James Browne
Question:56. Deputy James Browne asked the Minister for Finance his plans to address the high costs of insurance; and if he will make a statement on the matter. [7145/19]
View answerThursday, 14 February 2019
Questions (56)
Written answers
At the outset, it is important to note that while I am very aware of the financial strain which the cost of insurance is placing upon some consumers and businesses, as Minister for Finance, neither I nor the Central Bank of Ireland has the power to direct insurers on the pricing or provision of insurance products. Indeed, the EU framework for insurance expressly prohibits Member States from adopting rules which require insurers to obtain prior approval of the pricing or terms and conditions of insurance products. The provision of insurance cover and the price at which it is offered is a commercial matter for insurers and is based on an assessment of the risks they are willing to accept and requires adequate provisioning to meet those risks. These are considered by insurers on a case-by-case basis.
Notwithstanding the above, it was recognised with the establishment of the Cost of Insurance Working Group in July 2016 that the environment within which insurers conduct their business can be better shaped, in order to make the Irish insurance market a more competitive one and also to make it more attractive for new entrants. This Working Group, now chaired by the Minister of State for Financial Services and Insurance, Mr. Michael D’Arcy T.D., undertook an examination of the factors contributing to the increasing cost of insurance in order to identify what short, medium and long-term measures could be introduced to help reduce the cost of insurance for consumers and businesses.
The initial focus of the Working Group was the issue of rising motor insurance premiums and the Report on the Cost of Motor Insurance was published in January 2017. The Motor Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan.
In its second phase, the Working Group examined the cost of business insurance, in particular employer liability insurance and public liability insurance. This work culminated in the publication of the Report on the Cost of Employer and Public Liability Insurance in January 2018. The EL & PL Report makes 15 recommendations with 29 associated actions, again to be carried out in agreed timeframes set out in an Action Plan.
The recommendations from these two primary Reports are often inter-related and overall represent an important part of the broader insurance reform agenda. Key recommendations in the two Reports seek to increase transparency in the sector, as well as to improve the personal injuries litigation framework and costs environment by encouraging greater use of the Personal Injuries Assessment Board and reviewing the level of damages in personal injury cases.
Work is ongoing on the implementation of the recommendations from the two Reports by the relevant Government Departments and Agencies and there is a commitment that the Working Group will prepare quarterly updates on its progress. The seventh such update was published in November 2018 and shows that of the total number of 78 separate relevant deadlines within the Action Plans of the two Reports set up to the end of Q3 2018, 63 relate to actions which have been completed.
Both of the primary Reports and the quarterly updates are available on the Department’s website.
The Deputy should note that the Cost of Insurance Working Group will continue to focus on putting into place the measures proposed in its two Reports. It is envisaged that the full implementation of all the recommendations from both Reports cumulatively, with the appropriate levels of commitment and cooperation from all relevant stakeholders, can achieve the objectives of delivering fairer premiums for consumers and businesses, and a more stable and competitive insurance market.
In this regard, it should be noted that the most recent CSO data (for December 2018) indicates that private motor insurance premiums have decreased by 22.16% since peaking in July 2016. While it is accepted that premiums are still at a high level for many people, such statistics indicate at least a greater degree of stability in the market on an overall basis.
Finally, it is expected that the next quarterly Progress Update will be completed by the end of this month and will concentrate in particular on outlining the definitive position in relation to all of the 33 recommendations from the Motor Report as the last of the deadlines within its Action Plan passed at the end of 2018.