asked the Minister for Industry and Commerce if he has any plans to counter the recent decision of Guardian Royal Insurance Company to restrict their intake of new young male driver business, in view of the recent efforts of the Government to reduce insurance costs; and if he will make a statement on the matter.
Written Answers. - Guardian Royal Insurance Company.
87.
The Deputy will be aware that, as the insurance supervisory authority, my primary and indeed statutory duty is to ensure that insurance companies maintain their statutory reserves and solvency requirements. The acceptance or rejection of any type of risk is primarily a matter for each individual insurance company to decide in the light of their underwriting experience. No obligation can be placed on an insurer to quote in respect of a particular risk or to quote at any particular premium.
In 1987, insurers sustained underwriting losses of £32 million on their motor portfolios. These losses have risen to £48 million in 1988. Faced with losses of this magnitude over the past two years insurers have had no option but to increase their premiums in line with their claims' experience or to exercise more selectivity in the type of risk undertaken.
I understand that Guardian Royal Exchange have become more selective in the type of risk for which they are prepared to quote. This more selective approach applies to new business from male proposers but does not affect their existing policyholders or new female drivers. Additionally my information is that a number of companies are continuing to offer insurance cover to persons under 25 years of age.
However, cases of inability to get motor insurance cover can be dealt with under the declined cases agreement. This is an agreement between the authorised motor insurers and the Minister for Industry and Commerce. The Declined Cases Committee, established under the agreement, examines cases referred to it by my Department where motorists have been declined cover by five or more insurance companies, and nominates a company to quote for the risk involved. Before a case can be submitted to this committee for consideration it is necessary for my Department to have copies of written refusals from five insurance companies together with details of any previous insurance held in the last three years.
The Government remain fully committed to improving the environment for insurance generally, and in this regard the Minister for Justice and the Minister for the Environment are considering further initiatives regarding the operation of the courts and the enforcement of the Road Traffic Acts.