Pearse Doherty
Ceist:236. Deputy Pearse Doherty asked the Minister for Finance the level of competition in the motor insurance industry and the steps he is considering to prevent further increases in this area. [1355/16]
Amharc ar fhreagraWednesday, 13 January 2016
Ceisteanna (236)
Freagraí scríofa
As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. The Central Bank of Ireland, as regulator, is responsible for prudential supervision of insurance companies.
I am aware of continued reports on the increasing cost of motor insurance. However, 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 have the power to direct insurance companies on the pricing of insurance products. The provision and the pricing of insurance policies is a commercial matter for insurance companies.
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 this regard, it should be noted that the new prudential regime for insurers across the EU known as Solvency II, which came into force from the start of 2016, places a greater emphasis on the need to price risk appropriately, and in turn requires insurance companies to be more conscious of their pricing policy. This should benefit the consumer in many instances.
The Central Bank advises me that competitive conditions within the insurance market intensified in recent years and many firms' focus on maintaining market share provided impetus to lower premiums. Competition on premiums was subsidised by investment and other income. Recent reversals in investment markets have generated investment losses that are a drag on profitability. In the view of the Central Bank, the recent premium increases will serve to restore core underwriting profitability and to secure the financial position of the firms concerned for the longer term.
The question of the cost of insurance is a complex one involving a number of Government Departments, State Bodies and private sector organisations. I have asked my officials to examine the factors whic contribute to increasing costs of insurance. This work will continue over the coming months and will involve engagement with a number of parties, both public and private.