Vol. 538 No. 1
53 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will consider launching a ministerial inquiry into insurance costs and the impact which the current increases of 10% are having on the small business sector; if her attention has been drawn to the impact on small companies of such increases; the steps she proposes to encourage international competition to underwrite insurance here; and if she will make a statement on the matter. [17297/01]
There has already been extensive examination of the factors contributing to the relatively high level of insurance costs in Ireland. Insurance price movements are normally based on the underwriting experience of companies, as well as trends in the level, frequency and cost of claims. The high transaction cost of claims, particularly legal costs, has been identified as one of the major factors driving up the cost of personal injury settlements.
For some time now, this Government has been concerned at the high, and increasing, cost of insurance. I am aware of the difficulties being experienced by some companies due to these costs. The decision of this Government to establish a personal injuries assessment board by next year seeks to address the issue of the high cost of settling claims by achieving a reduction in the delivery cost of personal injury compensation for work related injuries.
In addition, a workplace safety group has been established with a view to improving health and safety standards in the workplace. The objectives are to reduce workplace accidents, encourage injured workers to return to the workplace at the earliest possible date and improve claims handling procedures, thus reducing insurance costs. The group is developing proposals designed to bring the initiative to small and medium sized firms.
Since the transposition into Irish law of the EU Third Life and Non-Life Insurance Directives in 1994, insurance companies authorised in any member state may provide insurance cover throughout the EU on the basis of their home country authorisation. This has opened up the Irish market to competition from insurance providers in other EU countries. In addition, the removal of the cap on brokers' commission will encourage further competition in the Irish market.
The Minister has failed to encourage international competition into the Irish market. Will he explain why the number of claims in this country is seven times higher than in the UK? Premium increases of 40% are a national scandal. The cost increases for employers together with public liability will result in under-insurance and, in certain cases, closures of businesses. Competition is lacking and there are problems with litigation. Does the Minister have any powers to intervene in that area? Litigation through the courts is widespread and costs are far too high when 44% of a claim can be consumed by legal costs.
I do not accept that we have failed. There are 521 companies authorised to provide insurance cover here, 398 of which are foreign. Many companies choose not to operate here because they find the insurance sector unprofitable.
We cannot be compared to the United Kingdom, which has a much bigger population, greater competition among insurance companies with higher levels of investment and greater opportunities to make profits. We have a smaller population, a higher propensity for claims, higher awards, including higher costs associated with delivering awards, and greater involvement of the legal profession in delivering awards in comparison with the UK. This is the reason for the high insurance claims that are prevalent here. The consumer is the victim.
The Government is addressing all aspects of the high costs of insurance. We need to bear in mind the irresponsibility of people who drive without insurance. This costs the insurance companies huge amounts of money every year in compensatory payments to the motor insurance bureau. There is nothing conceivable that we have not considered to reduce the costs of insurance. The Government established the personal injuries assessment board which is due to commence operations on 1 January. We are confident it will make a huge contribution without infringing on the right of citizens to continue to pursue the legal route and the law of tort if they so wish. I cannot understand how the Deputy arrives at his conclusions.
Insurance liability is the issue, not car insurance. I was referring to small companies and their high insurance costs. The Minister commented on an entirely different matter. We are not discussing young drivers, but people engaged in business for 25 and 30 years whose costs are constantly increasing, which is altogether different.
The Minister is behaving like a leaving certificate student—
Will there be a study on public liability and the risks to small companies posed by high costs, as well as into the fact that public liability claims are seven times greater here than in the UK?
I am pleased Deputy Rabbitte is concerned about the leaving certificate students. I did not receive the investment he had to enable him come through the system so perhaps his judgment is a little sharper than mine. That is for others to judge.
I did not mention motor insurance in my response. I referred to the costs of claims across the board, in every area of activity including employers' liability and personal injury. It is a very serious matter and the Government is concerned. There has been a major increase in the percentage of payroll taken up by employers' liability. It rose from 1.95% in 1999 to 2.7% this year.
Will the Minister launch a study?
There is no control.
Under European Union law, no member state is allowed to introduce controls. The market rules.
Control or proper advertising—
The time for this question is concluded.
We cannot interfere with the marketplace. We can only ensure the system is transparent, that companies have the reserves to be—
We now have the euro currency.
In fairness to other Deputies who have questions submitted, I ask the Deputy to cease interrupting.
—allowed establish, that they have the liquidity to perform thereafter and the reserves to meet liabilities.
The Minister of State has failed dismally.
We have established the Personal Injuries Assessment Board and the group on workplace accidents.
It is not reducing premiums.
We are working towards that.
There has been a 40% increase.
The time for this question has concluded.
We all have a responsibility to try to get rid of the claims culture that exists in our country. We have the highest number of claims across the European Union.
