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Dáil Éireann díospóireacht -
Tuesday, 27 Mar 2001

Vol. 533 No. 3

Adjournment Debate. - Motor Insurance Costs.

I am grateful for the opportunity to raise in the House this evening this important matter affecting thousands of our young citizens.

In ministerial reply after ministerial reply in this House, questioning Deputies have been fobbed off by the standard insurance industry mantra that the putative level of insurance costs for young drivers is a function of the claims record, especially of young male drivers, and effectively there is nothing in EU rules the Minister can do about it. The record shows that no month has passed without this issue being pressed at the relevant Question Time and the Minister doing his ritual handwashing exercise. To make matters worse, the most prominent figures in the industry have attended in sequence before the Committee on Enterprise and Small Business and defended the inordinate costs levied on young drivers by reference to their claims ratio which they said made any reduction not viable.

If The Irish Times report of the Motor Insurance Advisory Board findings is correct, the position of the industry has been at a minimum misleading and the position of the Minister of State naive and foolish. He must now tell the House why he continued to regurgitate the traditional excuse for inaction, even after he received the Motor Insurance Advisory Board preliminary report last July. The industry must explain why, although it had full knowledge of the MIAB report, its leading figures appeared before an Oireachtas Select Committee over recent months and stuck to their original position. Meanwhile tens of thousands of young people, who in most cases need a car to get to work, are expected to bear burdensome and crushing insurance costs because the testimony of the industry that it is an unprofitable enterprise is relied upon by the Minister.

It is all too tragically true that the rate of accidents among young male drivers in particular is alarmingly high. However, both the Minister of State and the industry must now explain why the MIAB has apparently concluded that young drivers are virtually the most profitable segment of the market. They must explain if it is true that young female drivers contributed on average £730 per annum per person to profitability. If those figures are accurate, the position of the industry is a disgraceful misrepresentation of the true position. The recklessness and appalling record of some young male drivers ought not be allowed distort the fact that tens of thousands of responsible young drivers are being punished on the fraudulent basis that they constitute an inherent loss making segment of the market.

This is a very significant issue of public interest. Some young people are expected to pay more for annual insurance cover than they paid for the motor vehicle being insured. If the MIAB report is borne out, they are victims of grave misrepresentation by the industry in which the Minister of State, knowingly or otherwise, is complicit. This revelation is reminiscent of the discovery a few years ago that in their annual presentation of the Blue Book the industry conveniently excluded reference to investment income. It is now time for a detailed examination of practices in the industry and for immediate alleviation of the burdens unfairly imposed on young drivers.

It is especially regrettable that, in his remarks on the Order of Business today, the Taoiseach lapsed into the old waffle that the figures are in dispute and came out essentially on the side of the industry. Nor did he make any attempt to explain why his Minister sat on the draft report since last July while the members of the Oireachtas committee were made fools of by the industry. He might have explained why the Personal Injuries Tribunal report initiative, which he today confused with the MIAB report, has taken almost four years to win the approval of his reluctant Minister who, it must be said, has never shown that the consumers, young or old, are his first priority.

I set up the Motor Insurance Advisory Board in 1998 to examine the factors that influence the cost of motor insurance and, in particular, the relationship between the premiums charged to different categories of drivers and the claims experience of those categories. The board is chaired by Ms Dorothea Dowling, claims manager of Coras Iompair Éireann and a Fellow of the Chartered Insurance Institute, with 15 years experience in this industry in both Dublin and London . The board members are representative of all the various groups interested in motor insurance, including representatives of consumers, commercial motorists, young drivers, the Garda, Departments of Justice, Equality and Law Reform, the Environment and Local Government and Enterprise, Trade and Employment, driver trainers, the motor industry and, of course, the insurance industry, including brokers.

The Motor Insurance Advisory Board submitted its interim report to the Department of Enterprise, Trade and Employment last June. The board was conscious that the data on which it had based its interim report was incomplete and that the findings were, therefore, tentative. Thus, the interim report clearly stated that the board required access to the individual raw data before any firm conclusions could be reached. I want to categorically contradict what Deputy Rabbitte has tried to portray here this evening, that is, that the MIAB has apparently concluded its business. The MIAB has not concluded its business. Furthermore, it became clear last October that there were serious deficiencies in the raw data. The board took the view that the flawed information compromised the already tentative conclusions of its report and brought this fact to my immediate attention.

