Dáil Éireann Debate, Wednesday - 19 December 2018
114. Deputy Richard Boyd Barrett asked the Minister for Finance the reason insurance rates for taxi vehicles, particularly wheelchair and disability vehicles, are high compared to EU rates; and if he will make a statement on the matter. [53509/18]
View answerAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. These are considered by insurance companies on a case-by-case basis. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to direct insurance providers as to the pricing level which should apply in relation to specific categories of drivers.
I understand that motor insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. Factors include those such as the type of vehicle, how the vehicle is used and the relevant driving experience, as well as the age of the driver, the age of the vehicle, the claims record, and the number of drivers. Insurers do not all use the same combination of rating factors, and as a result prices vary across the market. In addition, insurance companies also price in accordance with their own past claims experience.
In the case of taxi drivers, I understand that insurers take into account the nature of the taxi business, which involves driving for hire or reward extensively and in their view this has a much higher risk of injury claims from passengers and other road-users as a result.
My officials were unable to source appropriate data to facilitate a reliable comparison between the costs of motor insurance for taxis here compared to that for taxis in other EU countries. However, it is not clear how useful such information would be as it will never be possible to make direct like-for-like comparison with most other EU Member States because of differences in areas such as legal systems and claims environments.
One area, however, which is relevant to the cost of insurance where a comparative exercise has been carried out is in relation to award levels. In this regard, the Personal Injuries Commission (PIC) has recently completed its second and final report which indicated that soft tissue (whiplash) injury award levels in this jurisdiction run at a multiple of 4.4 times to that of the UK. This significantly higher level of awards is undoubtedly a contributory factor to why the cost of insurance in this State is high. The PIC has recommended that the Judicial Council when established should compile guidelines to take account of, amongst other things, its benchmarking exercise and it is hoped that when this is implemented it should have a positive impact on pricing.
In addition you should note that the Cost of Insurance Working Group will continue to focus on putting into place the measures proposed in its Report on the Cost of Motor Insurance. It is envisaged that the implementation of all the recommendations cumulatively, with the appropriate levels of commitment and cooperation from all relevant stakeholders, should achieve the objectives of delivering fairer premiums for consumers and attracting potential new entrants to the market. In this regard, I have been informed by my officials that Insurance Ireland has stated that there has been some increase in market capacity in relation to the provision of motor insurance for taxi drivers recently.
Finally, it should be noted that the most recent Central Statistics Office data (for November 2018) indicates that private motor insurance premiums have decreased by 22.7% since peaking in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore it is appreciated that many people may still be seeing increases. However, it is hoped that the improved stability in pricing will be maintained and that motor insurance premiums should continue to fall from the very high levels of mid-2016.
