Written Answers. - Liability Insurance Premiums.
Seán Barrett
Ceist:
5
Mr. S. Barrett
asked the
Minister for Industry and Commerce
if his attention has been drawn to the continuing difficulties facing the public in relation to the premiums being charged for certain classes of liability insurance; and if he will make a statement on the matter.
I would like to remind the Deputy that my main and indeed statutory duty as the insurance supervisory authority, is to ensure that insurance companies maintain their statutory reserves and solvency requirements. In this regard I must respect the right of insurers to accept or reject risks in the light of their underwriting experience. There is no legal obligation on any insurer to quote in respect of any risk or class of insurance. Similarly there is no obligation on a company to quote in any manner or at any particular premium.
Motor insurance is the class of liability insurance which the public at large would most often be seeking to obtain. The Deputy will be aware that price control was removed by Government in January 1986. Since then motor insurers are required only to notify my Department of any alterations to their rates. These alterations are neither sanctioned nor approved by myself or my Department, they are merely noted.
Since January 1990, motor insurers have notified my Department of increases in their premiums resulting in an overall increase in rates of 22 per cent on average. However, I consider it only right to point out that the fundamental cause of high motor insurance prices for all motorists in Ireland is the high claims rate which, regrettably, is on the increase, allied to the high cost of individual claims which is also rising. In 1989 the number of claims increased by 6.5 per cent and the number of claims as a proportion of the number of vehicles increased by 2 per cent. In the same year the average cost of claims increased by 12 per cent. One cannot reasonably expect the price of motor insurance to reduce, or even stabilise in these conditions.
In 1988, insurers sustained underwriting losses of £48 million on their motor portfolios, the corresponding figure for 1989 was more than double that at £116 million. Confronted with losses of this magnitude and in order to maintain their viability insurers have considered it necessary to increase their premiums in line with their claims experience.
While I can assure the Deputy that the Government is fully committed to improving the environment for insurance generally, Government action of itself will not reduce or stabilise motor insurance costs. Consumers must play their part by increased awareness of the need for safety. In this respect I am hopeful that the year long road safety campaign launched recently by my colleague, the Minister for the Environment, with the backing of the insurance industry will help to highlight the need for safety awareness and higher driving standards in the minds of our motorists. This should help reduce the number of accidents on our roads and, ultimately, the number of claims.
