Dáil Éireann Debate, Thursday - 7 May 2015
71. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which insurance costs here are comparable with those in other European and adjoining jurisdictions, with particular reference to the need for competitiveness; and if he will make a statement on the matter. [18047/15]
Amharc ar fhreagraInternational comparisons of insurance costs can prove problematic as a result of differences in law, in fiscal regime, in policyholder behaviour and in the expectations of policyholders from their insurance provider. Neither my Department nor the Central Bank of Ireland maintains information on the costs of insurance in Ireland or across the European Union.
The calculation of annual premium rates is a commercial decision for the insurance company in question. It should be noted that the ability of the Government to influence insurance costs is limited as insurance companies are required under European law to price in accordance with risk and neither I, as Minister for Finance, nor the Central Bank of Ireland has the power to direct insurance companies on the pricing of insurance products.
While competition in the market place acts as an effective constraint on insurance costs, insurance companies have 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 circumstances where they are exposed to a high level of claims, it is possible that their capital position can be affected with a consequential effect on prices. In this regard, it should be noted that the new prudential regime for insurers across the EU known as Solvency II, which will come into force from the start of 2016, will place a greater emphasis than the existing regime on the need to price risk appropriately, and will in turn require insurance companies to be more conscious of their pricing policy. This will benefit the consumer in many instances.
Government initiatives such as the establishment of the Personal Injuries Assessment Board and legislation to improve road safety, which has reduced accidents significantly, continue to make a major contribution to keeping insurance costs at a reasonable level.
