asked the Minister for Industry, Trade, Commerce and Tourism when legislation will be introduced to implement the EEC Directives on insurance.
Ceisteanna—Questions. Oral Answers. - Insurance Legislation.
11.
With one exception, all EEC insurance directives which we required to implement have been implemented.
As the Deputy is no doubt aware, the Minister recently signed regulations under the European Communities Act, 1972, giving effect to the First Life Assurance Directive. These regulations came into force on 14 March 1984.
The only directive which remains to be implemented is the Second Motor Insurance Civil Liability Directive. This is a matter for the Minister for the Environment to whom a separate question is addressed on the Order Paper.
12.
asked the Minister for Industry, Trade, Commerce and Tourism the estimated withdrawals that will be necessary from the insurance compensation fund to deal with claims made on it in 1983; and the impact that these withdrawals will have on all non-life insurance policy-holders.
No claims were made upon the insurance compensation fund during 1983 and, accordingly, no withdrawals was necessary in that period; the second part of the question does not therefore arise.
This fund will have to bear the burden of the money required to accommodate the Insurance (No. 2) Act, 1983. Would the Minister indicate from the estimates available to him what the expected withdrawal will be to accommodate the named company in the previous question?
I specifically answered the question which was asked. There were no claims made on the insurance compensation fund and, therefore, there were no withdrawals. That includes the company to which the Deputy referred.
Is it expected that there will be claims on the compensation fund in 1984?
That is another question.
It is a supplementary question.
A supplementary must arise directly as a result of the reply to the question. It was a straightforward question and answer.
It is expected, since the Government took major legislative steps with regard to the Insurance (No. 2) Act, 1983, that there will be a call on the funds. To date the administrator has made no demands but the 2 per cent levy has been determined for non-life insurers in 1984 and will be paid into that fund.
Would the Minister indicated what the yield will be from the 2 per cent levy for either 1983 or 1984?
There will be an estimated yield of £10 million in 1984.
13.
asked the Minister for Industry, Trade, Commerce and Tourism the steps he proposes to take to insist that motor insurers provide the consumer with a complete breakdown of renewal premiums and generally revert to less fragmented rating structures and that there be a greater simplicity in the wording of policy documents, so that policy-holders will know exactly what is and is not covered by their policy; and if he will make a statement on the matter.
I am informed that in general insurers do provide a breakdown of renewal premiums giving details of gross premiums and no claims discounts applicable and that where further details are requested these will be provided where reasonably possible. As for the rating structures these are examined on the occasion of price increase applications and where any rating scheme is unduly fragmented, this can be taken up with the insurer.
The Department have taken up the points referred to by the Deputy with the insurers' representative body and will continue to do so. The insurers have assured me that they appreciate the desirability of clarity and simplicity in the wording of policy documents, but given that the policy is a legal document there are limits to how far one can go.
Does the Minister agree that some of the renewal documents received by the public from certain insurers can be very confusing? I will not go as far as to say that they are misleading but the language is often couched in terms which they find difficult to understand. Would the Minister consider recommending to the insurers that they should issue a simplified version on third party and comprehensive cover which would be clearly understood and applicable to all insurance companies?
I sympathise and agree with the Deputy and I can assure him that my Department are in touch with insurers to try to make these documents as simple and clear as possible. However, one must accept that you can only go so far in simplifying legal documents.
Could the Minister tell the House when he was last in touch with the insurers in the hope that they would collectively do what he has stated to be his objective?
The Deputy will be pleased to note that I raised this matter when I addressed The Insurance Institute of Ireland in Galway last week——
I am pleased that my question had the desired effect.
I had accepted the invitation to go to Galway before Deputy Flynn put down his question but he can take it that my officials are in touch with the industry at present.
When were they in touch with the insurance companies?
I know my officials were in touch with them before I went to Galway so the Deputy may take it that they had also been in touch with them earlier in the year.
14.
asked the Minister for Industry, Trade, Commerce and Tourism if he is satisfied with the operation of the Insurance (No. 2) Act, 1983 and particularly that the Act affords a sufficient degree of protection to employees of a company where an administrator is appointed; and if he will make a statement on the matter.
It is quite clear that where an administrator is appointed the position of employees is improved, since the Act specifically requires the administrator to carry on the business as a going concern. It also provides that contracts of employment are not affected by reason only of the appointment of an administrator. Under the earlier legislation of 1936 and 1964 the only option available to the Minister in a case of serious insolvency was to petition the High Court for the winding up of the company in question with the inevitable consequences of termination of employment for the staff and of insurance cover for the insuring public.
The Minister has indicated that one of the factors in passing the Act was to safeguard employment. He said the purpose of the administrator was to carry on the company as a going concern. Apart from the principal company were the subsidiaries taken into account in relation to employment? Can he be specific about the closure of the garages with a loss of 80 jobs and no redundancy repayments after 20 or 30 years' service?
I am in a certain difficulty because there may be a sub judice problem. I said in my reply that the Insurance (No. 2) Act, 1983, specifically requires the administrator to carry on the business as a going concern whereas under the 1964 Act the company was forced to wind up. An administrator was appointed by the courts and he has direct responsibility for the PMPA. He acts under the court's direction. The administrator is subject to and answerable to the courts.
