I understand that Deputies Bríd Smith and Mick Barry were in possession and they have ten minutes remaining in this slot.
Insurance Costs: Motion (Resumed) [Private Members]
The following motion was moved by Deputy Michael McGrath on Wednesday, 8 June 2015:
That Dáil Éireann:
is concerned that:
— consumers have been faced with an increase of over 60 per cent in the cost of their motor insurance since January 2014, with a 34 per cent increase in the last 12 months alone; and
— commercial users have also experienced large increases in their motor insurance premiums;
notes that:
— there is an obligation on the State to act when motor insurance premiums become unaffordable and put families and businesses under severe pressure;
— when the issue of industry profitability was previously examined by the Motor Insurance Advisory Board in the 1990s, it was found that the Irish insurance sector had profitability levels that were multiples of the United Kingdom;
— up to 80 per cent of personal injury claims lodged with the Injuries Board are not subsequently settled through them;
— greater transparency regarding the cost of settling claims or awards in personal injuries cases that do not go through the courts or the Injuries Board is needed; and
— a reduction in resources for the Garda Traffic Corps puts lives at unnecessary risk;
welcomes an emerging trend where cases of suspected insurance fraud are being successfully contested in the courts by insurers; and
calls for:
— the establishment of a task force along the lines of the successful Motor Insurance Advisory Board, which led to a considerable fall in insurance costs up to 2013:
— to tackle rising motor insurance premiums;
— review the role of the Injuries Board; and
— examine the reasons for the current turmoil in the insurance market;
— improved transparency of insurance industry profits and the establishment of a national claims register and a motor insurance database to record data across the sector;
— enhanced disclosure for consumers around policy renewal notifications including an obligation on insurers to inform customers of the change in their premium from the previous year;
— legislative reform to increase the penalties for false and exaggerated claims;
— greater clarity as to the respective roles of the Motor Insurance Bureau of Ireland and the Insurance Compensation Fund;
— a review of road traffic legislation to prevent the use of technicalities to avoid a conviction for motoring offences;
— improved regulatory oversight domestically and at European level, including the filling of vacancies in the Central Bank of Ireland Enforcement Directorate which deals with insurance firms; and
— action to protect low-income and vulnerable customers from unfair practices by insurance firms, including a refusal to quote for older cars which have a valid National Car Test (NCT) certificate.
Debate resumed on amendment No. 1:
To delete all words after “Dáil Éireann” and substitute the following:
“is concerned that:
- on average consumers have been faced with an increase of over 60 per cent in the cost of their motor insurance since January 2014, with a 34 per cent increase in the last 12 months alone but that in many cases consumers have received renewal quotes with prices that are multiple times their most recent premium;
- commercial users have also experienced large increases in their motor insurance premiums;
- the insurance industry investment and underwriting losses are directly leading to increased premiums for consumers;
- many young drivers and many people in rural areas reliant on private transport are effectively being forced off the road by unaffordable premiums; and
- the dramatic increase in premiums will lead to a greater number of uninsured drivers on our roads;
notes that:
- motor insurance is compulsory in the State yet not provided by the State;
- there is an obligation on the State to act when motor insurance premiums become unaffordable and put families and businesses under severe pressure;
- when the issue of industry profitability was previously examined by the Motor Insurance Advisory Board in the 1990s, it was found that the Irish insurance sector had profitability levels that were multiples of the United Kingdom;
- up to 80 per cent of personal injury claims lodged with the Injuries Board are not subsequently settled through them;
- greater transparency regarding the cost of settling claims or awards in personal injuries cases that do not go through the courts or the Injuries Board is needed;
- an update of the Book of Quantum is currently being undertaken; and
- a reduction in resources for the Garda Traffic Corps puts lives at unnecessary risk;
welcomes an emerging trend where cases of suspected insurance fraud are being successfully contested in the courts by insurers;
notes that the evidence available points to the failure of the investment policies of the insurance industry as the largest single cause of the dramatic increase rather than any legal or policy decision by the State or State bodies; and
calls for:
- the incoming Oireachtas Finance Committee to examine the reasons for the increase including through an examination of the business model underpinning motor insurance cover in the State;
- the immediate publication of the Department of Finance’s reviews of policy in the insurance sector when it is complete, or the publication of its work on motor insurance if completed earlier;
- a proposal from the Government for legislative action, including through the strengthening of the Financial Services Ombudsman to give greater protection and clarity to consumers in the sector and specifically to prevent consumers whose circumstances have not changed from facing increases completely out of line with industry average increases from year to year without any rationale being presented to them;
- the more timely and detailed publication of data on the performance of insurance companies by the Central Bank of Ireland and an examination of the use of the Central Statistics Office, or another suitable body, to provide independent and full data on the sector;
- a review of the Central Bank of Ireland’s regulation of the motor insurance sector over the past decade with a view to ascertaining if it, as regulator, has protected consumers and acted as necessary to maintain a sustainable motor insurance sector;
- the establishment of a task force along the lines of the successful Motor Insurance Advisory Board, which led to a considerable fall in insurance costs up to 2013:
- to tackle rising motor insurance premiums;
- review the role of the Injuries Board; and
- examine the reasons for the current turmoil in the insurance market;
- improved transparency of insurance industry profits and the establishment of a national claims register and a motor insurance database to record data across the sector;
- enhanced disclosure for consumers around policy renewal notifications including an obligation on insurers to inform customers of the change in their premium from the previous year;
- legislative reform to increase the penalties for false and exaggerated claims;
- greater clarity as to the respective roles of the Motor Insurance Bureau of Ireland and the Insurance Compensation Fund;
- a review of road traffic legislation to prevent the use of technicalities to avoid a conviction for motoring offences;
- improved regulatory oversight domestically and at European level, including the filling of vacancies in the Central Bank of Ireland Enforcement Directorate which deals with insurance firms; and
- action to protect low-income and vulnerable customers from unfair practices by insurance firms, including a refusal to quote for older cars which have a valid National Car Test (NCT) certificate.”
- (Deputy Pearse Doherty)
When I saw this I thought it was interesting that Fianna Fáil's first Private Members' motion was about the issue of motor insurance and was very much framed to present Fianna Fáil as the best friends in Ireland of the ordinary Joe and Josephine Soaps-----
Hear, hear.
That is very true.
-----which is quite ironic given its record. The biggest cost in insurance premiums, at 60%, is the legal cost. If one looks at the role and the history of the Fianna Fáil Party in government and the previous Government of the Fine Gael Party and the Labour Party, none of them touched the legal profession. None of them went after the legal profession, even in the way the troika asked them to, which was through bringing down the legal costs in the country. That is probably one of the ring-fenced areas the troika did not go after and yet the ranks of both parties, particularly Fianna Fáil, are swollen with legal eagles of all sorts. I remember this being my experience on Dublin City Council in particular. The number of barristers and solicitors in that party who were also political representatives was quite astonishing.
They were elected by the people.
We are talking today about an issue where legal costs represent 60% of the total cost of motor insurance, and despite this, the legal industry is the sector that is least touched in terms of this. Despite the portrayal by the industry of the real cause of the increase in cost being the young, fast-moving drivers who are fraudulent, who get whiplash at the drop of a hat and who are making all sorts of spurious claims, the real costs are much more hidden, in terms of both legal costs and profits.
When one looks at the profits of the big three insurance companies, it is quite interesting that they are not actually hurting all that badly. Aviva's profits were up by 38.5% in 2015. I know that includes all its profits, but nevertheless these are the profits of a company that insures everything from medical expenses to houses. It may well be hurting a wee bit on car insurance, but it is certainly making up for it elsewhere. In the same period, AXA Insurance made €76.9 million in profits and Allianz made €43.3 million. They claim their costs have increased, but their profits are certainly very healthy indeed. The Injuries Board shows a modest 8% increase in new claims in the 18 months to the middle of 2015. Some 70% of personal injury claims do not go to court, although there may be legal costs attached to them. The arguments of the industry that the claims are the problem do not really stack up and there is no real evidence to show it. The companies themselves have cited, among other reasons, a drop in investment income. In other words, they are investing money and profits in stocks and shares and the returns on these are dropping.
