At the outset, the Deputy should note that the legal framework governing insurance regulation is determined at EU level through the Solvency II Directive. This is transposed into Irish law by the European Union (Insurance and Reinsurance) Regulation 2015 (SI No. 485 of 2015). Solvency II provides the basis for how insurers can operate in the EU and amongst other things prohibits interference by me or the Central Bank of Ireland 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. It also precludes models such as the fuel tax one proposed in the attached correspondence. The second proposal to establish a national insurance scheme for under 25s would also be problematic as any such arrangement would have to comply with the standard prudential rules that apply to private insurers. Because of the concentration of such a high risk category in one company, such insurance would likely be very expensive. In relation to the third option, of a cross-subsidisation of younger drivers, it is difficult to see that there would be much support from already hard pressed motorists for this proposal as it could add significantly to their existing premiums.
In pricing insurance, 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 age of the driver and the relevant driving experience, as well as the age and type of vehicle, how the vehicle is used, 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. I acknowledge the point that it would be helpful if insurers provided appropriately anonymised actuarial data to support their case with regard to pricing policy for younger motorists, however insurers argue that such information is commercially sensitive and unfortunately I am not in a position to compel them to disclose such information.
Notwithstanding the above, the Cost of Insurance Working Group was established in July 2016 and undertook an examination of the factors contributing to the increasing cost of insurance. The initial focus of the Working Group was on motor insurance premiums The Report on the Cost of Motor Insurance was published in January 201 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan. In January 2018, the Working Group published the Report on the Cost of Employer and Public Liability Insurance. This Report makes a further 15 Recommendations with 29 associated actions.
There has been significant work to date in implementing the recommendations of the two aforementioned reports, including the following:
- the establishment of the Personal Injuries Commission, and its subsequent recommendations relating to addressing award levels for soft tissue injuries – this has provided the objective evidence we need to be able to address award levels;
- the establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance;
- reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019 ;
- amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;
- the reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers; and,
- various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the recent decision by the Garda Commissioner to develop a divisional focus on insurance fraud which will be guided by the Garda National Economic Crime Bureau (GNECB) which will also train Gardaí all over the country on investigating insurance fraud, and the recent success under Operation Coatee , which targets insurance-related criminality.
I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from May 2019 show that the price of motor insurance is now 24.5% lower than the July 2016 peak). It is acknowledged however that this is an average figure and young drivers may not be benefitting to the same degree.
Undoubtedly the single most essential challenge which must be overcome if there is to be a further sustainable reduction in insurance costs for motorists is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. In this regard, the Personal Injuries Commission has highlighted the significant differential between award levels in Ireland and other jurisdictions, and has made a number of recommendations to address this issue, in particular the establishment of a Judicial Council to compile guidelines for appropriate general damages for various types of personal injury.
It should be noted that work is progressing as a matter of priority on the Judicial Council Bill, and it is due to complete Report and Final Stages in the Seanad this week, prior to being submitted to Dáil Éireann shortly thereafter. I would hope that members of both Houses of the Oireachtas can collectively work together to ensure that the Judicial Council Bill is enacted by the summer.
Finally, I would advise younger drivers who are quoted increased premiums to consult the Competition and Consumer Protection Commission website (https://www.ccpc.ie/), which has an informative section regarding the purchase of car insurance generally. One of the key tips listed to help cut costs is to “shop around” and “always get quotes from several insurance providers when you need to get or renew insurance”. Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. Insurance Ireland can be contacted at firstname.lastname@example.org or 01-6761914.