Dáil Éireann Debate, Thursday - 9 May 2024
154. Deputy Steven Matthews asked the Minister for Finance the actions he will take to address concerns related to the increased cost of car insurance for the majority of Irish customers; if he plans to meet with companies operating in this sector to raise these concerns; and if he will make a statement on the matter. [21143/24]
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).
Regarding motor insurance, it is understood that firms will use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. For example, these 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. Furthermore, damage-related inflationary pressures are an increasing factor due to the rising cost of repair inputs and labour costs. Accordingly, for a range of factors, premium prices vary across the market.
According to Central Statistics Office data, in the year to March, motor insurance prices increased by 5.0% on average; however, it should be noted that the average price rise in the EU was 9.7% in February 2024. This recent rise is after a long period of sustained price reductions, and it is important to stress that prices remain 40.7% lower than their peak in July 2016.
While the Government is committed to fostering competition in the market, pricing and underwriting decisions are ultimately made by individual insurers based on statistical data and risk assessment. Nevertheless, the Government has prioritised reform of the insurance sector via the Action Plan for Insurance Reform. This comprehensive reform agenda has targeted 66 measures in order to bring down costs for consumers and business; introduce more competition into the market; prevent fraud and reduce the burden that insurance costs can have on individuals, businesses, and community and voluntary organisations.
The most recent Implementation Report indicates that the Action Plan is over 95% complete, with major changes made to areas such as personal injury awards, the claims process (the Injuries Resolution Board) and the Duty of Care (Occupiers’ Liability Act 1995). In order to maintain this momentum, Minister of State Richmond is currently meeting with the CEOs of the major insurance companies in the State in order to impress upon them the necessity of passing on savings from the new insurance environment to customers, in the form of reduced premiums.
Additionally, it should be noted that these measures have had some success in attracting new entrants to the Irish insurance market, with a new major home and motor insurer having recently received a licence from the Central Bank of Ireland, and due to launch publicly shortly. This is a welcome development, as more competition is only good for consumers.