Advice received by the previous Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, from his own officials showed scepticism of the industry's claims about premiums rising because of compensation awards. They were very sceptical of these claims. The quote I would like to give Deputies from that advice is that from examining the evidence of awards it appears “motor insurers are now imposing higher premium rates to return themselves to profitability or to boost profitability after a number of years of insurers competing for market share, with prices driven down”. The officials also stated, “[t]he question does arise for motor insurers – if motor insurance is so unprofitable why does anybody do it?” We are constantly being told that competition is a healthy thing. It is supposed to be more efficient and it is supposed to improve the industry, but here is an example of the market ruling and making an absolute bags of an issue. It is making a bags of an issue where people are fundamentally legally required to have motor insurance but still the market does them nothing but disservice.
The only way we can improve this situation for the ordinary Joe and Josephine Soaps, who are so well got to the hearts of the Fianna Fáil Party, is to have a State-run, publicly owned and controlled and publicly accountable company that will insure people who are legally obliged to have insurance. We need a company that is not subject to the diktat of the market, trying to make a quick buck by investing in stocks and shares, but rather serving the needs of the people for medical and other cover when they require insurance. There will be a cavalcade of protesters on this issue - young, old, long, tall, medium and short, the ordinary Joe and Josephine Soaps from Cavan to Kerry - descending on this city on Saturday, 2 July. It will be a well-organised cavalcade to protest against the soaring cost of insurance. I hope most Deputies who genuinely have the interest of Joe and Josephine Soap at heart will be out to support that protest.
Deputy Barry has just over four minutes.
I thank the Ceann Comhairle.
Yes, as through this world I've wanderedI've seen lots of funny men;Some will rob you with a six-gun,And some with a fountain pen.
Woody Guthrie might have been writing about the insurance industry in this country. Profits on car insurance were up 12% in 2014 and they were up 26.5% last year. According to Mr. Ken Thompson, the chief executive of Insurance Ireland, they will be up another 25% this year. My colleague, Deputy Smith, has quoted from the briefing document that was given by civil servants in the Department of Transport, Tourism and Sport to the previous Minister, Deputy Paschal Donohoe, last year.
In it they cast some doubt on whether the root cause of insurance price increases was, fundamentally, as a result of high compensation awards, fraud, etc. Instead they pointed towards attempts by these companies to boost profits by hiking prices to claw back losses made in the period 2010 to 2014. Let us look at that. The industry claims that between 2010 and 2014, it made losses on car insurance of €585 million. However, with insurance, of all industries, it is not a good idea to look at a narrow window of a couple of years because of the way claims pay out. One needs to take a longer view. For example, I could say that industry profits in 2005 - one year - were €582 million which would wipe out all the losses it made during those tricky years. Let us take the long view.
Between 1994 and 2014, the insurance industry made pre-tax profits on car insurance in this State of €2.866 billion. This is an incredible figure. The Motor Insurance Advisory Board, MIAB, reported in 2002 that in the years 1983 to 1999, the return on car insurance in this State was 11 times the return, in terms of profits for the industry, than was the case in the UK. Between 2002 and 2008, according to the industry's blue book, that is, the statistics it produces each year, the profits as a percentage of claims paid were as follows: in 2003, it was 45.9%; in 2004, it was 60.2%; in 2005, it was a whopping 61.6%; in 2006, it was, 43.6%; and in 2007, it was 47%. It is quite clear there have been massive profits and profiteering by the insurance industry on car insurance in the State over decades. If there is to be an investigation, it must involve the truth, the whole truth and nothing but the truth - not some of it. The MIAB's executive summary report, produced by Dorothea Dowling in 2002, stated:"It has not been this board's experience that insurers have willingly provided all material information in the fulsome manner which the Minister is entitled to expect." Let there be no business secrets here. The industry should be compelled to open the books for full inspection by servants of the State. We would be inclined to vote for the Sinn Féin amendment to the Fianna Fáil motion. We support the idea of an investigation, we want pressure to be brought to bear and we believe the amendment firms things up a bit. However, we have been here before. In 2002, the MIAB report made 67 recommendations, many of which were positive and some made a difference, but it did not change the model of insurance we have in the State. It did not touch the for-profit model and now, 14 years later, here we are back to square one. A new investigation can come forward with positive proposals and can make a difference but we will be back here again in a few years' time if the root cause of the problem is not addressed, that is, if we keep the for-profit model that has ruled the roost on this issue down through the years. It is time for that model to be dismantled and changed.
Níl drogall ar bith orm mo thacaíocht a thabhairt don rún seo. Guím comhghairdeas ar Fhianna Fáil as ucht an rún a chur os comhair na Dála. I am delighted to support this motion and I have no hesitation in doing so. This motion has been brought forward by Fianna Fáil but it is because of the outrage on the ground among ordinary people who are struggling to pay their bills: their water bills - those who are paying - their property charges and now a hike in insurance. I have heard of quotes going up 300-fold.
Let us put this in context in that it is obligatory to have car insurance but there is very little public transport. Rural areas were mentioned but people are also forced into cars in cities, including in Galway, where I am from. The one-and-a-half page document, if I can call it a document, given to us by the insurance lobby group is lazy, unbalanced and self-serving. It has chosen to present certain facts while ignoring other facts. This is part of a campaign by the insurance companies that started with the abolition of juries and moved forward to the setting up of the former Personal Injuries Assessment Board. Now the industry is putting the blame on anybody but itself.
There was an interesting article in the newspaper yesterday, which I would say Fianna Fáil Deputies have read in detail because they have quoted from it. However, we should give credit to the person who has pointed all of this out, the former chairperson of the MIAB, Ms Dorothea Dowling. I do not think she is a friend of the legal profession. She certainly highlighted the inadequate information given by the insurance companies. For example, in 2014, there were 31,576 claims and of those claims, all Ms Dowling and the courts can account for is 9,046. That means 22,530 claims were settled by the insurance companies but they have not given a single piece of information as to how the claims were settled or what they cost. However, they lambast the legal profession for its costs and they give out to the Garda for not doing its job but there is no obligation on the insurance industry to disclose any information as to how it is settling claims. Insurance companies point to fraudulent claims while failing to point out that legislation is in place - the Civil Liability and Courts Act 2004 - which gives huge powers to the courts to dismiss claims if there is any sign of a fraudulent claim or an exaggerated claim. The industry does not refer to that legislation.
The industry gives no information on the number of policies repudiated by it. It is unacceptable for insurance companies to mount a campaign to force further changes without putting their hands up and saying: "We have increased costs by over 300% and 400% in certain cases". The industry has made huge profits but has not accounted for those profits. Dorothea Dowling points out that in the UK, which it wishes to copy in terms of the care culture rather than a compensation culture, the industry is breaking even but in Ireland it is making huge profits.
The Sinn Féin amendment should also be taken on board because there is some merit to bringing the insurance companies before the finance committee and giving them a grilling, not least for their failure to give any information.
The debate on this issue is based on the fact that people have been coming to Deputies' constituency offices. We have met many people, including taxi drivers who have seen their insurance increase by 300%, who are being quoted vastly outrageous charges for their insurance. I know of one particular case of a 28 year old woman who drives a Micra, which is 15 years old. The car has passed its NCT and it is taxed but when she went to seek her car insurance, she was told that it was going to go up by almost €700 or €800. She could not afford this so she went to other insurance companies to see if she could get a decent quote but she was refused. They would not even talk to her about it. They refused on the grounds the car was 15 years old and they would not even discuss it. She was told that the companies would not offer her any type of insurance, not even a quote of €3,000 or €4,000. This person has a young child and a part-time job and needs the car to get around, but she cannot get the insurance. It is outrageous that companies can do this.
The point has been made that this is an industry which is hugely profitable. There is no transparency and it is very hard to get figures from the industry. Similar problems exist with regard to house insurance. The industry can refuse people on the basis of future potential risk in their communities and on where they live. These companies then expect the State to step in to create a situation where they can give insurance to people. If there is risk in a business, it must provide for that risk. It must be able to manage the risk and see what it can do. I absolutely support the concept of a publicly owned and controlled insurance industry, linked in with a proper transport system.
