Dáil Éireann Debate, Tuesday - 31 May 2016
252. Deputy Thomas P. Broughan asked the Minister for Finance the estimated cost of restricting the 2% levy on non-life motor insurance policies to the first €1,000 of the premium; and if he will make a statement on the matter. [13417/16]
View answer253. Deputy Thomas P. Broughan asked the Minister for Finance if he will restrict the 2% levy on non-life motor insurance policies to the first €1,000 of the premium in view of the increasing amounts being charged, particularly to young drivers, and as such a measure would make a contribution to reducing the cost of motor insurance for younger drivers; and if he will make a statement on the matter. [13418/16]
View answerI propose to take Questions Nos. 252 and 253 together.
In my role as Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation. The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are accepting and adequate provisioning to meet these risks.
The purpose of the Insurance Compensation Fund (ICF) is to provide a certain minimum level of protection for non-life insurance policyholders should an insurance company go into liquidation. The Fund also allows insurance company administrators to apply to the High Court for funding, where necessary, in order to enable them to meet their financial obligations as they arise.
Section 6 of the Insurance Act 1964 provides that the Central Bank of Ireland has responsibility to carry out an annual assessment of the needs of the Fund and, where it is of the opinion that the state of the Fund is such that financial support should be provided for it, the Bank is allowed to determine an appropriate contribution to be paid to the Fund by each insurer in relation to insured risks in the State. The Central Bank is independent in this assessment and I, as Minister for Finance, do not have a role in deciding annually on the amount of the levy. The ICF levy is currently charged as 2% of the aggregate of total gross written premium of each non-life insurer, the maximum level the Central Bank is allowed to set the levy as per Insurance Act 1964.
It should be noted that the levy is charged on the insurance industry and not on individual policyholders and, therefore, it is a matter for each insurance company to decide the amount of the levy, if any, that they wish to pass on the individual policyholder. In practice, it would appear that most insurers pass the levy directly onto their policyholders.
Data in respect of individual insurance premiums are held by the insurance companies. My officials have consulted with Insurance Ireland regarding the availability of data regarding the cost of individual insurance premiums and are advised that because of competition law and data protection regulations, Insurance Ireland does not publish information about the size of premiums charged by individual insurance companies. It is not possible, therefore, to establish the cost of restricting the levy to those motor insurance premiums in excess of €1,000.
