asked the Minister for Trade, Commerce and Tourism the estimated amount of the reduction in a full year in motor insurance claims arising from the reduction from 23 per cent to 5 per cent in the rate of VAT applied to vehicle repairs; and if he will confirm that the benefit of this reduction will be passed on to the motorist in the form of lower premium rates.
Ceisteanna—Questions. Oral Answers. - Motor Insurance.
16.
My Department estimate that the reduction in the cost of motor insurance claims arising from the reduction from 23 per cent to 5 per cent in the rate of VAT applied to vehicle repairs, would, if there were no inflation in the underlying costs associated with motor insurance, result in a saving of £2.4 million in claims in 1983, a further £5 million in 1984 and approximately £11 million in a full year. However, given that the various elements associated with motor insurance — including the costs of parts and repairs themselves, even with the VAT reduction — have been increasing in cost, I am unable to assure the Deputy that these savings will be reflected in lower motor insurance premium rates. But the VAT reduction is obviously a matter to be taken into account, together with all other relevant factors, in examining motor insurance price increase applications.
Would the Minister do everything in his power to ensure that in the coming year the benefit of this VAT reduction will be made available to the motorists in the form of reduced premiums?
It is not possible to ensure that there will be a reduction in premiums but I can give the Deputy an assurance that in any application for price increases by motor insurers the fact that VAT on repair costs has been reduced from 23 per cent to 5 per cent will be taken fully into consideration in the allowance of any increase that might be applicable. I assure the Deputy of that.
Could the Minister say if the insurance companies will be asked to reduce their premiums along the lines suggested by the kind of profits that will be involved in a full year?
As the Deputy is probably aware, in any application for a price increase all aspects of that increase are taken into consideration. It is the aggregate of the different considerations that determines the final increase. I assure the Deputy and the House that that aspect in relation to the reduction from 23 per cent to 5 per cent on repairs will be taken fully into account in any price application coming before the National Prices Commission and submitted to me for approval.
The Minister has repeated one point, that is in relation to a further review or an application for a price increase: might I ask him, even if there is no application submitted for a price increase, if he would then undertake to ensure that the benefits inherent in this issue would be passed on to motorists?
As I have already explained to the Deputy, this will be done in relation to any application for increases coming before the National Prices Commission. To take it in isolation and apply it to perhaps in excess of 600,000 people insured for motor insurance would constitute a very considerable figure indeed. But the Deputy can be assured that any application coming before the National Prices Commission, or which comes to me for approval from them, will incorporate this fact, that there has been this reduction from 23 per cent to 5 per cent for car repairs, and the reduction will be reflected in any such consideration.
The remaining Questions will appear on the Order Paper for the next sitting day. The Chair has allowed a number of Private Notice Questions. In this connection I would ask the house for their co-operation in disposing of them as expeditiously as possible.
First, Deputy Jim Tunney has been given permission to ask a Private Notice Question of the Minister for the Environment.