I will be supporting the Sinn Féin amendment to the motion because I agree with the idea, as stated by my colleague, of the motor industry being brought before the finance committee and adequately questioned about its policy in this regard. It is important that the industry faces the ire of the people.
It is good to have the debate, but it will not have been worth having if we do not see something result from it and it does not look like the Minister of State will try seriously to address the issue. It has to be done though because we cannot have a situation where workers cannot afford car insurance.
We all know the overall figures. More than one third of Irish drivers have seen the cost of their insurance increase by more than 50% in the past year. We could all tell our own individual horror stories. It has gone beyond being a rip-off at this stage. Last week, a father contacted me about his son who paid €2,400 for his first insurance cover. His renewal quote was €3,100, which was then withdrawn, allegedly because he had changed from working in retail to being a labourer. They contacted the Ombudsman who told them to shop around, which they did, but the nearest quote was €6,500. This car is registered for social, domestic and pleasure purposes. It is not used for his job. The situation is utterly ridiculous. The young man ended up changing jobs because he needed a car but could not pay the cost of the insurance. The reality is that the increases being imposed are leading people to drive with reduced cover, which is very concerning, or to the imposition of severe economic hardship. It is simply unacceptable.
We know AA studies and so forth have blamed fraudulent activity and high costs in legal claims. However, they fail to mention the profiteering of insurance companies. This is the nub of the issue. I support the Fianna Fáil measure calling for a national database to record premiums and settlements. This can be done anonymously and would help provide some transparency. The truth, however, is that there is no reason for the current situation whatsoever and the only credible explanation is that a cartel is operating for profit.
For example, in the modern era of new technologies, the use of dash cams can be implemented. A dash cam can record footage which could be used as evidence in the event of a traffic incident. They can record speeds through GPS tracking and issue proximity warnings, for example, when changing lanes. The encouragement of the use of this type of technology has the potential to massively simplify the insurance process. Do the insurance companies want it? We can bet they do not, because there is a cartel of insurance underwriters and companies profiting from the current situation.
I know of an insurance brokerage company which set itself up with the view to operating with dash cams in particular and using them as a mechanism to reduce premiums and simplify the claims process. The company was taken over by a bigger insurance company and the dash cam programme has ended up in the bin. That is the real nature of the insurance business in Ireland. Figures show that the number of collisions has declined with the implementation of these types of technology, which are already available. We could radically transform the situation. There is no need for it whatsoever and unless we get to the heart of the matter the problems will continue. It is simply unacceptable for young people, in particular, but for other drivers as well, who, as other Deputies have said, against the backdrop of an inadequate public transport system, need their cars and should be able to drive them safely.
In our next slot, Deputy Noel Grealish is sharing with Deputy Mattie McGrath.
I compliment Fianna Fáil on tabling this Private Members' motion. Every Member of this House will have had a case brought to his or her attention regarding insurance costs in the past number of years. I am currently dealing with the case of a lorry driver with a clean licence who has never had an accident. His insurance bill last year was €1,320 and this year it is €3,847. He is just not in a position to pay it. This individual has children at school, but the lorry is parked up because he cannot drive it. He is in the process of trying to raise the money somewhere to pay for the insurance. We priced around with a number of insurance companies but they will not give him a quote. This is what is happening. Is it that these insurance companies are operating a cartel or something? I believe they are playing to their shareholders and maximising their profits. Unfortunately, many of these insurance companies are multinational companies, so I do not know if the Government can force them to bring down their prices.
In 2002, when I was first elected to the Dáil, there was a major issue regarding insurance claims. The then Tánaiste, Mary Harney, introduced the Personal Injuries Assessment Board, which brought down insurance costs in the following years. It is not just car insurance that has increased. Household and business insurance have also increased. This morning, I rang five business people in Galway. Their insurance costs have increased in the past two to three years by between 20% and 50%. In one company alone, there was a €70,000 increase in the insurance costs for a major factory. The owner told me he will have to let staff go if insurance costs continue to increase.
Many other Members have also mentioned young drivers. Unfortunately, many of these drivers are finding themselves driving without insurance because they cannot afford to pay for it. I plead with them not to drive without insurance. It is a very serious offence, and God forbid there was ever an accident. They might buy a car for between €2,000 and €3,000 and the first insurance premium could be €4,000 to €5,000.
Returning to the issue of the flood crisis in 2009, insurance companies refused to renew flood insurance for houses which had been flooded. We met the insurance regulator and, to be honest, it was a waste of time. He more or less told us he could not do anything and that it was the insurance companies who set the policies and the premiums. I know the OPW cannot give a commitment or assurance that following the carrying out of appropriate works a house would not flood again, but some insurance companies stated that even if the works were done they would still refuse to provide flood insurance. I know a review is being set up within the Department to try to deal with this issue but unless it has teeth and something can be done with the insurance companies, nothing will happen. Unfortunately, businesses and shops will close because the costs have gone through the roof.
I ask and plead with the Government to ensure that if it does something regarding insurance, it is given some sort of teeth and will force insurance companies into action. Some Members have spoken about setting up a national insurance company run by the Government. I do not believe that is the answer, but something has to be done to ensure premiums are reduced. I hope that following this motion something will be done. I think that there will be consensus within the House and that all parties and Members will work together to try to find a resolution to the issue.
I, too, compliment an Teachta McGrath and Fianna Fáil on tabling this motion, which is timely. I am delighted that in the spirit of the new politics it is not, as I understand it, being opposed by the Government. This is a very serious issue as we emerge from a dark, deep recession. I know this matter concerns car insurance mainly as well as commercial insurance, but this fledgling, recovering economy could be hijacked. That is what it is - a hijacking.
I have to declare an interest. I have a small business and my insurance increased this year by 40%. I know of countless cases of people, both young and old, trying to get insurance for cars, homes and commercial premises and businesses who are aghast at the situation. Road hauliers have lobbied the Government a lot over the past number of years, as have I, and concessions were made in terms of the rebate on fuel. In fairness to the Government, last year it gave a huge rebate in terms of the tax on heavy goods vehicles. It seems as if the insurance company saw this niche and decided to nakedly claim back every ounce of this badly needed break. We are an exporting nation and we need our haulage industry to carry our exports abroad. Efforts were made following a lot of lobbying and there was huge satisfaction and appreciation for what happened.
Lo and behold, as would only happen in this little country, the insurance companies cavalierly decided to balance it out because those involved had to keep paying anyway. That is the attitude. What are the regulator and the Competition Authority doing about the problem of insurance cover for young motorists and homeowners? As stated by Deputy Grealish, many people are now forced to drive without insurance, which I condemn out of hand. It is off the wall to drive without insurance. It is a serious issue. Further increases in insurance are not plausible.
The task force set up to examine this issue, which comprises officials from the Departments of Finance and Transport, Tourism and Sport, is only tickling at it. We need firm action. While the Taoiseach and Ministers of the previous Government are to be complimented on their discussions with the insurance industry following the recent flooding, the industry took no notice of what was said. It takes no notice of anybody. The industry is doing what it likes, when it likes, and is charging what it likes. It would be more in line for it to address the issue of out-of-court settlements, which as a businessman I have been a victim of over the years. Despite strenuous efforts in putting together a meaningful defence, claims are often settled on the steps of the court without notification to the interested party, despite the fact that his or her premiums will likely be hijacked on renewal because of the claim payment. Premiums are also being increased following minor accidents. When my daughter was involved in a minor accident, the cost of her motor insurance increased immediately in anticipation of a payout which did not materialise until two years later. In fairness to the barrister involved, the case was fought well in court. There are too many of these cases. Pervious speakers referred to the 23,000 claims paid out in 2014 without accountability to anybody. The person who pays the piper - namely, the person paying the insurance - is the person who should call the tune. How can we expect the regulator and so on to know about settlements when the insured are not made aware of them?
