Dara Calleary
Ceist:190. Deputy Dara Calleary asked the Minister for Finance the measures he has implemented to improve competitiveness in relation to insurance costs; and if he will make a statement on the matter. [37404/12]
Amharc ar fhreagraTuesday, 18 September 2012
Ceisteanna (190)
Freagraí scríofa
Pricing of insurance is generally determined by an assessment an insurer will make of the risks involved. Generally I understand that previous claims experience will have a major influence on such matters. Therefore, if there has been a major increase in claims in a particular area, as has happened with household insurance in the last few years, then this will be reflected in an increase in premiums.
Competition in the market place acts as a constraint in such circumstances, however insurance companies have always to be conscious of their prudential obligations and are required by the Central Bank of Ireland to meet their capital requirements on an ongoing basis in order to ensure the sustainability of their business. In these circumstances when they are exposed to a high level of claims, it is inevitable that their capital position will suffer and put pressure on prices. In this regard, it should be noted that the new prudential regime for insurers in the EU known as Solvency II which will come into force from the start of 2014 will place a greater emphasis on the need to price risk appropriately than the existing regime, and will in turn require insurance companies to be more conscious of their pricing policy. This will benefit the consumer in many instances. However in circumstances where there has been a significant increase in claims, it is likely to result in higher premiums.
It is worth noting that past initiatives, in particular the establishment of the Personal Injuries Assessment Board and legislation to improve road safety which has reduced accidents significantly still continue to make a major contribution to keeping insurance costs at a reasonable level. Another contributing factor to a more competitive market has been the introduction of greater transparency in the price of insurance products enabling cost comparisons be carried out e.g. the National Consumers Agency’s focus on providing information to consumers on financial service products including insurance on “Its your Money” website (www.itsyourmoney.ie). Finally, it should be noted that the ability of the Government to influence the competitiveness of insurance costs is limited as neither I as Minister for Finance nor the Central Bank can prohibit or restrict an insurance company from increasing its annual premium rates, as this is a commercial decision for the company in question.