The pricing and underwriting of insurance is a matter for individual insurance companies and EU law prevents governments from intervening in the matter of premium levels. Insurers make decisions on provision of cover based on their assessment of that risk in the market. Governments are free, however, to take action to improve the functioning of the insurance market.
As part of the insurance reform programme, a joint study on insurance is being undertaken by the Competition Authority and my Department. The bulk of the study was completed in 2003 and a preliminary report and consultation document on competition issues in the non-life insurance market was published on 18 February 2004. In its preliminary and consultation report one of the findings of the Competition Authority on brokers' fees is that there is a lack of transparency in that buyers do not necessarily know what incentives and commissions the broker might receive, nor which insurers the broker has contacted on their behalf. Following a two month consultation period, a final report will be published by the Competition Authority which will contain recommendations based on its findings. I fully intend that the recommendations made should be implemented.
The insurance reform programme that I launched on 25 October 2002 contains many recommendations that relate to transparency as follows: requiring brokers to provide each client with a list of the motor insurers for which they hold an appointment consistent with the provisions of the Investment Intermediaries Act 1995 — implemented in IFSRA's code of business conduct; introducing regulations to tackle the confusion of illusion of choice by requiring insurers who offer motor quotations under a number of business names and product images or through any direct sales outlets to state the identity of the insurance group of which they are a part — implemented in IFSRA's code of business conduct; amending the format and content of the insurance annual report, the Blue Book, to show clearly the accrual for the current accident year separately from movements in prior years reserves — in progress; that the preparation and publication of statutory returns be amended to clearly reflect the cost of uninsured driving, recording number of cases, amounts of payments and provisions for outstanding claims with other relevant information as deemed appropriate — in progress; that the gathering of statistics on motor insurance premium and claims costs by driver profile be formalised by IFSRA — in progress; that the declined cases committee should include external representatives to report to IFSRA on the operation of the scheme — implemented; that a regulation be introduced to require insurers who refuse to quote for any particular risk to state their reasons in writing upon request — implemented in IFSRA's code of business conduct; and that a regulation be introduced to standardise renewal notices — partially implemented, further standardisation desired by regulators.