Motorists who have received their motor insurance renewal notices in the post in recent months have got quite a shock, with dramatic increases in the premiums being charged by insurance companies. In the past year premiums have gone up by 30% or more in some cases. On top of this, the insurers' representative body, Insurance Ireland, is predicting that motor insurance premiums are likely to increase by a further 25% next year. This means, for example, that a person with a premium of €400 per annum last year could be facing a premium of €650 or more next year. Many motorists are now facing an increase of between €250 and €300 per year. These increases are simply unsustainable as I am sure the Tánaiste will agree. They are placing increasing pressure on household budgets and on businesses, particularly those which depend on motor fleets to conduct their business. Evidence suggests that younger drivers and drivers with older cars are being particularly hard hit by these premium increases.
Motor insurance premiums are increasing for a variety of reasons, including an increase in the number and cost of claims as well as a rise in the number of fraudulent claims. There is a lack of transparency around the way that many claims are being settled and the true financial performance of individual insurance firms in Ireland. It is remarkable that seven out of ten claims are settled by insurance companies without going to court and there is no register kept on the overall cost of those claims. There is a complete lack of information which is necessary if we are to get a proper handle on this situation.
The €1 billion plus bailout of Quinn Insurance and the collapse of Setanta Insurance has brought into sharp focus the need for the insurance sector to be properly regulated to ensure that firms are making proper provision for future claim liabilities. We have been here before. In the late 1990s, at a time when motor insurance premiums were spiralling, the Motor Insurance Advisory Board was set up. It issued its first report in April 2002, with 67 recommendations. The implementation of many of those recommendations, including the setting up of the Personal Injuries Assessment Board, PIAB, led directly to six successive years in which premiums were reduced.
I am calling for the Motor Insurance Advisory Board to be re-established in order that we can have an independent examination of why premiums are increasing at the current unsustainable rate. The board would need to examine a range of issues, including how claims are settled, the true financial position of insurance companies in Ireland and the need for judicial guidelines to be introduced to bring greater consistency to awards. It should also review the operation of the PIAB and the role of the Motor Insurance Bureau of Ireland and the Insurance Compensation Fund when individual insurance companies get into difficulty. The Consumers' Association of Ireland has also called for the re-establishment of the Motor Insurance Advisory Board and I hope the Tánaiste will accede to this call today so that we can get an independent assessment of why motor insurance premiums have gone through the roof and are likely to increase even further in the coming years. We have been here before and I hope we have learned some lessons from experience.