We need a root-and-branch review of what motivates the insurance companies. I am old enough to remember the introduction of the PMPA levy and subsequent levies, which we are still paying. Levies are frequently introduced but never withdrawn. What is happening in the insurance industry is naked hijacking. If terrorists were doing this there would be an outcry about it and we would set the Criminal Assets Bureau on them. This is marauding by the industry with the full power of the law behind it, affecting businesses and ordinary people. Thus far the attempts to address this issue have been feeble, although I am not suggesting that the motion before us is feeble. We must deal with this issue, which is damaging to our economy. Deputy Grealish referred to countless cases of people who have been forced out of business. The Minister for Jobs, Enterprise and Innovation, Deputy Mitchell O'Connor, whom I wish well in her new role, is trying to stimulate business. The cost of insurance cover is outrageous.
The legal profession must also take account of what is going on in terms of the staggering settlements being agreed behind closed doors. There is no transparency in that regard. Even the insured person is unable to find out the level of payment or cost involved in respect of a claim. All he or she can do is shut up and put up and pay the premium the following year regardless of the cost. Insurance cover for my business increased by 40% this year. No business can plan for such increases. The cost of insurance must be linked in some way to the cost of inflation. A business that successfully tenders for work to be carried out over a 12-month period may not be able to meet the cost of huge increases on insurance renewal mid-year. This is affecting countless businesses across the country, be they agri-contractors, plant hirers or road hauliers. It is also affecting many other self-employed people, including hairdressers and funeral directors. All businesses must have insurance cover.
There has also been a great deal of outcry in regard to the need for a review of rates, which I accept something needs to be done about. The issue of insurance cover has gone wild, although I do not know the reason behind this. Perhaps it is linked to our having been in election mode since last October and the fact that a Government has only recently been put in place. It is unacceptable. This issue must be addressed firmly. Task forces and so on will not suffice. We need legislation. We may also need to consider pay-as-you-go insurance, the cost of which would be added to the fuel tax. I have previously advocated such a proposal. There are many elderly people who only use their cars to get to mass or to collect their pensions on a Friday. They should be able to avail of pay-as-you-go insurance. The more mileage one does the more risk. That type of system might put manners on the insurance companies.
The next speaker is Deputy Stephen Donnelly, who is sharing time with Deputy Shortall. Is that agreed? Agreed.
I wish the Minister of State, Deputy Eoghan Murphy, all the best on his appointment. It is a great honour for him and his family. With financial services and government procurement in his portfolio, a background in nuclear disarmament may prove to be quite useful. I wish the Minister of State the best in his job.
The Social Democrats support this motion on the establishment of a task force to examine the rising costs of motor insurance in Ireland. However, we would like to go further than that. We all know that motor insurance costs are skyrocketing. According to the Central Statistics Office, insurance costs increased by 32% in the last 12 months. We all know that at least some of the reasons for these increases are historic under-pricing by insurers, new rules requiring higher reserves to be put aside, elevated personal injury awards and lower investment returns. These costs are being passed on to motorists, with drivers being asked to pay an additional 50%, 75%, or in some cases 100%. People are being stunned by their motor insurance renewal bills. The reaction of some people is to question what they have done wrong that has caused their premiums to increase.
Members of the Freight Transport Association recently reported premium increases of 50%, with some being asked to pay increases of up to 70% on their 2014-2015 premiums. It is not only in motor insurance that this is happening. Up to the end of March this year, home insurance premiums had increased by approximately 10%, and health insurance premiums have increased by more than 3% in the past year. This is in spite of the fact that 100,000 extra people have taken out health insurance following the introduction of lifetime community rating. The cost of health insurance for hundreds of thousands of VHI customers increased by an average of 3% since the beginning of May. This is the second increase announced by the State's private health insurer in the last six months. It rolled out an average price increase of 2% last November.
As alluded to by other members, insurance costs for businesses are also worrying. The Small Firms Association, SFA, reports that insurance costs for its members have increased by approximately 30% since 2011, which is a significant additional cost for any firm to bear, particularly small firms around the country that are hanging on by their fingernails. This amounts to an increase in the average cost per claim of 8% in private motor insurance, 27% in employer liability and 8% in public liability. Clearly, the average claim is increasing at a steep rate. How do we address this? We need to drive down average claim costs. We can reform how awards are set by the Injuries Board and the courts. We must also have better non-litigation options such that legal fees are reduced.
I listened to a debate on this issue last night during which it was reported that 70% of claims are being settled out of court. There is no record of those transactions. The industry, rather than the State, is at fault in that regard. The industry must invest in proper data sharing. This happens in the UK and in Northern Ireland. Firms that are engaged here and in the North have invested in serious data sharing in the North but they have not done so here. The AA has suggested that a task force of all Government agencies be established. Obviously, this is a multi-departmental issue. The problem is not just related to motor insurance, nor is it related to insurance generally; rather, it is a problem related to the cost of living and the cost of doing business in Ireland. Child care costs here are the second highest in the OECD. Rents here have increased by over one third since 2011 and the cost of education has increased by almost 20% since 2011. Variable interest rates here are also much higher than in most European countries. The Social Democrats support the establishment of a task force on motor insurance, but we believe we have to be much more ambitious than that.
There needs to be a task force - be it an expert group, an Oireachtas committee or some combination of these - which considers not just motor insurance or the insurance industry but which also systematically addresses the cost of living and of doing business and comes back with a multi-agency, multi-departmental recommendation so that people can get on with their lives. Then the money in their pockets can buy them more, they can afford a decent standard of living and small firms can reduce the cost of doing business and get on with expanding their operations and employing people.
I very much support this motion, but why has this not happened before? Why has the Government not taken action in this area? We know that insurance costs are far too high. The current annual inflation rate is running at over 34%. We have no explanation for this and, as far as the Government is concerned, there is no real proposed action to tackle the problem. In recent years the rising cost of living on several fronts has been a significant problem for many families. This is one area that is driving up the cost of living for ordinary families. There are several actions the Government can take to tackle matters such as this in a way that does not entail expenditure but could reduce the cost of insurance, along with tackling water charges and ensuring greater competition on energy costs, which would have a huge impact on the cost of living and family budgets. Unfortunately, the Government has been quite remiss in this area and, rather than taking that approach to tackling the cost of living and dealing with the issues it has a role in, it has promised tax cats which simply erode the tax base and reduce the potential for investment in good quality public services.
The Social Democrats identified the rising cost of insurance as a key area of concern in increasing family budgets. We dealt with this last year and raised it several times. We all became aware very quickly in the recent general election that this is a pressing issue for most people. It was one of the key issues that came up on the doorsteps and it has taken that for the Government to come up with some proposals for a potential task force. In many ways, that action is too little too late. The response of the Government has been too slow but the response of the Central Bank has also been too slow.
A constituent recently told me that he received a quote for his 2009, 1.4L Renault Mégane of €873, up from €493 last year. Another constituent told me his insurance doubled from €600 last year to €1,200 this year. We hear these stories repeated over and again with no explanation offered. There is very little transparency in the insurance companies’ charging regime. It is very difficult to explain the difference between the increases operating in distinct but similar motor insurance markets. For example, there has been little or no premium inflation in motorcycle insurance for the past three years, apart from a significant blip of almost 6% last October. Motor car insurance premiums, however, have rocketed, with inflation of over 10% in each of the months since the autumn of 2014 and in excess of 25% in each of the months since autumn 2015. How can two very similar markets operate so differently?
It is difficult to believe that there is not excessive profit-taking going on, yet, as the insurance industry points out, premiums have gone up and down in recent years. However, they are now 56% higher than at the end of 2011. This not only imposes a huge additional cost on individual families but also on businesses because the same kind of increases have been applied to commercial vehicles. I think of people trying to run small businesses, sole traders, people who drive taxis and so on. It makes it very difficult for them to operate in a way that returns any profit to their small business. This is a timely motion and we very much support it. It is long overdue.
I thank my colleague, Deputy Michael McGrath, for bringing forward this motion and for taking these steps to address what is a very serious issue, one that is very high in the public agenda. I wish the Minister of State at the Department of Justice and Equality, Deputy Eoghan Murphy, well and congratulate him on his appointment.
Motor insurance is not like health, travel or home insurance. It is compulsory. A person found in control of a vehicle without insurance is guilty of a criminal offence. When we hear that the cost of motor insurance has risen by 60% since 2014, with the Central Statistics Office, CSO, confirming that there has been a 34% increase in the past 12 months, it is a cause for very serious concern. We do not need the CSO to inform us, as public representatives, because we have been hearing it anecdotally from constituents.
