Dáil Éireann Debate, Thursday - 7 October 2004
6 Ms O’Sullivan asked the Minister for Enterprise, Trade and Employment the progress made to date with regard to the implementation of his action plan for the insurance industry; and if he will make a statement on the matter. [23664/04]
Amharc ar fhreagraFollowing the establishment of the Irish Financial Services Regulatory Authority and the coming to an end of my Department's lead role in the insurance reform programme, my colleague the Minister for Finance retains overall responsibility for policy and legislation as regards the provision of financial services in Ireland. My colleague, the Minister for Transport, in light of broader responsibility for road safety, will take over the lead role as regards policy and legislation on the availability and cost of motor insurance and any related interdepartmental co-ordination. The transfer of responsibilities to the Minister for Transport has been agreed and will be activated shortly following the completion of logistical issues relating to the transfer of an agreed number of posts from my Department to the Department of Transport.
An Agreed Programme for Government includes a commitment to tackle the high cost of insurance. The action plan outlined how the 67 recommendations contained in the Motor Insurance Advisory Board report of April 2002 were to be implemented. To date 41 of the recommendations have already been fully implemented with a substantial proportion of the rest either partly implemented or progressing. All the measures relevant to my Department have now been fully implemented and my colleagues the Minister for Transport and the Minister for Justice, Equality and Law Reform and IFSRA, under the aegis of the Department of Finance, continue to progress measures that are relevant to their own Departments. For example, a new road safety strategy was launched on 24 September last and the enactment of the Civil Liability and Courts Act 2004 introduces significant changes to the manner in which claims are dealt with, including introduction of new offences to deal with fraudulent claims.
A number of significant measures have been introduced by my Department. A key initiative was the establishment of the Personal Injuries Assessment Board, PIAB. The Personal Injuries Assessment Board was established by ministerial order on 13 April 2004. From 1 June 2004 all personal injury claims arising from workplace accidents, where an employee is seeking compensation from his or her employer, must be referred to the PIAB before legal proceedings may be issued. From 22 July 2004 all motor liability and public liability claims must also be referred to the Personal Injuries Assessment Board before legal proceedings may be issued.
By eliminating the need for litigation costs where legal issues are not in dispute, the PIAB resolution of cases will significantly reduce the cost of delivering compensation for insurance claims. The PIAB will also offer speedier assessments to the benefit of claimants.
A book of quantum, for assessing the level of compensation based on the type of injury involved, which is essential for the successful operation of the PIAB, was published by the board on 2 June 2004.
Additional Information
The Motor Insurance Regulations 2002 require that insurance companies provide motor insurance policy holders with the terms upon which renewal is offered and their "no claims bonus" documents a minimum of 15 days before the end of their current policy. This allows consumers sufficient time to "shop around", which is helping to improve competition.
My Department and the Competition Authority have undertaken a joint study into the insurance market. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. The bulk of the study was completed in 2003 and a preliminary report and consultation document on competition issues in the non-life insurance market was published by the Competition Authority on 18 February 2004. Following consultation a final report will be published later in the year which will contain recommendations based on the findings.
Clearly the action plan is contributing to reductions in insurance premiums. The CSO consumer price index statistics show that there was a reduction of 15.2 index points, 14.1%, in motorcar insurance between the months of April 2003 and August 2004, the latest figure available. The CSO index is based on averages but many individual policyholders have done much better as may be seen from data provided by the MIAB. Examples provided by MIAB for three specific companies between March 2003 and March 2004 indicate the following reductions: 10% to 16% in comprehensive insurance for a 30 year old male; 10% to 41% in comprehensive insurance for a 50 year old female; and 10% to 45% for third party, fire and theft insurance for a 21 year oldmale.
Recent reform measures taken have led to a better functioning insurance market. We are seeing enhanced profits reported by the Irish Insurance Federation and significant premium reductions which must continue as the full impact of the reform programme is felt. These new operating conditions in the insurance market enhance its attractiveness for prospective new entrants.
The insurance market is growing. Gross written premiums increased to over €4 billion in 2003 compared to just €2 billion in 1998. As the economy continues to grow, the insurance market will also continue to grow in size. Competition from new entrants attracted by better market conditions will be an important element in ensuring continuing downward pressure on premiums.
