asked the Minister for Industry, Trade, Commerce and Tourism the steps he proposes taking to implement the recommendations of the report of the inquiry into the cost and methods of providing motor insurance.
Ceisteanna—Questions. Oral Answers. - Motor Insurance.
3.
A number of the measures which the Government announced on foot of the Prices Advisory Committee Report on Motor Insurance are already in force. These include increased fines for uninsured driving, increased surveillance by the Garda authorities and the elimination of the double counting of certain social welfare benefits.
Various other measures are in hands in my own Department and in the other Departments concerned, and I am in communication with the Ministers concerned with a view to the earliest feasible implementation.
In regard to the measures which would come within my area of responsibility, the position is that an order will be made in the very near future establishing a representative board to advise on matters such as premium rates, loadings, and the availability of insurance cover. I will shortly lay before the Houses of the Oireachtas a draft order requiring insurance brokers to identify separately, when billing clients, any service charges made.
A review of price control procedures has been completed by my Department.
Special discount insurance schemes cannot be subsidised from the pocket of the general motorist and, so far as is known, no new discount schemes have been established since the Government announcement.
Insurers have undertaken to keep statistics in relation to particular aspects of their operations and are aware that additional statistics are likely to be needed by the representative board to be set up shortly.
Would the Minister agree that although this important report was announced in February 1983 virtually nothing has been done to deal with the cost of motor insurance? Much has been promised. His predecessor undertook to introduce a windscreen disc to enable people to determine whether drivers were insured or not. That was to have been done six months ago but the Minister makes no reference to it in his reply. Would the Minister agree that the need for a quicker response is indicated by the fact that one in five cars is uninsured? Will he take the measures outlined in the 1983 report to deal with uninsured motorists?
The Deputy can be assured that the action required by my Department will very shortly be completed, especially the setting up of the representative board. The windscreen disc is a matter for the Department of the Environment and there are other issues of concern to other Departments — particularly the Department of the Environment and the Department of Justice — for which I cannot answer. If the Deputy has questions pertinent to those Departments, I suggest that he asks the Ministers involved.
Has the Minister made representations to the Minister for the Environment on the matters which more properly refer to him and which were outlined in the 1983 report? Is the Minister aware that the outstanding claims before the Motor Insurance Bureau at the end of 1983 for liability arising from uninsured motorists stood at £28 million? Does he understand that that money has to be borne by the other four out of five motorists who go to the trouble of properly insuring their cars? Is it not time some relief was given to those hard pressed people.
In answer to the first part of the Deputy's question, I have been in close contact with the Departments concerned.
And the windscreen disc?
I have been in touch with the Minister for the Environment and the Minister for Justice about the areas in which they are required to take action. I am aware that there is a level of uninsured drivers but this requires action from other Departments, such as greater surveillance by the Garda, which has been put in train. I do not wish to go into the responsibilities of other Ministers, and I ask the Deputy to put down questions to the relevant Ministers.
Is the Minister aware that there can be great difficulty in ascertaining whether a particular motor vehicle is covered by insurance? Is there a recommendation, or does he intend to implement a recommendation, to provide a central registry that would enable a person who received injuries from a motor vehicle to find out if insurance on the vehicle is provided? The Garda on occasion do not or cannot provide the necessary information.
That would appear to be for another Department.
Taxing motor cars is the responsibility of the Minister for the Environment and I would ask the Deputy to address his question to him.
Is this recommendation in the report?
There were recommendations in the 1983 report but none of them is being implemented.
I do not agree with the Deputy, but I do not want to enter into an argument with him because this is not my responsibility.
If the Minister would tell us the areas that have been complied with we would all know what has been done.
4.
asked the Minister for Industry, Trade, Commerce and Tourism if he will consider encouraging motor insurers to offer discounts on motor premiums for drivers who have undertaken advanced driving tests.
I am informed that at present no such advanced driving tests are run in the State, although there may be drivers here who have passed these driving tests abroad. While any measures which improve the standard of driving are to be welcomed, the question of granting discounts to persons who have passed such tests is a matter in the first instance for individual motor insurers to consider and decide.
5.
asked the Minister for Industry, Trade, Commerce and Tourism if he is aware that many motor car insurance companies are now refusing to renew insurance policies for customers who have been convicted and sentenced to disqualification from driving for a temporary period and that many of these customers will never again be able to obtain motor insurance under their own names; and if he intends to introduce some form of legislation to regularise this anomaly.
