Dáil Éireann Debate, Thursday - 21 January 2016
55. Deputy Arthur Spring asked the Minister for Finance his views that the insurance industry is within its rights in disproportionately increasing the cost of car insurance to younger adults and in excluding cars that are over 12 years old from insurance quotes; and if he will make a statement on the matter. [2588/16]
View answerAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. I am aware of reports on the increasing cost of motor insurance. However, the ability of the Government to influence insurance pricing is limited as insurance companies are required under European law to price in accordance with risk and neither I, nor the Central Bank of Ireland, have the power to direct insurance companies on the pricing or the provision of insurance products.
The EU framework for insurance expressly prohibits Member States adopting rules which require the prior approval or systematic notification of certain matters, including general and special policy conditions and scales of premiums. Furthermore, the EU framework provides non-life insurers with the freedom to set premiums. This has been acknowledged by the European Court of Justice.
Insurance companies consider a number of risks when determining the premium for a proposed insurance policy, whether that is a general insurance policy such as motor or home insurance, or a life assurance policy. A premium is based on the actuarial calculation of risk.
I have again consulted with the Central Bank of Ireland on this matter. The Central Bank confirmed that it has no remit over the pricing of insurance policies or the practices of insurers in relation to underwriting particular risks. These are commercial decisions for the various insurers themselves and the Central Bank cannot force an insurer to accept particular risks.
Insurance Ireland has informed me that motor insurers make their own individual decisions on whether to offer cover and what terms to apply. They use a combination of rating factors in doing this, such as the age of the driver, the type of car, claims record, driving experience, number of drivers, how the car is used, etc. Insurers do not all use the same combination of rating factors, prices vary across the market and consumers are free to choose. Insurance companies price in accordance with its own past claims experience and, for example, where the age of a car is a factor, different insurance companies would use different age thresholds.
In the event that a person is unable to obtain a quotation for motor insurance or feels that the premium proposed or the terms are so excessive that it amounts to a refusal to give them motor insurance, they should contact Insurance Ireland (telephone +353 1 6761820) quoting the Declined Cases Agreement. Under this Agreement, the Declined Cases Committee of Insurance Ireland deals with cases of difficulty in obtaining motor insurance.