On the last point, since the Minister appointed the administrator does he not monitor——
I am concerned only with the relevance of the question, but the administrator was appointed by the court and not by the Minister.
My question asks about the operation of the Insurance (No. 2) Act, 1983. Surely the Minister monitors the operation of that Act to ensure that it is operated in accordance with the wishes of the Dáil. Did he take up with the administrator the closure of the garages almost as soon as he took up his job with a loss of 80 jobs particularly as they did not receive redundancy payments after 20 or 30 years' service?
That is a matter for the administrator. It is my responsibility to keep the operations of the PMPA insurance company at arm's length.
15.
asked the Minister for Industry, Trade, Commerce and Tourism if he is aware that of all the insurance companies (details supplied), only one company will quote insurance cover to a person aged 20 years to insure a car worth £2,000, and for this quoted a premium of £1,032; if he regards this situation as satisfactory; and if he believes that the motor insurance industry is discharging its responsibilities under the declined cases agreement by quoting the terms (details attached) for motor insurance cover to young persons.
It is not possible to say from the details supplied by the Deputy whether the precise premium quoted is correct. However, it would appear to be in line with the basic rates for the company adjusted by the age loading applied by the insurer. As stated in replies to previous questions, the age loadings applied by motor insurers have been found by the Motor Premiums Advisory Committee to be broadly in line with the risk they represent.
The other companies referred to by the Deputy in his question have been written to asking them for specific details about their underwriting policies in relation to young drivers. The matter has also been taken up with the insurers' representative bodies. The information I have received so far indicates that young drivers can get insurance cover, but when I receive detailed information from all insurers I will be in a better position to examine the position.
Is the Minister aware that the companies made an agreement not to refuse motor insurance to any person on the grounds of age alone? Would the Minister agree that in the three months since this question was put down the insurance companies have not responded satisfactorily? Out of the 17 companies I listed only one would insure persons aged under 25 years. Would the Minister not agree that in those circumstances the insurance industry is discriminating seriously against young persons?
The Motor Premiums Advisory Committee accept the fact that the risks are substantially higher for young people because of their claims experience. Young people can have their names added to their father or mother's name on their policy in order to get insurance. I suggest that the Deputy is overdramatising the situation.
He is not.
My information is that many young people are getting insurance.
Will the Minister accept my word that on 1 February through an agent I contacted 17 insurance companies and only one would give insurance to young people under the age of 25 years? Does the Minister accept my word for that?
I bet that insurance company was the PMPA.
It was the only company in Ireland to quote for young drivers.
Would the Minister request the sources where he got that information to investigate the information he has been given? With the best will in the world I think the Minister has been given bad information.
He is being slightly misled.
Perhaps people are not doing their homework. I entirely agree with the question put by Deputy Molony.
The Minister is smiling in recognition of that fact.
Could the Minister name some of the people who sit on the committee that investigated cases which have been declined insurance?
When I have received full information from the people referred to by Deputy Molony I will be better able to assess the situation. I do not think the matter is as serious as the Deputy makes it out to be. I say that in the context that there is a general acceptance that the level of premiums for young people is of its nature higher than the levels of premium for adults or those over 25 years.
Will the Minister tell the House on what basis he regards it as fair that young people should be discriminated against given the fact that people can only start driving under our law at the age of 17 or 18 years? If an analysis was done it may well transpire that people with red hair might be involved in more road traffic accidents than people between the ages of 17 and 23.
Particularly if they are women, according to the old fable.
Is it right that young people should be discriminated against in this way? The Minister will accept that the contents of his reply indicate clearly that young people are being discriminated against.
I do not like the word discriminate.
I do not like it either.
In the insurance industry the rate in respect of any risk must reflect the risk involved. It has been the experience of the insurance industry that it is a loss-making underwriting situation and that the younger the person, especially those under 25 — this has been proved by the PAC — the higher the accident rates. The liabilities on the insurance companies are highest for those categories. I accept that the level of premium must reflect the risk involved. That has always been the case.
The Chair offered to allow me ask a question earlier and I hope he will permit me to do so now.
As long as the Deputy does not report me to Deputy Tunney.
I am not one for reporting people to anybody. I made a recommendation to the Minister that the easiest and quickest way to deal with this problem was for all young people seeking insurance to be divided out equally in proportion to the total motor insurance being written by the companies. That is the fairest way. It will guarantee that young people get a fair quote and that motorists will be insured. What is happening now is that because of the attitude of the insurance companies up to 25 per cent of people using our roads are uninsured. Will the Minister accept our recommendation?
I cannot accept that up to 25 per cent of motorists are uninsured.
That was the Minister's figure last year.
The concept of equalising the numbers throughout the companies is something I cannot dictate. The industry has its right to their own spread of the portfolio. I cannot dictate to them as to what they should do but even if what the Deputy has suggested was carried out it would not necessarily mean that the rates would be reduced for young drivers. The risk will not change. Therefore, there may not be a lot of sense in what the Deputy has said but I am prepared to give the matter consideration.
If it is not voluntary, sooner or later the Minister will have to legislate to force them to do it.
The remaining questions will appear on next Tuesday's Order Paper.