Seanad Éireann debate -
Wednesday, 25 Mar 1992

Vol. 131 No. 19

Cost of Motor Insurance: Statements (Resumed).

Mr. Neville

I welcome the Minister to the House. In the time left to me I would like to deal with motorcycle insurance. This area has been highlighted in recent times and it has been pointed out that there is now only one company in Ireland dealing in motorcycle insurance. They have 95 per cent of the market, practically a monopoly.

Some people find that the insurance premimum for motorcycles is three to four times the value of the vehicle. In fact, very little comprehensive insurance is taken out on motor cycles because the cost is too prohibitative, and it is unavailable for motorcycles in excess of 250cc. Often there is a debate on whether motorcycles should be banned, but I would not agree with that because they provide inexpensive transport for people who cannot afford cars or other types of transport. A motorcycle is a valuable mode of transport but it is also a lethal and deadly machine which should be treated with care and respect.

Unfortunately, many young people do not treat the motorcycle as such. People, especially young people, seem to change when they get on a motorcycle. A psychological barrier can be broken in very quiet and inoffensive people in that they feel a sense of power when they travel at speed and take risks on the road that, in their senses, they would not dream of.

Insurance companies and the State should promote greater road safety awareness for motorcyclists. The Irish Bikers Action Group in conjunction with Dublin Country Council have set up an excellent training course. The test at the end of this course is far in advance of the requirement for a full driving licence — if that if the right word — for a motorcycle. No cognisance is taken by the insurance companies or anybody else of the fact that people have taken that course. The insurance companies should consider reducing premiums for people who have taken courses on safety in driving and on safety aspects of motorcycling. I was surprised to learn that there is no no claims bonus for motorcyclists, so regardless of one's record, one does not get any credit for accident free motorcycling.

I would like to return briefly to the issue of the power of the motorcycle. In the past 15 years, there has been an evolution in the design of motorcycles and motorcycle engines. Fifteen years ago a 250cc motorcycle could travel at maximum speeds of 55 to 60 miles per hour. I understand that today a motorcycle with a similar engine can travel between 100 and 110 miles per hour. It is mindboggling to think that a motorcycle can travel at that speed. Something should be done to reduce the speed of these machines, bearing in mind the condition of our roads. Regardless of the condition of our roads, given the level of protection motorcyclists have, they should not be in a position to travel at such dangerous speeds.

I believe that the whole area of motorcycle insurance should be looked at seriously, as should a programme for improved road safety and awareness of road safety. There should be a concentration on doing courses to ensure that people are adequately equipped if they are driving such lethal machines as motorcycles. I understand that up to 80 per cent of motorcyclists under 25 years of age only hold a provisional licence and there is no evalution of the skills of somebody using such lethal machines.

What I am saying to the Minister is that we should look at the safety and control aspects with regard to people who buy a motorcycle and who without any training, use these lethal machines, bearing in mind the type of machine it is and, as I said earlier, the effect that going on a motorcycle seems to have on young people. It gives them a sense of power, that they are on a high with this machine.

I ask the Minister to reconsider first, the area of motorcycle insurance and its prohibitive cost, second, the provision of comprehensive insurance for people who have taken approved driving courses and third, the necessity to ensure that people complete such courses and operate under a provisional licence for a limited period only. Insurance companies should consider reducing the cost of insurance by a certain percentage for those who have taken recognised courses and introducing a no claims bonus for those insured on motorcycles.

Minister of State at the Department of Industry and Commerce (Mrs. O'Rourke)

I apologise to the House if anybody feels I have neglected them; I would never do that to the Seanad. I understood that somebody else was detailed to come here for the first hour today and by chance I caught the vacancy on the monitor and came rushing from what I was doing. I would not disparage this House or any of its Members.

Mr. D. Kiely

I welcome the Minister to the House, congratulate her on her new portfolio and wish her luck and success with it. I am sure the Minister is aware of the costs of motor insurance as a mother with a young family who may be trying to get insurance for themselves on their parent's cars or on their own cars and of the problems they face.

There are two categories of person in this country I feel extremely sorry for when it comes to motor insurance. These are young people between the ages of 18 and 25 and older retired people between the ages of 65 or 66 and 80 who are placed in an invidious position when they reach 65 and premium costs seem to shoot up with accompanying tests and regulations.