In essence, the data concerning claims experience in various categories of drivers did not cover the whole market. The MIAB considered that the missing data were very significant and could have a serious impact on its analysis. In addition, it was not clear that the data adequately identified different categories of driver. In particular, it was not clear that women drivers were always separately identified. The challenges in producing accurate data largely arose because the centralised IT system the insurance industry used to deliver the necessary data had difficulties in coping with mergers in the insurance industry which had necessitated integration of sometimes very different computer systems. It appears that these difficulties have been resolved and that the insurance industry is now in a position to deliver accurate data to the MIAB.

Once the board was in a position to confirm that the insurance industry would be supplying up-to-date accurate data, to facilitate the board's analysis of that data and the completion of its task, I extended the appointment of the Motor Insurance Advisory Board until the end of 2001. It is vital that any consideration by this Government of issues arising from the levels of motor insurance premiums should be on an accurate and well informed basis. I respectfully suggest that Members of this House, rather than playing politics with this serious issue, reflect on facts rather than fiction.

I am not playing politics. It is nine months since—

I will take no lectures from Deputy Rabbitte. He spent three years in the Department, sat on his hands and did not even consider the fact that there was not a Motor Insurance Advisory Board in operation for five years, which I had to revamp. He should not lecture me on this issue because he did nothing about it.

You must be joking.

(Interruptions.)

The Minister of State must address his remarks through the Chair. I ask Deputy Rabbitte to resume his seat.

I will take no lectures from Deputy Rabbitte who failed as a Minister. He is a waffler and an exploder of wind energy proportions, in exploiting various issues.

(Interruptions.)

The Minister of State is a hack of the industry.

I ask Deputy Rabbitte to resume his seat and allow the Minister of State to continue.

I will as soon as I tell the Minister of State he is a partisan hack.

The Deputy is totally out of order.

What an ignorant thing to say.

An Leas-Cheann Comhairle: The Minister should continue and address his remarks through the Chair.

(Dublin West): They made fools of us.

The Government, the Tánaiste, the Department of Enterprise, Trade and Employment and myself are very appreciative of the hard work already done by the board. We look forward to the work currently being undertaken and to the board's final report. It will make a very valuable contribution to informed debate on motor insurance costs. It is expected that the board will report towards the end of this year. The Government will take full account of the board's final recommendations and will refer them, as appropriate, to the Financial Services Regulatory Authority.

The Government is pursuing a number of other initiatives to address issues related to the level of insurance premiums. We decided last week to prepare for the establishment of a personal injuries assessment board to reduce the high cost of delivering personal injury compensation.

It took the Minister of State four years—

It did not take me four years.

I ask Deputy Rabbitte to resume his seat.

Deputy Rabbitte, you have made outrageous allegations. They are unsubstantiated, non-factual and ridiculous fiction.

I ask the Minister to address his remarks through the Chair.

Four years.

In December 1996, six months before you left office, you established this board, which has reported to me twice. I acted on the report against the wishes of other people. You participated in a Government, some of whose—

I ask the Minister to address his remarks through the Chair.

The report was ready in May 1997. This is 2001.

If Deputy Rabbitte does not resume his seat I will adjourn the House. If I suspend the sitting his colleagues will not have an opportunity to raise their matters.

I do not want you to do that, a Leas-Cheann Comhairle.

The Deputy is leaving me with no option. I ask the Minister to address his remarks through the Chair.

Four years.

The Deputy established the board in December 1996. It has reported to me twice and I have acted on the report.

(Interruptions.)

Please, Deputy Rabbitte. One word more and I will suspend the sitting.

We decided last week to prepare for the establishment of a personal injuries assessment board, to reduce the high cost of delivering personal injury compensation. Research undertaken by the MIAB indicates that a high proportion of outlay on injury claims is absorbed by fees paid to lawyers and other professional experts. It should be noted that for every £100 compensation paid for injury in motor accidents an extra 40% goes on professional fees.

A number of initiatives have been taken by the Minister for the Environment and Local Government to reduce accident frequency. While there is still some way to go and accident rates remain too high, particularly in view of their human cost, we are achieving real progress, particularly when the rates of accidents are compared with the significant rate of growth in car ownership. Car numbers have risen from 828,000 in 1996 to approximately 1.3 million today. I trust these facts put the matter in context.

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