I am not aware of any general practice by insurers of refusing to provide cover for persons who have been temporarily disqualified from driving for offences under the Road Traffic Acts, after the period of disqualification is ended.
If the Deputy is aware of any individual who is experiencing difficulty in this area my Department can investigate the matter and refer the case to the declined cases committee if appropriate. This committee was set up in June 1982 and deals with cases of inability to obtain motor insurance.
Is the Minister in a position to tell us the number of cases referred to the declined cases committee? Under the terms of the declined cases agreement insurers may not refuse to provide cover except where such provision would be deemed to be against the public interest. How many cases were deemed not to be in the public interest?
The provisions have been invoked by the declined cases committee on one occasion only, and for very good and valid reasons.
While they may be obligated to provide insurance cover, are there any controls as to the amount of premium they can require?
There is a price control mechanism for motor insurance and companies have loadings for such things as convictions, age and so on. Any complaints regarding excess charges for premiums should be notified to my Department. They will be immediately investigated and corrected if necessary.
That is a separate question.
6.
asked the Minister for Industry, Trade, Commerce and Tourism the proposals he intends to implement in order to achieve a cheaper form of motor insurance, particularly for persons under 25 who are unfairly penalised at present; and if he will make a statement on the matter.
7.
asked the Minister for Industry, Trade, Commerce and Tourism the steps he proposes taking to deal with the high cost of motor insurance for young drivers.
I propose to take Questions Nos. 6 and 7 together.
Motor insurance for young drivers is relatively more expensive than that for older drivers because of the accepted practice of applying loadings, to reflect the additional risk which they represent, to the insurance premiums charged to young drivers. In addition, younger drivers are less likely to be in a position to benefit from no claim bonuses which older drivers will have earned.
The necessity to charge loadings arises by virtue of the higher incidence of accidents and claims involving young drivers relative to their older counterparts. The motor premiums advisory committee, which examined accident and other statistics, found that the loadings charged to younger drivers generally reflected the additional risk which they represent.
The committee of inquiry into the cost of motor insurance which reported in January 1983 considered it entirely legitimate that groups shown to have higher claims experience should pay higher premiums. The committee made various recommendations in relation to the cost of motor insurance generally, a number of which have already been implemented.
The representative board, which will be established very shortly, will advise the Minister on matters related to premium rates, loadings and the availability of cover.
If the Deputies are aware of any individual case of excessive rates being charged to young drivers, I will be glad to have them investigated by my Department.
Does the Minister accept that in some cases young people are being asked to pay prohibitive rates? I know a person who was asked to pay £1,000 insurance for a £3,000 car. Can the Minister hold out any hope that a statutory or some other instrument can be used to ensure that these people, many of whom have had trouble free motoring experience, will be able to obtain insurance at a lower rate?
We cannot directly link a premium to the value of a car because it is possible that a car valued at £2,000 may be unsafe or may not be roadworthy. All insurance companies apply loadings to young drivers for a number of reasons which I have already given in numerous replies in this House, but mostly because the accident rate is substantially higher than in the case of older drivers, and because they do not have experience, they have not earned their no claims bonus. I have examined all the price applications as closely as possible to try to ensure that the premiums charged are reasonable and I have asked the insurance industry in general to take on young drivers. I am satisfied that, with a few exceptions, this is being done at present.
Will the Minister agree that the reason the number of uninsured motorists is so high is that young drivers find it so expensive to get their first insurance and, consequently, are prepared to take the risk of going on the road without any insurance? Will he indicate when he proposes to comply with the commitment given in this House two years ago by Deputy Barry that his party were going to introduce a comprehensive new policy dealing with insurance for young people under 25 years?
That is a separate question.
I am as concerned as the Deputy about uninsured drivers. I am saying realistically that the price of insurance for young people reflects the higher risk they carry. The experience of insurance companies who deal with the motorists has been a most unhappy one in recent years. I have an obligation to ensure that these companies continue to have a pricing structure that is competitive but they must also be allowed to continue in business. I must balance both considerations as the Deputy who was a former Minister in charge of this Department knows very well.
Will the Minister indicate from the records of the Department the number of young motorists under 25 years who are currently insured and the number who would like to get insurance but who cannot get it at a reasonable cost? Will he indicate to the House the kind of money the insurance companies have to carry because of the extra liability of young drivers on their books?
