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Insurance Industry.

Dáil Éireann Debate, Thursday - 28 October 2004

Thursday, 28 October 2004

Ceisteanna (240)

Seán Crowe

Ceist:

240 Mr. Crowe asked the Minister for Enterprise, Trade and Employment if, in view of the large increase in profits and significant decrease in claims being experienced by insurance companies, he will be arranging a meeting with representatives of the industry to demand a comparative decrease in motorists insurance premiums. [26659/04]

Amharc ar fhreagra

Freagraí scríofa

The CSO consumer price index statistics show that there was a reduction of 19.3% in motorcar insurance between the months of April 2003 and September 2004. The CSO index is based on averages but many individual policyholders have done much better as is evidenced from data provided by the Motor Insurance Advisory Board, 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 old male.

Motor insurance market losses from 1997 to 2001 were reversed in 2002 and 2003 and profit levels in 2003 have been very significant. However, the cumulative profit margin in motor insurance between 1997 and 2003 was only4.8%. I strongly welcome the premium reductions we have seen to date and I expect that further premium reductions will follow from the new market conditions now in place.

EU law prevents Governments from intervening directly in relation to the matter of premium levels or in respect of what risks insurance companies are prepared to underwrite. Governments are free to take steps to improve the functioning of the market, and the Government's concern for motorists and businesses regarding insurance premia has been pursued in the insurance reform programme. A significant number of the MIAB recommendations, which were central to the reform programme, have been fully implemented, and the majority of the remaining recommendations are being progressed.

Reforms such as the establishment of the Personal Injuries Assessment Board, action in the areas of road safety and driver behaviour and the Civil Liability and Courts Act tackling fraudulent and exaggerated personal injury claims will further benefit consumers and genuine claimants and drive premium reductions.

Competition from new entrants attracted by the improvement in market conditions will be an important element in ensuring continuing downward pressure on premia. New entrants in the motor and liability areas authorised to operate on a freedom-of-services basis in Ireland include Brit Insurance and ARB Underwriting. Great American Insurance International was authorised by IFSRA in June 2004. Santam Europe Limited, with a parent company based in South Africa, was authorised by IFSRA in August 2004. Quanta Europe Limited, a subsidiary of Quanta Capital Holdings, Ltd., Bermuda, was authorised by IFSRA on 1 September 2004.

My Department and the Competition Authority have undertaken a joint study to identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. A preliminary report and consultation document on competition issues in the non-life insurance market was published on 18 February 2004. Following a consultation period, a final report will be published, which will contain recommendations based on its findings. I expect these reforms will result in further premium reductions going forward.

The Deputy might wish to note that following the establishment of the Irish Financial Services Regulatory Authority, IFSRA, my Department no longer regulates the insurance industry. My colleague, the Minister for Finance, retains overall responsibility for policy and legislation in relation to the provision of financial services in Ireland, including insurance.

My colleague the Minister for Transport, in the light of broader responsibility for legislation regarding motor insurance, including negotiation and transposition of EU motor insurance directives, the operation of the Motor Insurers Bureau of Ireland, the requirement for motor insurance and road safety, will shortly take over the lead role in relation to policy and legislation on the availability and cost of motor insurance, including related interdepartmental co-ordination.

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