For several years drivers benefited from competitively priced motor insurance premiums but the consequence of that was the collapse of insurance companies such as Quinn and Setanta and the consumer will be paying for this with a 2% levy on all insurance premiums for the next ten to 15 years. On top of that, today's insurance companies are in a race to return to profitability, with premium increases of up to 60% hitting already hard-pressed drivers and resulting in the negation of any well-deserved tax cuts they may have received in the recent budget. Increases are costing Dublin drivers, in particular, between €200 and €300 in many cases, regardless of the longevity of their accident and claim free record. While we are correct to focus on young drivers, this rightly angers and frustrates seasoned and experienced drivers who have a 25 to 30-year accident and claim free driving record. Dublin motorists have always been at a disadvantage because premiums have often been higher in the capital than in the rest of the country. In Dublin and across the country, these increases are resulting in very worrying trends where motorists are not insuring their vehicles. Unable to afford the spiralling cost of car insurance, some are taking to the roads with nothing but the sky for cover. This cannot continue. Even Insurance Ireland says high premiums are not in insurers' or drivers' interests as raising the threshold of affordability leads to more uninsured drivers. Insurance companies tell us that these increases are down to, among other things, fraudulent claims, higher rates of compensation being awarded in the courts and legal fees.
Without the establishment of the independent task force that Fianna Fáil proposes, however, none of this can be confirmed. We are setting out clear proposals to tackle motor insurance costs. This would involve the reconstitution of the Motor Insurance Advisory Board, which was successful in reducing motor insurance premiums, to examine, in particular, the profitability of the industry, the settlement of claims and the impact of fraud and exaggerated claims on premiums. We need this task force to identify, once and for all, the root cause of these dramatic and crippling price increases. It needs to have access to data such as the amount of compensation awarded in private which never makes it into the public sphere. During the previous sustained period of rising motor insurance costs in the late 1990s, prices rose by 50% in seven years. The establishment of the Motor Insurance Advisory Board helped reduce these costs by 40% in real terms between 2002 and 2013. Fianna Fáil believes there is a need to re-establish the Motor Insurance Advisory Board, which would include representatives from insurance companies, the Departments of Finance and Jobs, Enterprise and Innovation, motorist representative bodies and the Road Safety Authority, to examine all the relevant issues that affect insurance premiums.
I have received a raft of calls from constituents in the past month, in particular, regarding the rise in the number of cars, especially older cars, being abandoned in residential estates in my constituency. I am sure the two issues are connected.
Given that car insurance is compulsory, the cost is a major issue for family finances. It impacts heavily on family budgets. Higher car insurance premiums mean families are doing without other essentials. Shopping around for competitive quotes is not only time consuming, but also seems completely fruitless.
My party has a proud record of having addressed and effectively dealt with this issue in the 1990s and 2000s. It is that kind of action which is demanded by the motion. Dash cam technology is an innovation and initiative worthy of consideration, as are other non-legal avenues to address the issues. I strongly commend Deputy Michael McGrath on bringing the motion before the House, which proposes to establish a task force to address spiralling insurance costs. I am happy to support it on behalf of Dublin motorists.
I, too, join in the congratulations to the Minister and wish him well. I would also like to thank my colleague, Deputy Michael McGrath, for once again putting forward a motion that makes a lot of sense and proposes a simple and achievable action.
This is a new Dáil. Time and again we have heard calls for the Dáil to be taken seriously. I do not think we can accept the idea that we come in here and vote in favour of motions, and then return in five, six or eight months' time to find the will of the Dáil has been totally ignored and nothing has happened. If the Dáil accepts the motion put forward by my colleague, which I hope it will, that then is the will of the people's representatives and should be acted upon.
It is very important that the Government immediately establish a task force to examine this issue. Since the motion was tabled a major debate has started. All of the inevitable interest groups said they were not the cause of the problem. Nobody has explained to us how, for example, the significant change in the number of fatal accidents over many years has not had the desired effect. There are many GoSafe cameras, but they have not had the desired effect of reducing accidents and, therefore, insurance costs. Many other things that have discommoded lots of our citizens have not had the desired effect of at least providing them with affordable insurance.
We need to get to the bottom of what is going on urgently. We need evidence on whether there is any legitimate basis for charging extra premiums on older cars, when many such cars are used by families as a second car for runabout journeys. They never go at any great speed and are often driven by family members for school transport, going shopping and other such family business which is not high risk. We need evidence on the charging system.
In the motion, Deputy McGrath clearly outlined the steps that need to be taken, the challenges we face in trying to find out the real basis for the increase in insurance premiums and whether it is evidence based. There is ample evidence that a lot of the necessary data is not available to make that judgment.
In the short time available to me - two colleagues are due to follow me - I will make another point. There is a fantastic legal battle going on between different interest groups regarding Setanta. Those who were injured by drivers who believed in good faith that they were insured are entitled to compensation. Whether the compensation comes from the compensation fund or other funds, at the end of the day unfortunately it is likely to be motorists who, in one form or another, will pick up the tab. We need to bring this matter to conclusion and make sure that those who have suffered losses because of the failure of Setanta are paid what they are due.
We need to make sure that type of bad regulation cannot happen. A company which is regulated abroad cannot come into the Irish market without proper prudential scrutiny having been carried out to ensure it will not collapse. Unfortunately, my time is up. Deputy O'Dea will be delighted to note that I have finished five seconds early.
That is a first. I congratulate the Minister on his appointment, and wish him the very best and a long and profitable period in his position. I also want to congratulate my colleague, Deputy Michael McGrath, on bringing forward this very timely motion. Due to time constraints, I cannot discuss the structural problems of the insurance industry or the implications of Setanta and Quinn. Therefore, I will confine myself to making a few general points.
One of the main determinants of the amount one pays into any fund, including insurance funds, is how much the fund has to pay out because, after all, it is a commercial operation. There is no doubt that the amounts paid out here by way of insurance awards are dramatically out of line with the rest of the world. For example, some 80% of minor car accident injuries in Ireland involve whiplash. Whiplash awards here are about three times the level they are in the UK and are an even greater multiple of the amounts in other jurisdictions. There is no logical basis whatsoever for this. What is the justification for it?
Another problem with the costs incurred that determine how much people have to pay into an insurance fund is the process by which awards are now determined. As Deputy Grealish and others said, we set up the Personal Injuries Assessment Board, PIAB, to deal with the level of costs in the motor insurance sector. Unfortunately, it has been gradually eroded over the years. I understand it now only deals with about 20% of claims. It was eroded by the legal profession which found a way to get around it by claiming psychological damage, which means claimants are automatically out of the ambit of PIAB.
In addition, the section of the legislation which prevents somebody seeking an offer through PIAB from having an each way bet in terms of rejecting it and going to the courts is not being enforced at all, as far as I can see. For many years it has been suggested that we have a statutory system for all but the most extreme cases, such as cases of very grave personal injury where people have become paraplegics, etc. We currently have what is called a book of quantum, which is supposed to be a list of indicative awards for particular types of injury. However, it is based on the prevailing level of awards which means that it is quite useless. If we base awards on the book of quantum, the only way insurance premiums can go is upwards.
Premiums have risen by over 60% over the past three years. I have received the latest figures from the CSO, which show that in the 12 months to the end of May, insurance costs in Ireland rose by 35.5%. There is no logical justification whatsoever for that. It is long past time that we took action to deal with the issue.
Deputy Michael McGrath's motion proposes a task force. I note the Minister for Finance told the House there would be a review. When he addressed the House yesterday, the review miraculously morphed into a Department of Finance task force. More surprisingly, at the end of his speech the Minister said when the task force eventually reports, there might then be a need for another task force, I presume along the lines of what is proposed by Deputy McGrath, to examine the problem further. With all due respect to the Minister for Finance, who is a good constituency colleague of mine, that does not indicate that the Government accepts the urgency which attaches to this problem.
Over the past two years we have had debates, analysis, scrutiny and discussions, but now we need action.
