My attention has been drawn to the survey mentioned by the Deputy which was carried out by the Consumers' Association in June 1989 and published in its Consumer Choice Magazine in October 1989. I would like to stress that this survey was based on a hypothetical risk and the methodology used calls into question the results of the survey.
The Consumers' Association itself admits that it was decided to ensure that the brokers and the insurance companies contacted were not given the same details of information as to the risk for which quotas were sought. In effect the brokers were not then seeking quotas on a basis that could result in fair comparison. The results of this survey must, therefore, be seriously questioned.
In addition the risk for which quotes were sought in the 1989 survey was not the same as the risk on which quotes were based in an earlier survey in October 1988 by the Consumers' Association. Valid conclusions cannot, therefore, be drawn from the results of the two surveys.
I must also point out that the 1989 survey covered only one category of motor risk and did not represent an overall survey of motor insurance premia.
At the time of its publication my Department rejected the 1989 survey. I would add that clearly the results of this survey do not, for the reasons I have already mentioned, give a valid picture of the trends in motor insurance premia or of the range of rates available in the market.
The Deputy will appreciate that, as the insurance supervisory authority, my primary responsibility is to ensure that companies meet their statutory reserves and solvency requirements and, as such, I must respect the right of insurers to accept or reject risks in the light of their underwriting experience. No obligation can be placed by me on an insurer to quote in respect of a particular risk or to quote at any particular premium.
The cost of motor insurance is dependent on the frequency and level of claims, the level of awards for personal injuries and the general underwriting experience of insurance companies. In recent years competition has also increasingly become a factor. Since price control was removed by the Government in January 1986 motor insurers are required only to notify me in advance of any alteration to their rates. However, I am aware that the underwriters' losses in motor insurance have been increasing. Unless there is an upturn in the underwriting experience, one cannot expect overall improvements in rates for motor insurance.