Vol. 516 No. 5
92 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps, if any, she will take to ensure that car insurance is affordable for young drivers; and if she will make a statement on the matter. [8208/00]
Current high levels of premiums for young drivers are directly related to adverse claims experience of young drivers as a risk category. Accordingly, the primary focus of initiatives aimed at reducing the cost of motor insurance for young drivers must be on reducing the frequency of accidents and the associated cost of claims. The key to this is to create appropriate conditions for improving their standards of driving and their appreciation of road safety.
A number of initiatives are in place and are being taken to improve driving standards and safety awareness amongst all drivers, including young drivers. In my own area these include: the establishment in 1998 of the Motor Insurance Advisory Board; the abolition of the cap on brokers commissions in 1999, which should introduce further competition into the market and the establishment of a special working group to advise on the establishment of a personal injuries tribunal and to examine issues surrounding alternative systems of personal injury compensation in operation in other jurisdictions. The group will present its final report shortly. In the light of its report, I will consider what follow up to the work of this group is necessary.
Does the Minister accept – I mean no disrespect to him – that is the answer trotted out for many years on this issue? Does he accept it is of no value to young male drivers, in particular, who cannot get access to insurance? If an insurer takes them on, it is at exorbitant rates. I am sure the Minister is familiar with the recent IBA survey which suggested that the quotes, in so far as one can get them, are in danger of going through the £4,000 per annum barrier for young male drivers.
I am fully aware of the situation. I have given much time and attention to it, and am still doing so. I established the motor advisory board in 1998 and appointed to the board 17 people who are actively involved in the motor and insurance industries and the business sector. They are working assiduously to see what can be done to ensure we can create a structure in which young drivers can get a reasonable premium.
When will we see action?
We are doing our best. Many people have tried to do this before me and they did not have any success. Be assured, our Department will do what it can to ensure we can assist. I would like to resolve this issue but the facts and the statistics make it virtually impossible and it is against that background we must operate. Our priority must be to make sure cover is available and to ensure there are viable and liquidity strong insurance companies to give the cover.
It is against that background and looking at all the surveys, analysis and statistical data that we are doing what we can as quickly as we can to ensure we change the situation. However, there will have to be a huge change in the attitude of responsible people who have come through the system and young people who want cover. There will have to be many changes across the board. Our Department and the Department of the Environment and Local Government, in particular, in co-operation with the Garda Síochána and others are doing what they can to make major changes. Slowly, but surely, we are making some progress.
The Minister said one of his duties is to make cover available but, plainly, cover is not available. Again, I instance the IBA survey. It took a fictional 22 year old professional male with a 1999 Volkswagen car in Kildare and sought quotes. Only Quinn Direct gave a quote of £3,712. Cover is not available. Surely, this is a temptation to young drivers to go on the road without insurance?
There are no figures to suggest there are more uninsured drivers on the road now than previously. As the Minister of State charged with responsibility for this area, I have not received many representations in recent years from people who have been refused cover. Cover is being made available but at a very high cost. My priority is to ensure that cost is reduced in so far as it can be. I have tried everything possible to do that in consultation with the insurance industry and the motor industry and those consultations are ongoing. The motor insurance advisory board is trying to ascertain if we can come up with a new formula or a new structure. Such a new structure would involve a major change and, if we make the progress we hope, it might not be so palatable to people. We hope such a new structure would be accepted – although that would not be easy – which would allow young people to get cover but there would be certain limitations.
I am disappointed the Minister of State does not seem to understand the urgency of the fact that young people are not able to get insurance cover. My colleague, Deputy Upton, tabled this question on foot of representations she received and I am sure every Member has received similar representations. Is it not the case that many young males, in particular, cannot get cover and that to offer them cover at a premium in the order of £4,000 is tantamount to offering them no cover? Is it not time to consider what possible interventions the State might make to deal with this problem? Some of these young people need their cars to go to work, they need them for their livelihoods.
I am surprised that a man of Deputy Rabbitte's experience would call for the intervention of the State on this issue. We are debarred by European Union rules from interfering in this area. We cannot interfere with the market, the insurance industry or direct that cover be given. All we can do is try to create an environment and a legislative framework within which people can compete for cover and ensure that the industry responds to that. Based on the information and statistical data available, it is clear that no insurance company here is making a profit on motor insurance cover. They all have underwriting losses.
When the Deputy was in the Department in 1997 he requested the professional staff to carry out an evaluation and they concluded there were underwriting losses and that no excessive profits were being made by the insurance companies here that provide motor cover. The Motor Insurance Advisory Board, which is made up of eminent people, some of whom have major skills in this area, is analysing this matter in great detail and I await its report.
Investment income was not taken into account in that analysis.
It has a variance of 2% to 5% in the overall insurance area. I am waiting for the figures to come through. Every effort is being made to address this issue and I fully understand the problems in this area.