It seems to me that a task force along the lines proposed by Deputy Michael McGrath, provided the Government's puts a time limit on it, would be the springboard to action in that regard. Action is badly needed. Other speakers have pointed out how the increased cost of insurance is eroding disposable income, costing jobs and damaging the economy. It is a matter of great urgency, particularly when one considers the 35.5% increase in the past 12 months. It is time to do something. I urge the Government to accept the motion and to proceed with the task force without delay.
I welcome the opportunity to contribute to the motion on the cost of motor insurance. It is most important that the Minister would accept the motion from Deputy Michael McGrath because of the seriousness of the situation currently and the pressure it is putting on so many individuals and families. This is a concern that is raised with me on a regular basis by my constituents. In the past week, one constituent highlighted to me that their motor insurance premium had increased from €900 to €1,300 on renewal. The car in question is seven years old and the person has a full no claims bonus. The issue is becoming most serious. Another constituent who is in the commercial haulage business is now considering moving his headquarters abroad so that he will be in a position to secure more competitive insurance for his business and compete more effectively with other transnational haulage companies that have access to lower insurance costs. As we know, consumers have been faced with an increase of 60% in the cost of their motor insurance since January 2014, and the situation is now becoming a critical one for Irish consumers and businesses, particularly haulage-related businesses.
The increasing cost of insurance is also affecting our competitiveness, and action must be taken to reverse the trends that have emerged. Not only has the increasing cost of insurance affected individuals, but it will also become a barrier to better maintaining or creating jobs in our economy. The reductions in the universal social charge in the last budget will become meaningless if the benefit is cancelled out or even exceeded by the increase in the cost of motor insurance. Much debate at election time revolves around tax cuts to help with living standards. While that is very important, not enough emphasis is placed on the cost of living, which includes the cost of motor insurance. We must focus on introducing polices that assist in reducing the cost of living and bring about a better standard of living. The motion is designed to achieve that. There is little point in sharing the benefits of a modest recovery by reducing taxes such as the USC if it is going to be cancelled by increases in motor insurance. In effect, the reduction in the USC, and more in addition to that, is transferred to the coffers of the insurance companies, which further bolsters their profits. Any reduction in the universal social charge should be a direct benefit to workers and should not be taken away by inflated insurance costs. Giving more disposable income to workers is better for the economy and provides a stimulus for growth and a benefit to local businesses. All our efforts should be focused on ensuring that we increase disposable incomes, which then become available to the economy, rather than having them grabbed by the motor insurance industry.
There are 12 key elements in our action plan to tackle motor insurance costs, and I will focus on two of them. First, we need to re-establish the Motor Insurance Advisory Board, MIAB. Given the previous track record of the MIAB, that seems to be an imperative action for the Government if we are to make progress in reducing motor insurance costs. The board should be given a specific timeline to report to the Dáil or an Oireachtas committee on its recommendations to tackle the high cost of motor insurance. The board should comprise representatives from insurance firms, the Department of Finance and the Department of Jobs, Enterprise and Innovation, motorist representative bodies, haulage companies, representatives of older people and the Road Safety Authority to examine all relevant issues that affect motor insurance premiums. The Motor Insurance Advisory Board established in the late 1990s put forward recommendations that helped reduce insurance costs by 40% in real terms between 2002 and 2013. That was a significant achievement at the time and there is no good reason not to establish such a board again.
Second, I wish to highlight the more vulnerable motorist. Those on low incomes and older people who use their own transport are particularly vulnerable to increasing insurance premiums, as increases in insurance costs eat up a greater proportion of their disposable income. Their income tends to be fixed, so if there is an increase in insurance costs they have less net income to survive and they become more vulnerable from a financial perspective, when we should be trying to make them more secure. Recently, some insurance firms have begun to restrict the availability of cover to cars older than 14 years, which often affects those on lower incomes and older people. Currently, individual insurers have the right to refuse cover, but it is not acceptable to have a blanket refusal to quote for business for vehicles older than 14 years. That could be construed as a targeted attack on the most vulnerable motorists and people in society. We must introduce legislation to limit the ability of insurance firms to refuse cover in such circumstances without a valid reason other than simply the age of the car.
The next speakers on behalf of the Government are Deputies Burke, Fitzpatrick, McLoughlin, Rock and the Minister of State, Deputy Eoghan Murphy. They have 20 minutes. I assume they will speak for four minutes each. Is that agreed? Agreed.
I wish the Minister of State, Deputy Eoghan Murphy, the very best of luck in his new Department. I welcome the opportunity to speak on this very important motion and the issue of rising insurance costs. Insurance costs have become a major issue facing motorists and the Government must explore every avenue to reduce insurance costs. Over the past year, increases of 30% and beyond in insurance premiums have become an industry norm. Figures released by Insurance Ireland show that the number of motorists denied quotes by three or more companies in the past two years has almost quadrupled, with no figures available for 2015 as yet.
Serious challenges are presented to the sector given the cost of insurance and the difficulty in getting viable quotes. Many leading companies are embarking on a policy not to ensure cars over 15 years old, and young drivers are experiencing extreme difficulties. I welcome the action the Government has taken to curb the rise in insurance costs - namely, the establishment of a task force in the Department of Finance, which is carrying out a review of policy in the insurance sector. It is clear that the cost of insurance is a complex one involving a number of Departments, State bodies and private sector organisations. I understand the task force is due to report back to the Minister shortly.
I note the Minister held a meeting in his Department on the 3 December last with insurance industry representatives in response to the increasing cost of insurance. However, while it is easy to highlight the problems, we must also put forward credible solutions. High Court awards have increased and the Injuries Board does not seem to have the influence on claims that it used to have. The book of quantum produced by the Injuries Board on the size of awards for various injuries has not been updated in the past ten years. I know work is under way in that regard, but one new initiative would be international benchmarking. For example, awards for whiplash account for 80% of motor insurance claims in this country, and awards amount to approximately €15,000 here compared with £5,000 in the UK. We must review legal costs for litigated cases across the board, given that costs have increased sharply in recent years. Reports by the industry that legal costs make up 60% of awarded claims are most worrying.
We must guarantee that insurance fraud is tackled, as fraudulent cases have a significant impact on the industry as a whole. It is estimated that uninsured driving represents an annual cost of €60 million to the industry, and we must ensure maximum resources are available to eradicate such practices. There can be no substitute for law enforcement.
We must assess the possibility of an international benchmark of premiums. We must also strengthen the PIAB. We must recognise that the claims environment has changed dramatically and new powers are required. Those include simple changes such as compelling claimants to provide loss of income information and to attend for medical assessment. The Central Bank must ensure that greater transparency is provided by insurance companies in the information supplied to it. We must also restore core competitive underwriting to ensure it becomes profitable again, as opposed to being subsidised by investment income. Many of those ideas have been raised by industry experts in the media in recent months. I am hopeful that the new task force will take all views into account prior to making its recommendations to the Minister. I hope sustainable insurance premiums will be available to all.
I welcome the opportunity to speak today on this important topic. Insurance costs in Ireland, both general and motor, have risen considerably in recent years, and figures from the Central Statistics Office show that insurance costs in Ireland have risen by almost 30% since 2011 with motor insurance prices rising almost 34% over the same period. These rises are unsustainable and from dealing with my constituents, I am familiar with the true cost of rising insurance prices. I have heard of cases in which premium prices have risen by 400% or even more. I regularly hear of premium prices being quoted at €4,000 and more for cars that are worth much less than that. In one case, a constituent who drives a 2000 Polo with a 1-litre engine was given a quote of €5,000 for insurance, which would be reduced to €3,000 were he to install a driving monitor box. He has a full driving licence and a no-claims bonus. Other people who had been paying annual premiums of approximately €500 are now being asked to pay premiums in excess of €1,000 and in some cases are not being given quotations at all.
It is my understanding that County Louth is one of the hardest hit areas when it comes to insurance premiums and this situation must not be allowed to continue. Members must get to the bottom of why premiums are rising so dramatically, particularly over the past 12 months. I welcome that the Department of Finance has a task force carrying out a review on the insurance industry, which will report to the Minister shortly. This review is badly needed and I look forward to reading its findings. I have spoken to various people in the insurance industry who have offered a number of reasons for rising insurance costs. These include past underpricing in an effort to win market share, High Court awards and legal fees, the role of the Injuries Board, and an increase in the number of claims. Moreover, in the past, there was subsidisation of competition on premiums by investment income and other measures. In addition, claimants are now more likely to engage a solicitor to handle claims, resulting in claims taking longer to settle and in higher legal fees. Another cause for concern is the incidence of fraudulent claims.
