Dáil Éireann Debate, Tuesday - 21 June 2022
172. Deputy Alan Dillon asked the Minister for Finance if he will outline the work undertaken within his Department to drive insurance premiums down to affordable levels; and when promised legislation reforms will be enacted to support these measures. [32374/22]
View answerAt the outset, it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).
Nonetheless, this Government recognises the concerns felt by many groups regarding the cost and availability of insurance, and has therefore prioritised insurance reform via the Action Plan for Insurance Reform which was published in December 2020. As the Deputy may be aware, the Government published the second Action Plan for Insurance Reform Implementation Report, which shows that work is progressing well to implement these important reforms, with 80% of the actions already being delivered.
The Action Plan is a whole-of-Government strategy contains several initiatives expected to positively impact insurance costs. For example, the new Personal Injuries Guidelines have significantly lowered award levels for many common injuries, with the latest data from the Personal Injuries Assessment Board (PIAB) indicating that the overall average award has reduced by 42% compared to 2020. Consistent implementation of the Guidelines should therefore lead to a reduction in the cost of claims, which is the main driver of the cost of insurance.
Another key development with regard to home and motor insurance costs has been the Central Bank’s decision to prohibit price walking from 1 July 2022. This is a form of dual pricing whereby customers are charged higher premiums relative to the expected costs the longer they remain with an insurance provider. This ban is a balanced approach that will protect customers who prefer to stay with their current provider from being subject to a ‘loyalty penalty’, while still allowing customers to benefit from discounts from new providers.
Other actions which aim to assist in lowering insurance costs include measures to reduce fraud, the enactment of legislation making perjury easier to prosecute, as well as efforts by the Office to Promote Competition in the Insurance Market to attract new providers. Work is also continuing across Government to drive forward the outstanding aspects of the Action Plan, including: further changes intended to reduce costs such as strengthening the PIAB (which is under the responsibility of the Minister for Enterprise, Trade and Employment); and reforming the duty of care (which is under the responsibility of the Minister for Justice). It is my belief that the overall implementation of the Action Plan should help to improve both the cost and availability of insurance.
Finally, recent data from the Central Statistics Office shows that average private motor insurance prices have fallen by 41 per cent since their peak in July 2016, and it is my hope that these ongoing reforms will bolster this downward trend in the wider insurance market, to the benefit of consumers, businesses and community groups.
