Dáil Éireann díospóireacht -
Thursday, 1 Jul 1999

Vol. 507 No. 4

Written Answers. - Motor Insurance.

Richard Bruton

Ceist:

56 Mr. R. Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment if a private individual can obtain a motor insurance quote from any company established in the EU; and if she has satisfied herself with the level of competition in the motor insurance market, particularly in the segment dealing with young drivers. [17083/99]

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

Since the transposition into Irish law of the EU Third Framework Insurance Directive under Statutory Instrument No. 359 of 1994 (European Communities (Non-Life Insurance) Framework Regulations, 1994), authorised insurance companies may provide motor insurance throughout the EU/EEA on the basis of their home country authorisation.

In general, motor insurance companies will seek to attract safer low risk policyholders and a keen level of competition exists in this sector as a result. Currently there are 29 insurers – 17 companies with their headquarters in Ireland, 11 based in other EU member states and one non-EU insurer – authorised to underwrite motor insurance in Ireland. The Deloitte & Touche report on an economic evaluation of insurance costs referred to the competitive nature of the Irish motor insurance market in terms of numbers of companies per head of population compared with, for example, the UK insurance market. Deloitte & Touche's survey of motor insurance premiums as presented in its report 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. Its survey showed that the key factors affecting the premium rates applied to the Irish motorist were the individual driver's maturity and safety record. Within these parameters, motor insurers quoted widely different premiums for similar risks. This fact has also been borne out by successive automobile association surveys on motor insurance premium quotations.

The level of competition among suppliers of insurance in the young driver motor insurance market depends on the willingness of insurance companies, established here or abroad, to provide motor insurance cover in Ireland having regard to the poor safety record and high claims costs associated with the young driver category of insurance business. The experience in Ireland is that this is a particularly unattractive segment of the motor insurance market and supply of insurance is limited and, therefore, high-priced.

Insurers worldwide classify young inexperienced drivers as a high insurance risk relative to the more mature, experienced driver. The degree of risk decreases with age and maturity and the level of premiums charged reduces over the life cycle. As a general rule, therefore, young drivers will pay higher premiums for insurance cover at the outset but individual drivers have the incentive to earn premium discounts through safe driving performance.

In analysing young motorists risk profile, the Deloitte & Touche report on insurance costs in Ireland confirmed that, in a European context, young drivers as a group and individuals with poor safety records will have limited choice of insurers and face high premium costs throughout the EU. While the underwriting criteria used by insurers throughout Europe, such as type and make of motor vehicle, driver's age, experience, use of motor vehicle, geographical area and driving record are similar, other relevant factors, such as demographic profile, accident and claims frequency and cost of claims under different compensation regimes differ between member states.