I do not have the number of drivers under 25 years who are insured. I wish to tell the Deputy I am satisfied that companies are taking on young drivers and that there is no widespread problem in that regard. However, I accept there is a problem with regard to pricing.
How does the Minister know there is no problem if he has not got the number? How many young drivers under 25 years are insured?
If young drivers were complaining to my Department I would be aware of it. I know there are problems for them primarily because of the price of insurance but I have been advised in at least two independent reports that the premium rates charged to young drivers are justified. I am not defending the companies but I have an obligation to see that there is a fair balance between the premiums charged and making sure that the companies continue in business.
Is the Minister of State aware that one insurance company is promoting its business by stating the number of people who will be seeking insurance at the end of each year? If that company can indicate the number of policyholders who will be renewing their insurance, surely the Department can give a breakdown of the age groups accommodated? I do not believe the Minister has not got those figures.
That is a separate question.
They were in the Department when I was there. I ask the Minister to send me at his convenience the information I have requested.
I will be happy to communicate with the Deputy.
Will the Minister state if he expects that the board will be set up and have its first meeting by the end of this year?
I would expect the board to be set up sooner rather than later but I rather doubt it will be in operation by the end of the year. I hope it will be established early in 1985.
8.
asked the Minister for Industry, Trade, Commerce and Tourism if he is aware of the difficulties caused to insured drivers with the PMPA following recent increases in premiums of up to 50 per cent; and if he will explain in detail the reasons such substantial increases were granted by him.
The PMPA administrator proposed a number of changes in the rating structure of the company with effect from 1 September last, equivalent to an annual increase in revenue of 15.3 per cent. Having referred the matter to the National Prices Commission, I decided to raise no objection to the proposal which was justified on underwriting grounds and necessary as a step in restoring the company's business to a sound commercial and financial footing. The administrator is under a statutory duty to achieve this objective.
Following implementation of the revised rates, a small number of inquiries relating to renewal premium levels was received by my Department. However, I am not aware of any particular difficulties being faced by PMPA policyholders, as suggested by the Deputy.
I should point out that only a small percentage of policyholders will incur premium increases of 50 per cent; among these are taxi drivers to whom the increase approved in July 1983 did not apply.
Is the Minister of State aware that in addition to the increase of 48 per cent granted by the Department to the PMPA for drivers under 25 years, loading has been increased from 50 per cent to 100 per cent? Further, is he aware that a motorist with some years accident-free driving experience is paying in the region of £1,265 for insurance on a Fiat 1300? Does the Minister consider that just and fair?
I am aware that the decision approved by the National Prices Commission confined the allowance of the no-claims discount on private car policies to those loadings particular to the policyholder, that is, loading in respect of drivers other than the policyholder would not be reduced by the amount of the no-claims discount allowance to the policyholder. That was a change which I allowed on underwriting grounds. I am satisfied that the level of premiums for additional driver loadings charged by the PMPA is competitive when compared with other premiums charged by other companies.
The Minister's reply is rather strange because I have had correspondence from him which confirmed that the driver to whom I have referred has had insurance increased from over £500 to nearly £1,300. It is not surprising in the present circumstances that young motorists have no alternative but to go to the PMPA and they are being exploited by the PMPA? Would the Minister like to comment on that?
I would categorically reject the last part of the Deputy's question. For four out of five policyholders with the PMPA the increase will amount to less than 10 per cent.
That is not true.
The PMPA have agreed to examine individually on a referral basis any case where the increase is over 40 per cent or £200, whichever is the lesser, and except where the increase is fully warranted by reference to the underwriting factors such as adverse claims experience, loadings due to licence endorsements, drunken driving convictions and so on, to postpone any increase in excess of those thresholds until the next renewal date. I think that is a fair effort on the part of the company.
Will the Minister not agree that his Department gave permission for a 48 per cent increase across the board for all insured with PMPA and the additional increase which I have mentioned has also been allowed for those under 25 years? In view of the additional income these excessive increases must mean to the PMPA, are we reaching a situation where the levy imposed on all others insured will be terminated at the end of this year?
That is a separate question. It has nothing to do with the question on the Order Paper.
As I said in my reply, for four out of five policyholders the increase will amount to less than 10 per cent. The pricing structure applied for by the PMPA in relation to private cars was directed primarily towards additional drivers to policyholders. There was no increase in the basic rate for the policyholder himself. From my statistics, so far as insurance for private cars is concerned the PMPA are competitive. No matter what increase I give to insurance companies, it is a competitive market and companies will attract customers only if they remain competitive.