While I understand the reasons given by the insurance industry for increased premiums, I do not believe these costs alone could result in such dramatic increases in premiums. As I stated earlier, I look forward to the findings of the task force put in place by the Department of Finance. I believe radical reform is required, particularly in the areas of legal fees and awards given. I believe both the awards given and the legal fees charged are too high. It is estimated that legal fees can make up to 60% of the cost of claims. This is too high and must be addressed. We must also consider the area of fraud. Fraud is costing the industry and although measures have been taken recently to address it, more is needed. Members must get tough on fraud and it must not be allowed to be perceived to be acceptable.
In conclusion, I reiterate the point that serious reform is required in the insurance industry. Members must tackle immediately the causes of rising insurance costs. They must identify the causes of such a dramatic rise in insurance premiums and I believe we must reform the Injuries Board. Finally, I look forward to the findings of the task force set up by the Department of Finance to examine the rising costs of insurance. Members must act now to ensure that insurance costs are brought under control.
First, I congratulate the new Minister of State, Deputy Eoghan Murphy, and wish him well in his new position. At the outset, I wish to record my anger, disgust and deep regret about some of the motor insurance quotations that are being issued nationally by most Irish insurance companies this year. I also express my full support for this motion that has been proposed by the Fianna Fáil Party and that calls for a task force to be established to investigate and take real action on this matter. If anything is to come from Government support of this motion, it must be that it listened and took real action on the issues raised within the motion. Some motor quotations I have seen in recent weeks are simply appalling. Most quotes I have seen were increased by more than 60% for no reason whatsoever. The drastic rise in insurance premiums is affecting all drivers on the road, as young and old drivers, returning immigrants and male and female drivers all are witnessing unfair and crippling increases. No one is immune.
In the case of young drivers, I met a young man from County Leitrim this week who had contacted me about his insurance. He had a no-claims bonus for two years and no penalty points but this week was quoted a price of €2,700 for motor insurance, which was an increase of more than €1,200 from 2015. Can anyone justify this rise? How can this young person be expected to keep his part-time job, travel to football or make his way to college independently at such prices? It is an absolute scandal. As for older drivers, I also met another person from County Sligo who has been driving on a full licence since August 1972 with no accidents, claims or convictions. In 2015, his full comprehensive policy with every conceivable extra, including no-claims protection and windscreen and breakdown cover, as well as with no penalty points, cost €365. This year, however, his quote for renewal was €860. This is utter madness. Drivers of older cars are also being discriminated against by Irish insurance companies. I am advised that neither Aviva Insurance nor Allianz Insurance will insure cars that are more than 15 years old. The car in question was registered in 2000 or 2001 and if this is the case, what is the point of having a national car test at all? A car that has passed an NCT should not be discriminated against by insurance companies and this should be made law. I also have learned about issues affecting emigrants returning home, who are being told they have no right to their no claims bonuses from other countries. Despite living in a technical age, one is advised that Irish insurance companies cannot receive such information from another company but I ask, why not? I believe the current situation is spiralling out of control at a rapid pace.
As Members of a national Parliament, Deputies must take urgent action to address this issue in the next few months as they would be failing their constituents otherwise, many of whom risk losing employment due to these increases. While it is important to debate the reasons insurance companies believe they can charge such extortionate prices, my own understanding is the number of claims has increased and the value of compensation claims also is very high. One also is told of the damaging effects false claims and the collapse of both Quinn Insurance and Setanta have had on the industry. However, I do not believe Irish insurance companies can stand over the current level of increases due to these problems. I believe what is at play here is a realignment of insurance prices by key players to levels that obtained before the introduction of low-cost providers in the early 2000s. It appears there is now an opportunity to reset the industry and this is why such increases in the price of premiums are taking place. Members must take on insurance companies that are charging these prices and set up a task force that will make strong recommendations. Moreover, strong Government action this issue is required.
Many contributors to this debate have outlined the scale of the problem in great detail, the most alarming feature of which is the CSO figures, which indicate a 35.5% increase has taken place over the past 12 months. This places further unsustainable pressure on people of all ages and all backgrounds, who frankly are struggling with the cost of living at present. This, allied with a 9.2% rent increase across the board, is placing great pressure on people in respect of the cost of living and must be addressed urgently. As such, I welcome this motion which is good and has good foresight. The idea of establishing a task force with a view to taking action on the causes of the problems in the insurance sector is good. I am glad to note it appears as though the motion has secured support from right around the House, which is heartening and goes to show the pursuit of new, consensus-driven politics.
When one considers the problems and how they affect individuals, I certainly can state I have been inundated by people contacting me on the costs of their own insurance. For example, a 19-year old who had an insurance premium costing €2,000 last year has now had the cost of his premium increased to €3,200 this year, which is a stunning increase. Similarly, I refer to a 54% increase in respect of a 1-litre Micra and a 70% increase on a 1.1-litre Yaris. These are extraordinary increases being faced by people, young and old, working and unemployed, as well as students and people from all sorts of different walks of life. It is incumbent on Members to examine the reasons for this and to try to address the root causes. As such, I believe the task force is a good idea, as is strengthening the Injuries Board. I believe Deputy Fitzpatrick pointed out that legal fees are making up to 60% of many claims. This is an alarmingly high figure, but even more alarming is that eight out of every ten motor injury claims in Ireland are for whiplash.
In Ireland, the average whiplash claim is €15,000 while, as Deputy O'Dea pointed out, it is approximately one third of that in the United Kingdom. It is less in other jurisdictions.
The Fianna Fáil motion is right to point out that nothing replaces increased road traffic enforcement in terms of getting uninsured cars off the road. Such cars lead to an increase in costs for all those who work hard, play by the rules and insure their own vehicles. It is incumbent upon us to bring about more enforcement. We hope that the investment in An Garda Síochána's road traffic enforcement will go a long way towards achieving that.
In the limited time available I have spoken about the impact on individuals, as well as some of the welcome solutions that have been set out in this motion. I welcome the motion and look forward to hearing the Minister of State's thoughts on the matter.
On a personal note, I wish to thank Deputies for their good wishes.
The discussions that have taken place regarding motor insurance are timely and, in this regard, Deputy Michael McGrath's motion is very welcome. I also welcomed this opportunity to hear contributions from other Members both yesterday and today. It is clear that the rising cost of motor insurance is a shared concern across the House.
As outlined yesterday by the Minister for Finance, the Government is not opposed to the Private Members' motion calling for a task force on motor insurance matters, which has been tabled for discussion both yesterday and today.
The Minister for Finance has highlighted that he has already established a task force in his Department to carry out a review of policy in the insurance sector. This project will examine all of the issues relating to insurance policy and will include all of the matters raised in this discussion. One of the major issues to be addressed by the task force is an examination of the factors which have led to the significant increase in motor insurance costs in recent years and, of course, to recommend what steps can be taken to influence the situation.
Neither is the Government opposed to the amendment to the Private Members' motion. The Government would welcome any discussions on the issues of insurance and the insurance industry in the new Oireachtas finance committee when it is formed, and will look at any legislative proposals that may arise from those discussions.
The Department of Finance has a task force in place which is addressing the issues raised. Publication of the Department of Finance's report will be considered as soon as the Government has an opportunity to review it. As the Minister outlined in his speech yesterday, the review of insurance policy will examine the issue of data and the need for more detailed information to be available regarding claims costs and insurance policy data.
A Bill is currently being drafted on the merger of the Financial Services Ombudsman and the Pension Ombudsman. The points raised in the amendment on increasing the power of the Financial Services Ombudsman could be examined under the pre-legislative scrutiny process for that Bill.
With regard to the Central Bank, it should be remembered that the Oireachtas has the power under section 33AM of the Central Bank Act 1942 to call certain staff of the Central Bank, including the Governor and the head of financial regulation, to appear before a joint committee of the Oireachtas. Those called shall provide that committee with such information as it requires, subject to certain conditions. This provision was introduced under the Central Bank Reform Act 2010.
