Tuesday, 10 February 2004

Ceisteanna (34)

Brendan Howlin


109 Mr. Howlin asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress made to date with regard to the implementation of her action plan for the insurance industry; the elements of the plan yet to be implemented; the timetable for the implementation of the different elements of the plan; if she intends to take steps to deal, in the meantime, with the escalating cost of insurance; the number of persons recruited to date to the staff of the Personal Injuries Assessment Board; when she expects that the board will be operational; and if she will make a statement on the matter. [3821/04]

Amharc ar fhreagra

Freagraí ó Béal (7 píosaí cainte) (Ceist ar Minister for Enterprise)

The insurance reform programme that I announced on 25 October 2002 comprises a comprehensive set of inter-related measures designed to improve the functioning of the insurance market. I chair a ministerial committee established to drive the co-ordinated implementation of this reform programme across the relevant Departments and other bodies concerned. Substantial progress is being made on a range of measures that will radically overhaul the functioning of the insurance market and help tackle the high cost of insurance.

One of the key measures in the reform programme is the implementation of the recommendations in the Motor Insurance Advisory Board action plan within a target timeframe. To date, 32 of the recommendations have been fully implemented, three have been partially implemented and work is in progresson the implementation of the other recommendations. I have precise information on each of the recommendations which I will make available to the Deputy.

Another key measure is the establishment of the Personal Injuries Assessment Board. As the Deputy will be aware, the Personal Injuries Assessment Board Act 2003 was signed by the President on 28 December 2003. The provisions of this will be commenced soon. A chief executive officer has been appointed and commenced duty on 2 February 2004. The proposed structure and staffing levels of the new body are being finalised in conjunction with the new chief executive officer, and it is expected that a recruitment campaign will commence later this month. The board will become operational when the necessary staff and information technology systems are in place, which I expect will be within the next two months or so. The PIAB interim board has made enormous progress in this regard.

In addition, my Department and the Competition Authority are undertaking a joint study into the insurance market. A significant amount of the work was completed in 2003 and a report will be produced shortly.

Indications are that the reform programme is having its desired effect. The Central Statistics Office publishes monthly indices of costs for a number of classes of insurance. These statistics show that there was a reduction of 11.7 index points — 11% — in motor insurance between December 2002 and December 2003. Further, the CSO noted a significant contribution from insurance to the recent reduction in inflation. As implementation of the reform programme continues, I expect further significant reductions to occur in all forms of insurance. I am also confident that the measures the Government is putting in place to reform the insurance market will attract new players into the market and lead to further downward pressure on premia.

The Tánaiste said she published her action plan for insurance industry reform in October 2002, a plan containing 67 measures. It is now 2004. How many of those measures are outstanding and what is the timeframe for the full implementation of all 67 measures? What is the inflation index on which she is working with her Department regarding insurance premia costs for 2004 for each of the various sectors, for example, motor insurance and the various types of business insurance? By how much would the Tánaiste expect insurance costs to rise this year?

Has the Tánaiste any comment regarding the December report of the IFSRA which found a 500% variation in motor insurance costs? When the same circumstances were presented to a variety of motor insurance companies, the difference between the cheapest and the dearest quote was 500%. Surely, the market is dysfunctional if that level of disparity is allowed to exist.

I have concentrated on the implementation of the recommendations which would reduce price, such as the establishment of the PIAB, the introduction by the Minister for Justice, Equality and Law Reform of the court and civil liability Bill, which was cleared at Cabinet today, and the introduction of the penalty points system and other road safety measures. We have concentrated on the areas which can bring about the biggest reduction in premia costs. Many of the recommendations refer to transparency and information and they have, in the main, been passed on to the IFSRA. I do not expect a rise in insurance costs but a further and substantial decrease.

Of how much?

I cannot put a figure on it but it should be quite substantial. If the decrease was 11% from 2002 to 2003, I expect it to be greater this year because the impact of the measures implemented is only now coming through. With regard to motor insurance, anecdotal as opposed to hard evidence suggests there are reductions in some cases of 40% to 50%. Nevertheless, while that is the evidence presented to me by many individual motorists, I do not want to exaggerate it or say it is general across the board.

With regard to the IFSRA, at one level one could say that the fact there are such significant discrepancies indicates there is competition in the market. I accept that such wide discrepancies are extraordinary but it proves my point — for which I was heavily criticised by Deputies and others — that it is very important for all consumers, not least in the insurance market, to shop around. That information is now given in advance of premium renewal and is of great assistance to consumers because the 15-day gap allows them to try alternatives instead of simply placing their insurance with the broker or company they have been with for a considerable time. That is proving very successful.

Information can mean power and the information from the IFSRA should help to drive home the importance for consumers of asking all necessary questions and making sure to get a number of quotes before they place their insurance.

The Tánaiste has given the figure of 11% for the decrease in motor insurance costs. What is the figure for business insurance costs, including public liability costs? Does she expect a significant reduction in that category of costs during 2004? She will be aware that many small businesses in particular are vulnerable and regard insurance costs as the second greatest pressure in regard to their survival.

Regarding the PIAB, we discussed during the passage of the relevant legislation the expectation that the board would have been operational from 1 January last. We are now talking about a period of some months from February 2004. When will the board hear its first case?

The chief executive of the PIAB was appointed and took up her position on 2 February last. The IT system and headquarters have been secured and the chief executive is now in the process of recruiting the staff required to assist her in the task. I met with her only last week and she is anxious to ensure that everything is in order before the board opens for business, given the importance of the role of the PIAB. We expect a commencement date of sometime in April or 1 May, perhaps the latter as it is the start of a calendar month, and we are working towards that date.

I do not have the figures regarding employer liability insurance or business insurance generally. However, awards are down and the volume of claims is substantially down, and that will feed into the system very early on. Some have suggested to me that they have already experienced a reduction in premiums. However, until all measures are in place, the exaggerated and false claims provisions being brought in by the Minister for Justice, Equality and Law Reform in the court and civil liability Bill will have a particular impact on reducing the level of fraud and exaggeration and, therefore, the high cost of premia.