Dáil Éireann Debate, Wednesday - 20 February 2019
100. Deputy Pearse Doherty asked the Minister for Finance if he will request that insurers agree commitments to reduce prices in line with reforms introduced using a template (details supplied); and if he will make a statement on the matter. [8754/19]
View answerI understand the table which the Deputy is referring to relates to estimates from the Irish Insurance Federation (now Insurance Ireland) of reductions in total claims costs from implementation of the MIAB recommendations made in 2002, and not commitments to decreases in pricing. However the two issues are sufficiently closely connected that I believe there is a need to be careful about requesting such commitments, particularly in the context of competition in the sector, as it may send a signal to other insurers about what pricing levels might be. This is particularly the case in the context of ongoing investigations into the insurance sector by both the European Commission and the CCPC.
It is also important to note that as 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. 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.
However, the above said, I would expect that insurers’ pricing for motor premia in general would take account of the measures that have been implemented and are being implemented as a result of the Cost of Insurance Working Group’s (CIWG) recommendations. In particular it is envisaged that the full implementation of all the recommendations taken 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.
I believe that insurers recognise that the implementation of the CIWG recommendations will have a positive impact on pricing. In this regard, I would recall that Justice Nicholas Kearns, the Chairperson of the Personal Injuries Commission, noted in the foreword of the PIC’s second and final report that insurance industry representatives on the PIC repeatedly stated that, as award levels and associated costs account for the bulk of the cost of insurance, if claims costs come down and are maintained at a consistent and predictable level, then premiums will also reduce accordingly.
Finally, I believe it is important to acknowledge that pricing in the motor insurance market has stabilised over the last year, although it is accepted that premiums are still at a high level for many people and that further decreases would be desirable.