On the call for a review of the Central Bank of Ireland regulation, it should be noted that the IMF has recently undertaken a detailed review of the Central Bank as part of its financial sector assessment programme. This report examined all the supervisory areas of the bank, including insurance supervision, and it will be published over the summer months.
A number of additional issues were raised in the House yesterday during the Members' contributions. They span the work of several Departments and offices, and they will also be addressed as part of the current review. These include the lack of a link between the national car test and the availability of insurance; insurance costs for the young and those over 65; the case for rural dwellers with no public transport to have car insurance at a reasonable cost; the issue of returning immigrants having difficulty obtaining car insurance; and the cost of insurance to taxi drivers, hackneys and hauliers.
The Department of Finance is aware that certain groups are particularly affected by the increase in insurance costs. The Department will undertake an examination of the underlying issues as part of its review.
The Department of Finance task force will report to the Minister for Finance shortly on the first phase of its work dealing with the insurance compensation framework. This work is focused on developing an insurance compensation framework that will provide clarity and certainty regarding the insurance compensation framework in Ireland. This work is being done jointly with the Department of Transport, Tourism and Sport.
The work of the task force will be completed over the coming months. The outcome of the review will be to recommend measures to improve the functioning and regulation of the insurance sector. This work on insurance costs fits with the programme for a partnership Government commitment to a fairer society in Ireland.
I welcome the Minister for Jobs, Enterprise and Innovation's review of the Injuries Board legislation aimed at strengthening the legislative framework in terms of operational issues. I also welcome the review of the Injuries Board's book of quantum, which is expected as soon as possible.
The cost of meeting expected claims is one of the main drivers of insurance costs. As the Minister for Finance stated yesterday, the Government welcomes proposals to reduce the uncertainty and volatility of the claims environment in Ireland. This core issue is being examined by the Department's review of insurance policy.
The Government will await the completion in the coming months of the existing Department of Finance insurance task force's work. The Government will then consider what further longer-term options may be required, including the possible establishment of a broader structured task force on motor insurance, as outlined in the motion.
I thank the House for the opportunity to debate this important issue concerning the rising cost of motor insurance.
I now call on Fianna Fáil to conclude the debate. Deputies Dooley and Troy are sharing a ten-minute slot. Is that agreed? Agreed.
I welcome the opportunity to contribute to this important debate and I compliment Deputy Michael McGrath on his foresight in addressing this issue. The response, which has achieved consensus around the House, is based on stories we are all hearing from our constituents. Many people have come to my constituency office to outline some really harrowing stories.
There is a belief that motor insurance has probably risen by 35% across the board. However, I have heard cases involving increases of between 60% and 100% where there has been no material change in the existing contracts, including the vehicle or any past history.
The haulage sector has indicated that it is finding things difficult given the spiralling costs. One particular haulier identified an increase of 160% in insurance costs. Unlike others, he was in a position to challenge and fight the case, otherwise it would have put him out of business. As a result of that, he succeeded in getting a much lower cost.
It is clear that the insurance market is not functioning appropriately. There is a lack of competition, as a result of which insurance companies are sitting on their hands. They are getting the business in, passing costs on, and putting a margin in that people cannot afford.
When Quinn Insurance was in the market it changed the way business was done. It had solvency issues which have created a significant cost for the State. Quinn had an aggressive approach to the management of claims which, at the time, forced other companies to do the same. The appropriate management of cases and claims has gone with the exit of Quinn from the sector. Insurance companies now prefer to settle out of court - sometimes on the steps of the court - without an appropriate level of detailed investigation which would manage costs downwards. The companies know that the market will carry that cost.
It can only be seen as an element of price gouging in recognising that the economy is improving in certain areas and that the burden can be carried by consumers. The haulage sector was hard pressed and the Government responded by lowering truck taxes, yet that saving is now being eaten up by spiralling insurance costs. In other jurisdictions the cost of insuring a truck varies from €1,200 to €2,500. Here, however, it ranges from €3,000 to €6,000 per truck, or even higher. That is not acceptable.
A number of things need to be done over and above what is set out in the motion. We need to examine claim management. In addition, the book of quantum should be reviewed and used by the Judiciary. We also require a greater level of consistency in terms of how courts deal with claims.
I thank all Members who contributed to this crucial debate, including my colleague, Deputy Michael McGrath, who proposed the motion. Having listened to all of the contributions, it is obvious that the issue is a very real one in every constituency. The anecdotal evidence includes examples of premiums doubling or trebling in some cases. The CSO has confirmed that premiums have risen by 60% since the beginning of 2014 and by 24% in the past 12 months.
While I welcome the fact that the Government is not opposing our motion, it must be acknowledged that we are debating this matter because of inaction by the previous Fine Gael-Labour Party Government. As with so many other issues in the past, they failed to listen to warnings on this side of the House. Consequently, motorists have continued to pay crippling and exorbitant premiums. I will cite an example.
At the end of last year my colleague, Deputy Michael McGrath, during Leaders' Questions with the then Tánaiste, Deputy Burton, raised the need to establish this task force. Her reply was that the price of petrol at the pumps was falling. Quite simply, that showed the lack of priority that was given to it. Last night, the Minister for Jobs, Enterprise and Innovation, Deputy Mitchell O'Connor, confirmed that the data available to her Department from the Injuries Board does not support the sector's claim regarding the volume and cost of claims. However, less than 25% of claims go through the Injuries Board. There is an issue in that regard. The Department initiated a review of the Injuries Board in June 2014, but almost two years later the review is not complete. The Minister said last night that she hopes to seek Government approval of a draft Bill before the end of the year. What is the delay? Meanwhile, motorists are facing exorbitant, crippling premiums.
Last night, the Minister for Finance, Deputy Noonan, confirmed that he had been conscious of the issues for some time. However, it took until two months ago to establish a review. It is interesting how the review has suddenly become a task force. In reply to many of the parliamentary questions tabled by my colleague, Deputy Michael McGrath, it was always called a review. There was no mention of a task force. There is no clear timeframe for when this review is to report to the Minister. Will it take the same length of time as the Department is taking to review the Injuries Board? Will we be here two years hence still waiting for the conclusions of the review? The time for procrastination is over. It is time for action.
Yesterday, our party published a comprehensive action plan to deal with the exorbitant cost of motor insurance. One of its key pillars is the re-establishment of the Motor Insurance Advisory Board. We are not talking about reinventing the wheel. There is no need to wonder whether it will work because we have evidence that it worked in the past. When it was established in the early 2000s, the board contributed significantly to the reduction of premiums by approximately 40% between 2002 and 2013.
As a previous speaker indicated, we have all been contacted by various representatives of the different stakeholders to tell us it is not their fault that the cost of premiums is increasing. It is not the legal profession's fault and it is not the result of the insurance companies gouging people and seeking to increase their profits. While each stakeholder blames the other, the end user is being crippled. This is crippling jobs and having an impact on the cost of living and people's quality of life. A rural constituency such as mine does not have public transport. People need their cars to go to the shops, to work, to church or wherever they must go. At present, the cost of insurance is preventing people from using their cars, and it is preventing people who have two cars from using the second vehicle. We cannot wait, therefore, for an unknown length of time for a review - that suddenly has been ramped up to a task force - to report back on what must be done. The time for debate is over.
The Minister of State, Deputy Eoghan Murphy, whom I wish well in his new role, concluded by thanking Members for the opportunity to debate this important issue. We need not debate it further. We know what the issues are. What we need is action. By virtue of the fact that the Government is not opposing this motion, it is accepting its content. It is accepting the proposal to re-establish the Motor Insurance Advisory Board. We will return in a number of months to ask the Government what action it has taken to ensure that the men and women we represent do not continue to pay crippling motor insurance costs indefinitely into the future. They have been paying such costs for the past two years, which is too long. The time for that is over, as is the time for debate. The time for action is now. We will return before the summer recess to ask the Government what it has done with regard to the motion that the Dáil is now going to pass.
Amendment agreed to.
Motion, as amended, agreed to.