I agree with Senator Neville that some form of system should be introduced where a person would receive credits for their driving ability. People who go to the trouble of attending a school of motoring and who pass their driving test should be entitled to a fair crack of the whip when it comes to insurance. My own son and daughters are named drivers on my insurance policy. The cheapest insurance premium my 23 year old son can get costs £700 or £800, although he has been driving for a number of years with a full licence; we have tried every insurance company in the country. He is now talking about taking out his own insurance despite this because without it he will not receive any credits when he reaches the age of 25. One might be better off financially to take out insurance at 21 to avail of the credits available at age 25.

Another matter which must be looked at is court awards. Some years ago everybody blamed the jury system for high awards. When that system was done away with, the function was awarded to the judge. The legal profession seems to cash in on accident cases by imposing extra costs on people when they look for engineers to map out roads, etc. Barristers and junior barristers have to be paid also and 85 to 90 per cent of these cases are settled out of court. It takes years before a settlement is reached in court.

In most European countries certain criteria are laid down for certain injuries. I am not talking about major injuries, such as serious back injuries or loss of a limb but for whiplash injuries, the loss of a small finger or similar minor injuries. In most European countries a certain sum of money is deemed appropriate compensation for such injuries. As Members of this House, a certain number of insurance guidelines are written into our policies for the loss of an eye, or whatever, so that we know to some extent what we are entitled to in the event of an accident.

It is difficult to expect or ask young people earning £100 or £120 a week in their first job, to fork out £30 or £40 a week for car insurance. I am thinking especially of people in rural areas who need car or motorcycle transport to get to and from their workplace. People living in cities can avail of a good bus or train service but young people in the country living 20 miles from their workplace need a car or a motorcycle to get to work. Some credit system will have to be worked out in this regard.

With regard to full and provisional driving licences, I agree that a higher premium should apply to those with provisional licences but a lower premium should be imposed when that person passes his or her test.

Permitted levels of alcohol for drivers will be reduced again in the near future under European law; insurance companies should take this into account also. I congratulate the Garda on the job they did last Christmas and the Christmas before in enforcing this law. I would like to see more uninsured drivers brought to justice — it is estimated that 7, 8 or 9 per cent of drivers are uninsured — that may help to reduce the cost of insurance premia.

It was mentioned that something like 33 non-life insurance companies are now authorised to issue motor insurance in Ireland. One would think that would lead to competition for business but when one goes looking for insurance, that element is not there. When one looks for car or motorcycle insurance one is asked to take out house insurance to make one's business worth while to the company. I welcome the law which comes into effect at the end of November which will permit other European insurance companies operating within the EC to compete for insurance business here; this may create much needed competition.

Irish people must examine their own practices; insurance claims and compensation seem to be on the tip of everybody's tongue at the moment. An insurance claim is like winning the lotto; if one is involved in an insurance claim the tendency is to exaggerate the damage for maximum gain until the court case is over when one can claim to have been cured, miraculously. Such people have a lot to answer for. When driving through Irish towns and villages a number of people walk out deliberately in front of a car. Those people put drivers at risk but maintain that it is up to drivers to stop and let them pass. In larger towns where footpaths are provided many pedestrians walk on the roads making it hazardous for drivers.

Drivers deserve consideration and credit for their skills. I have driven in many countries. I lived in America for a number of years where one drivers on the left hand side of the road and I found that most people in other countries are conscious of the dangers when crossing roads and adhered to the rules of the road, but Irish people seem to have the reverse attitude towards drivers.

I hope something can be done for younger drivers. It is unjust that a young person of 21 or 22 years of age should be expected to pay £1,000 or £1,500 for motor insurance. They may be thinking of buying a house but by the time they pay for motor insurance they cannot afford it. Some credits will have to be built in for them so that they are placed in a different category until they are 25 years of age. Most young people between 21 and 23 years are excellent drivers and a credit to our country. There may be some young people who mess around, but all young people should not be tarred with the same brush.

Mrs. Jackman

For once, women have received some recognition for their care, courtesy and concern as drivers. Generally speaking, one hears the comment, women drivers again, but in this instance it is nice to hear that women receive a percentage discount on motor insurance premia which is about the only concession women have in these days of so called equality. That does not necessarily mean that I would not fight the case of male drivers, particularly young male drivers who have enormous problems obtaining insurance.