I do not know whether my colleagues heard, but I express my surprise that responsibility for insurance is to be broken up among a number of Departments. The notion that the Department of Enterprise, Trade and Employment should not have responsibility for motor insurance is wrong. Much more is involved than the safety aspect, important as that is. Neither is it a transport issue. It is an insurance business matter. The issue of brokerage, the PIAB and the cross-subsidising of insurance are all insurance matters that rightly are the responsibility of the Minister for Enterprise, Trade and Employment. It causes me great concern to hear that. Will the Minister say when that decision was made and whether he is in full agreement withit.
Will he say, specifically, how that will work as regards his monitoring of insurance premiums? Does it mean that his Department will have no responsibility in terms of watching how the motorist is charged for insurance? It would be wrong if that was the case. Finally, as regards the operation of the PIAB, established through ministerial order by the Tánaiste, which is specifically within his remit, has he had the opportunity to make an evaluation of its working to date and is it on target with regard to processing the volume of claims that was anticipated? Is it having the impact that we all anticipated in supporting its enactment through this House in the teeth of stringent enough sectoral opposition from the industry itself?
The Department of Enterprise, Trade and Employment took the lead role in the insurance reform programme, but it was very much an interdepartmental exercise, with individual Departments having clear lines of responsibility in terms of their respective functions. For example, the Minister for Justice, Equality and Law Reform brought in legislation in terms of the fraudulent claims issue, the Minister for Finance had certain responsibilities for financial services regulations etc. It was a good exercise as regards how Government worked in this instance. The recommendations were made and the interdepartmental group met under the chairmanship of the Tánaiste and progressed its business effectively.
There comes a stage when the recommendations are implemented that one moves on. Basically, some of the areas will come under the Minister for Finance who will have overall responsibility for policy and legislation as regards the provision of financial services. It was agreed prior to my appointment that the Minister for Transport would take the lead role in terms of policy legislation on matters involving the cost of motor insurance and interdepartmental co-ordination. The Department of Enterprise, Trade and Employment obviously retains competition issues. My Department and the Competition Authority have embarked on a joint study of the insurance market. That study has already commenced and will analyse the barriers to entry, limitations and rivalry in the insurance marketplace. For the record, the bulk of that study was completed in 2003 and the final report is to be published later this year. It should be stressed that the action plan worked as regards the subject matter.
Has the Minister any indications in his file about the number of recommendations of the MIAB that have been implemented and will he give some indication as regards those that have yet to be implemented?
There have been 67 recommendations to date and 41 have already been fully implemented, with a substantial proportion of the remainder either partly implemented or progressing. All measures relevant to the Department of Enterprise, Trade and Employment have been fully implemented. The Minister for Transport, the Minister for Justice, Equality and Law Reform and IFSRA, under the aegis of the Department of Finance, continue to progress measures relevant to their own Departments. For example, a new-——
They are dragging their feet somewhat.
No, the new road safety strategy was launched on 24 September last. The enactment of the Civil Liability and Courts Act 2004 by the Minister for Justice, Equality and Law Reform introduces significant changes in the manner in which claims are processed, including new offences, to deal with fraudulent claims. The important point is that the programme is working. The consumer price index statistics show that there was a reduction of about 14.1% in motor car insurance between the months April 2003 and August 2004. The example provided by the MIAB for three specific companies between March 2003 and 2004 indicate the following reductions: 10% to 16% in comprehensive insurance for a 30 year old male; 10% to 41% in comprehensive insurance for a 50 year old female; and 10% to 45% for third party, fire and theft insurance for a 21 year old male. That is a significant improvement on where we came from. By and large we have a better functioning insurance market at the moment. There is significant interest from outside in terms of new entrants to the marketplace, which should improve competition. Better competition should enhance price reduction.
I would like, first, to congratulate the Minister and wish him well in his new position. I hope it is successful for him. When may we have sight of the details of his proposals in terms of segmenting the insurance industry into the various Departments? I am not sure that it is a bad idea, by the way. I would like to consider it more carefully instead of giving an instant reaction to the proposal. However, it occurs to me that transportation is now a fundamental cost on business and clearly insurance is a major element of that. I would like details. When may we see the detail of these proposals?
Much of the relevant information was to be found in the reply to the parliamentary question this evening but I can forward further documentation the Deputy may require.
Will I first have to submit a parliamentary question?
I do not have an issue about the insurance on Louth hospital. I have dealt with the Deputy on many occasions as regards that matter. When I saw him I immediately had a flashback.
I think he said we had moved on.
Absolutely.
