Dáil Éireann Debate, Tuesday - 8 April 2014
172. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which insurance costs here are comparable with those in other European and adjoining jurisdictions, with particular reference to the need to competitiveness; and if he will make a statement on the matter. [16822/14]
View answerNeither my Department nor the Central Bank of Ireland maintains information on the costs of insurance in Ireland. Neither do we hold information on insurance costs across the European Union.
The calculation of annual premium rates is a commercial decision for the insurance company in question. It should be noted that the ability of the Government to influence the competitiveness of insurance costs is limited as Insurance companies are required under European law to price in accordance with risk and neither I, as Minister for Finance, nor the Central Bank of Ireland have the power to direct insurance companies on the pricing of insurance products.
While competition in the market place acts as the best constraint on insurance costs, insurance companies have to be conscious of their prudential obligations and are required by the Central Bank of Ireland to meet their capital requirements on an ongoing basis in order to ensure the sustainability of their business. In circumstances where they are exposed to a high level of claims, it is possible that their capital position can be effected with a consequential effect on prices. In this regard, it should be noted that the new prudential regime for insurers across the EU known as Solvency II, which will come into force from the start of 2016, will place a greater emphasis on the need to price risk appropriately than the existing regime, and will in turn require insurance companies to be more conscious of their pricing policy. This will benefit the consumer in many instances. However, in circumstances where there has been a significant increase in claims, it is possible that there will be higher premiums.
It is worth noting that past initiatives, in particular the establishment of the Personal Injuries Assessment Board and legislation to improve road safety which has reduced accidents significantly, continue to make a major contribution to keeping insurance costs at a reasonable level. Finally, a significant contributing factor to a more competitive market has been the introduction of greater transparency in the price of insurance products enabling cost comparisons be carried out e.g. the National Consumers Agency's focus on providing information to consumers on financial service products including insurance on the "Its your Money" website (www.itsyourmoney.ie). This allows consumers to respond to price changes and shop around.