Several speakers have claimed that young people are frequently involved in expensive compensation cases but one should not tar everybody with the same brush. I have received representations from many young men of 21 or 22 who cannot get insurance that would enable them to take up jobs. This is an obvious problem in rural areas where jobs are scarce. People may have to travel 25 or 30 miles to work and as there is no public transport young people in rural areas are badly affected. In Limerick it is almost impossible to get even one insurance company to take on a young person, and if they do they charge prohibitive sums of £2,000 or £3,000 even in poor family circumstances where there may be no hope of parental financial support. What is to become of these people? Those are the people I represent today.

There are many ways out of this impasse. Insurance companies say they have no problem with young female drivers. Any young girl of 20 or 21 will be welcomed with open arms by an insurance company; the young male will not. This raises the question of liability. What sort of assessment procedures do insurance companies apply to assess the risk of young drivers? The situation could be redressed if insurance companies set up a panel of testers to assess young people's driving skills. It could be argued that young people have passed their driving test but I recommend that insurance companies set up their own panel of testers of driving skill and experience so that they could say "I stand over this young person. He", and it is not a she in this case, "to our minds will be able to drive within the confines of our premiums." This measure would create jobs and be self-financing because no young person would mind paying up to £50 to an insurance panel of assessors to be enabled to obtain reasonably priced insurance.

We know that irrational young daredevil drivers exist who cause serious accidents, but the majority of young male drivers do not. It has been suggested that all young male drivers are utterly irresponsible but I would like to know how insurance firms decide that young male drivers are an unacceptable insurance risk.

Over the last number of years, Fine Gael have taken this matter on board and aim to evolve a new starter policy viable for insurance companies and more importantly, fair to young drivers who must under law be insured. As a result of the insurance prohibition on young male drivers, uninsured driving is a significant problem. Young people do not think of the possible consequences of driving uninsured so we must take responsibility for the temptation we place before them.

When our insurance costs are compared to those in other EC countries we are not compared on an equal basis; we have the highest percentage of under 25s in the EC. A new starter policy could be priced at around £750 and young people who need their cars for work would be prepared to cough up that amount. This solution would ensure better driving skills which would be tested by the statutory driving test and by the insurance company assessor.

The roads block grant was released to local authorities this week; we will be debating it in Limerick County Council on Friday. We place great emphasis on the safety of our national routeways, but I would like statistics on where the greater number of routeway accidents occur because a number of them still occur on national routeway black spots which should be eliminated given the money we are receiving from Europe. Close to Limerick, there is a black spot at the Lisnagry level crossing for which funding was sanctioned this year but the money has not come. A board stretch of road at Lisnagry narrows suddenly into what I could only call a boreen on the national routeway. We have had numerous accidents there; visibility is nil and CIE are not taking responsibility for financing. Limerick County Council took the responsibility because of the number of accidents but we have not received the expected allocation for this problem area in our roads grant. I do not want to be a prophet of doom but this black spot on the N7 has been discussed over and over again. There have been deputations and protests, yet it remains. I travel that road twice and three times a week and only I know the dangers I would be afraid of where I might end up. Numerous trucks have ended up in farmers' fields after driving through huge concrete barriers erected at that spot. Safer roads must become not just a pious aspiration but a reality.

We need stricter traffic law enforcement, tighter cost controls on claims and a better deal from insurance companies. Competition from foreign insurance companies within an integrated Europe will oblige our insurance companies to take stock of the situation.

Implementation of a starter driver policy would improve the business environment for insurance companies. We do not expect insurance companies to take the rap totally; we say let us work with you to ensure lower costs. We will do our share but you must do yours. This is a quid pro quo which the Government should, and Fine Gael would, require from insurance companies to undertake this starter driver policy. Under it premium quotes would initially be for third party cover only at a cost of £750. The insured person would have to have a clean licence and not to have been found in breach of the restricted driving requirements. Genuine, honest young people who need cars to survive will come forward with clean licences. Many of the young people I am concerned about are applying for insurance for the first time, many of them having passed their driving test and geared towards being responsible. We are given the impression continually that they are irresponsible, but they are not so, in the main.

Under this starter policy claimants for more than personal injuries would be liable for the first £500 or 10 per cent, whichever is the lesser and the normal no claims bonus would not apply for the first three years. This is a constructive positive proposal which does not refuse cover but insists on a three year phase without benefit of a no claims bonus. This proposal would appeal to the positive spirit of young drivers. It is essential that insurance companies take a share of the starter driver pool. Motorcyclists protested on the streets a few weeks ago. If all companies take a percentage of young drivers no company will be left with an excessive number of high claims and I hope there will not be high claims. Thirdly, starter drivers who make a claim would face an escalation of their premium cost related to the cost of the claim.