Dáil Éireann Debate, Tuesday - 15 December 2020
210. Deputy Seán Haughey asked the Minister for Finance his plans for reform for the motor insurance industry; if his attention has been drawn to the fact that some motor insurance companies are loading premiums in cases in which motorists move to an area of disadvantage and high density population; if actuarial data is made available to his Department which could be used to validate such loading; and if he will make a statement on the matter. [43223/20]
View answerAt the outset, it is important to note that neither I, nor the Central Bank of Ireland, can intervene in the provision or pricing of insurance products or have the power to direct insurance companies to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so. Consequently, I am not in a position to direct companies as to how they price their policies or what terms and conditions apply.
On a general level, my understanding is that insurers will use a combination of rating factors in making their individual decisions on whether to offer motor insurance cover and what terms to apply. For example, factors may include the driver’s age; relevant driving experience; the age and type of vehicle; how and where the vehicle is used; the claims record; the number of drivers; and the storage location. Insurers also price in accordance with their specific claims experience and do not use the same combination of rating factors. Accordingly, premium prices vary across the market, demonstrating why it is important for consumers to shop around on their insurance policies. The Deputy should also note that such actuarial data is confidential to each insurer and is not made available to my Department.
Notwithstanding this, I can assure the Deputy that insurance reform is a key policy priority as reflected in the Programme for Government. A Sub-Group of the Cabinet Committee on Economic Recovery and Investment was established by Government to oversee insurance reform implementation. This is chaired by the Tánaiste, and also includes as standing members, Ministers McGrath, McEntee, O’Gorman and myself, together with Ministers of State Troy and Fleming.
The Sub-Group has prepared an Action Plan for Insurance Reform, which was published by the Government last week. This Action Plan contains 66 actions across a number of Government Departments which aim to bring down costs for consumers and business; introduce more competition into the market; prevent fraud and reduce the burden on business, community and voluntary organisations. Actions will be undertaken and delivered by Ministers in the Departments of Enterprise, Trade and Employment, Finance and Justice over the next 18 months. The Sub-Group on Insurance Reform within the Cabinet Committee on Economic Recovery will meet regularly, engage with stakeholders and publish progress of the actions every six months.
With regard to the cost of motor insurance more specifically, I would draw his attention to data from the recent second National Claims Information Database Private Motor Insurance Report from the Central Bank. This shows that, after peaking in Q2 2018, the average earned premium for private motor insurance decreased by 9 per cent up to the end of 2019. I would reasonably expect that the next year’s report will show further reductions in the average earned premiums for private motor insurance into 2020. Separately, the Central Statistics Office in its recent November Consumer Price Index private motor insurance component shows that private motor insurance premiums have reduced by almost a third from their July 2016 peak. While for methodological reasons, these datasets are not directly comparable, both have indicated the same downward trend for some time.
