach. We will also seek the advice of the assistant Garda commissioner.

We are the conduit for insurance industry groups, which are the experts, and we want to work as closely as we can with them. We have taken note of the two requests made by Mr. Kemp with regard to legislation and will endeavour to assist the industry, as we did with the past four Bills. I thank the groups which have come before us this morning.

Senator Hanafin's draft report, Government Decentralisation in Ireland, will be taken at the next meeting. Is that agreed? Agreed.

The joint committee adjourned at 11.20 a.m. sine die.