Dáil Éireann díospóireacht -
Thursday, 25 Feb 1999

Vol. 501 No. 2

Written Answers. - Motor Insurance.

David Stanton

Ceist:

150 Mr. Stanton asked the Tánaiste and Minister for Enterprise, Trade and Employment the action, if any, she has taken in order to reduce the cost of insurance premiums to motorists; the average percentage change by year to motorists with regard to motor insurance in the past two years; the plans, if any, she has to ensure that competition exists in the market; and if she will make a statement on the matter. [5733/99]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

The 1996 Deloitte & Touche report on an economic evaluation of insurance costs assessed the Irish motor insurance market in relation to consumer choice and price competition. The report found that Irish motorists are better catered for than their UK counterparts, with three active insurers per 100,000 private cars in Ireland compared with 0.3 insurers per 100,000 private cars in the UK. Deloitte & Touche's survey of motor insurance premiums indicated that there was no uniform market price for motor insurance due to factors such as differing assessments of claims histories by insurers, strategies towards niche markets, specialisation and segmentation of the market. Within these parameters, motor insurers quoted widely different premiums for similar risks and this is characteristic of a competitive market.

While mature drivers with good safety records benefit from competition between insurers in particular segments of the motor insurance market, the consultants' survey found that young drivers were regarded as a high risk category and that certain insurers refused to quote for young drivers. The insurers' reluctance to quote was attributed to young motorists' poor claims record. The report found that the average cost of an insurance claim for 17-24 year old drivers was over twice that for the 36-40 age group and that motorists in the 17-24 age group were responsible for over three and a half times the average claims cost of the 36-40 age group. The price index for motor insurance increased by 3.2 per cent in 1997 and 4.7 per cent in 1998. These increases reflected the sharp increase in underwriting losses experienced by the motor insurance industry from 1995 and the consequent need for insurers to raise premiums in order to provide for the increased cost of future claims.

It is abundantly clear from the foregoing analyses that the primary focus of initiatives aimed at reducing the cost of motor insurance must be on reducing the frequency of accidents and the associated cost of claims. I have kept the House informed of initiatives being taken to improve driving standards and safety awareness particularly among young drivers. These measures include the introduction of a scheme of insurance premium discounts by the insurance industry, in conjunction with the driving instructors' register, on completion of a required number of driving lessons. Other initiatives include the introduction of road safety educational programmes for students and advertising campaigns by the National Safety Council to discourage speeding. The Department of Environment and Local Government is undertaking an examination of the Ontario graduated licensing system for learner drivers as a possible model for introduction here.

In addition to the above initiatives, I re-established the motor insurance advisory board in September 1998. The expanded membership of the new board is broadly representative of the consumer, insurance user and road safety and road traffic interests. I have asked the board to act not only as a monitoring agency but also to provide advice to me and our Department in regard to the current charges for motor insurance as between different risk categories of drivers having regard to the claims structure in each category. I have also asked the board to advise me on any matter which the board itself sees as affecting premiums charged and the methods of providing motor insurance.