Vol. 550 No. 5
5 Mr. Flanagan asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she proposes to take to deal with the ever increasing cost of insurance to include public liability insurance, employers' liability insurance and motor insurance for young drivers. [9359/02]
The pricing and underwriting of insurance is a matter for individual insurance companies. EU law prevents the Department and I from intervening in relation to the matter of premium levels or in respect of the risks insurance companies are prepared to underwrite. Insurers make decisions on the provision of cover based on their assessment of the particular risk involved.
The insurance industry has pointed to a number of factors, both domestic and international, to explain these increases, including the high cost of settling claims, the general reduction in investment returns, recent court decisions regarding the calculation of compensation losses in personal injury cases and the effects of the 11 September attacks in the United States. Representations being made to me suggest that many businesses seek insurance cover from sources outside Ireland. Availability from these sources has contracted, as capacity in the international market has been impaired following the events of 11 September last.
I am aware of the difficulties being experienced by businesses in getting cover, even at very high premiums. I am again arranging to meet the Irish Insurance Federation and representatives of the main insurers here to discuss these difficulties. I will be encouraging them to develop, in consultation with their clients, innovative strategies for controlling risk. It is my hope that such strategies will contribute to a moderation of prices. Meanwhile, I await the final report of the interdepartmental implementation group, which was set up to progress the establishment of the personal injuries assessment board, PIAB, in order to ensure that the latter may be set up as quickly as possible.
With regard to the Motor Insurance Advisory Board, I received a briefing from the chairperson, backed up with a proposed final draft of the report, last week. I noted the progress made, and the chair's plans to bring the matter to a speedy conclusion. The board met on Thursday last and formally ratified the final text. The report has now been sent for printing. I will be pleased to personally send the two Opposition spokespersons concerned a copy of the report, as printed, as soon as it becomes available.
I will be giving urgent consideration to the best way of advancing the MIAB's recommendations when I receive the printed report and, in that connection, any contributions that I may receive from the Deputies will be very welcome. Further work to improve health and safety standards in the workplace is also in progress.
I put it to the Minister of State that his actions in this area have been quite poor and that his record during the Government's term of office – a period which is thankfully coming to an end – illustrate this. A colleague has brought to my attention a renewal notice from Quinn Direct Insurance Company in respect of a Volkswagen Golf valued at €1,270. The company quoted a new annual premium of €7,258.69 in respect of third party, fire and theft cover. What has the Minister of State to say about that?
Set fire to the Golf.
I am delighted that Quinn Direct is quoting because many insurance companies are not issuing quotes and a number of such companies have gone to the wall. There is a crisis in the worldwide insurance industry and the major players within it, particularly the macro-intermediaries, have a crucial role to play going forward. In my opinion they will respond to sectoral opportunities in the next year or two.
I fully accept that the premium to which the Deputy referred is astronomical. Car motor insurance is mandatory in Ireland and we are obliged to pay out in respect of a huge number of claims. I put it to the Deputy that of the €800 million paid out in claims last year, over 40% was paid by the insurance companies in lawyers' fees. We all have a serious responsibility to address that issue and I hope I will have the Deputy's support as I try to tackle it.
The Minister of State said the same thing nine months ago and he has done absolutely nothing in the interim.
The Deputy is a member of the Incorporated Law Society. Perhaps he should make a submission about this matter.
The premium to which I referred is not unusual and the total amount quoted is inclusive of the 2% Government levy. What is the position with regard to that levy which, in the five years since the Government took office, has raised €250 million for the Exchequer? Where does this money go?
The levy in question was introduced by the Deputy's party when in Government. I have made it clear on previous occasions that it is part of the general taxation framework and the money collected from it is invested in the central Exchequer fund to supplement the reasonable tax base that exists in this country.
Does it go into the central Exchequer fund?
