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Insurance Industry.

Dáil Éireann Debate, Wednesday - 7 July 2004

Wednesday, 7 July 2004

Questions (166)

Brendan Smith

Question:

162 Mr. B. Smith asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress to date in implementing the recommendations of the Motor Insurance Advisory Board in view of the serious problems caused by excessive insurance costs; and if she will make a statement on the matter. [20827/04]

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Written answers

A key element of the insurance reform programme that I announced on 25 October 2002 is to implement the Motor Insurance Advisory Board action plan. Significant progress has been made in implementing the recommendations of the Motor Insurance Advisory Board and I am confident that these implementing measures will radically overhaul the functioning of the insurance market and help tackle the high cost of insurance. The key measures include the establishment of the Personal Injuries Assessment Board. The Personal Injuries Assessment Board Act was signed into law on 28 December 2003. The board was established and members appointed on 13 April 2004. The PIAB commenced dealing with employer liability cases from 1 June 2004 and it is my intention that it will commence dealing with motor and public liability claims from autumn 2004 or earlier. A book of quantum, an aid for assessing the level of compensation based on the type of injury involved and which is essential for the successful operation of the PIAB, was published by PIAB on 2 June 2004.

Other measures include the undertaking by my Department and the Competition Authority of a joint study into the insurance market. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. 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. Following consultation, a final report will be published later in the year which will contain recommendations based on the findings. Significant progress has been made by the Department of Transport on the implementation of the road safety strategy. For example, the introduction of the penalty points system has already reduced the number of accidents on our roads, which has benefits far beyond the cost of insurance. The Road Traffic Bill 2004 was published on 22 June 2004.

The Minister for Justice, Equality and Law Reform published the Civil Liability and Courts Bill on 11 February 2004. It is expected that this Bill will have passed all stages of the Dáil and Seanad this week and enactment will take place at the earliest date possible. This Bill contains measures to streamline the law on personal injury claims including measures to deal with fraudulent and exaggerated claims. The MIAB recommended that the Irish Financial Services Regulatory Authority is charged with progressing, deal with issues relating to public information, promotion of competition, transparency and consumer protection. Recommendations implemented since it began operations on 1 May 2003 include a one stop website went live on 26 November 2003; an IFSRA code of practice published during December 2003; and comparative tables showing motor insurance quotations published on a quarterly basis since 10 December 2003.

The Irish Insurance Federation has incorporated a number of the MIAB recommendations on insurance providers in a code of practice. These recommendations deal with issues such as equality, transparency and information issues for consumers. While EU law prohibits the imposition of price control on insurance, I have made it clear that I consider there to be an onus on the insurance industry to ensure that the reforms to be taken will have the effect of significantly reducing the cost of premia to consumers and businesses. Indications to date are that the insurance reform programme is having its desired effect. The CSO publishes monthly indices of costs for a number of classes of insurance. These statistics show that there was a reduction of 12.9 index points, or 12.1%, in motor car insurance between the months of October 2002, when the programme was launched and April 2004, which is the latest figure available. Reductions are also beginning to occur in the cost of employers' liability and public liability insurance premia, which represent a significant burden for businesses. As implementation of the reform programme continues, I expect further reductions to occur. I am also confident that the measures the Government is putting in place to reform the Irish insurance market will attract new players into the market leading to further downward pressure on premia.

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