That is stretching the word "competitive".
It is a fact that if they got an increase of 48 per cent in respect of commercial vehicles, taxis and other categories of vehicles in July 1983, the then Companies Act did not apply probably because of market conditions.
I must ask a further question. I have a letter from the Minister in which he states——
That is not a question, and the Deputy may not quote at Question Time.
Is the information in this reply from the Minister correct? The PMPA were given approval last July to increase their third party premiums by 48 per cent. Is that correct?
That was correct in July 1983.
Why did the Minister not say that in the first instance?
I said it in a supplementary reply.
There was an increase of 48 per cent and a further increase in the load for those under 25 years of age from 50 per cent to 100 per cent.
I would be quite happy to clarify any matter for the Deputy. The price increase I granted to the PMPA is slightly complex in so far as it does not apply to primary policyholders, but it does have effect in relation to the discount record for additional drivers. That is where the increase comes. I am satisfied that the PMPA rate structures for private motorists remain competitive.
The Minister is being misled by the PMPA.
The Minister is not being misled by the PMPA. The Deputy need not worry about that.
Then the House is being misled.
My predecessor acted very wisely in relation to the PMPA.
The Minister should answer the question he is being asked.
It is on my mind.
On the Minister's what?
I am happy that my predecessor, Deputy Cluskey, acted very responsibly in respect of the PMPA. Some people over there do not think so.
Ceist 9.
9.
asked the Minister for Industry, Trade, Commerce and Tourism if he will indicate the current position regarding the financial standing of the PMPA insurance company now under administration; if he has received notice from the administrator as to possible changes in the structure and financing of the company; and if he is satisfied that the company can meet their projected targets for the present financial year.
The administrator to the PMPA Insurance Company Limited was appointed by the High Court and he is responsible to the court for all aspects of the conduct of the business of the company, including its financial affairs.
The company are of course, subject to insurance supervision in the normal way and, as the Deputy will be aware, this involves the publication and presentation to the Houses of the Oireachtas of annual statements submitted to me.
As insurance supervisor, it would be inappropriate for me to comment on the affairs of a particular company. However, I can tell the Deputy that the PMPA administrator is required under the relevant legislation to publish accounts for the year ended 31 December 1983 by the end of next month.
At least we are getting the Minister to admit that his Department as the regulatory authority are responsible for the financial affairs of the PMPA confirming what I suggested here during the passing of the Insurance Bill, 1983, as we have now a nationalised insurance company.
That is a statement.
In those circumstances would the Minister indicate to the House what the accumulated liabilities of the PMPA are at present and what the estimated assets of the company now stand at?
I want to make it quite clear to Deputy Flynn, as he appears not to want to listen to me, that I said in my reply: "The administrator to the PMPA Insurance Company Limited was appointed by the High Court and he is responsible to the court for all aspects of the conduct of the business of the company, including its financial affairs."
I am afraid the Minister misunderstands. I understand exactly what the duties of the administrator are.
That is a good start.
The Department of which Deputy Collins is the Minister of State are responsible for issuing the licence to the PMPA to continue in business. They are also responsible for bringing before this House the statement which he has promised.
A question please, Deputy.
Is the Minister aware of the public disquiet following recent suggestions in the media that the accumulated liabilities of the PMPA are not in accordance with the statement issued to this House last year and that likewise the assets are not at the same level as was indicated by his predecessor? I want to know whether the Minister knows what is going on in the PMPA at present, what the financial arrangements are, and who issues the order to have these arrangements entered into.
In relation to my responsibilities I can tell the Deputy that the PMPA administrator is required, under the relevant legislation, to publish accounts for the year ended 31 December 1983 by the end of next month. We will have to wait until the end of next month when they are published to see the exact position.
Does the Minister still retain a right as the licensing authority for this insurance company to investigate what is happening in the PMPA? Yes or no?
I have supervisory powers in relation to insurance responsibilities and insurance legislation in respect of the PMPA. I treat that company in regard to price increases in the same way as I treat any other company.
What the Minister is saying is contradictory.
Does the surcharge on premiums chargeable to policy holders with other policies to supplement the income of the PMPA still apply? How long is it intended to continue that to supplement the financing of the PMPA?
That is a separate question.
The question asks about the financing of the company.
It might be more appropriate on Question No. 10.
The 2 per cent levy continues and I have no intention of withdrawing it.