Written Answers Nos. 54 - 60
54. Deputy Arthur Spring asked the Minister for Finance if the insurance industry has explained the increased cost in car insurance to him; if the insurance industry is profiteering; and if he will make a statement on the matter. [2587/16]
Amharc ar fhreagraAs Minister for Finance, I am concerned that there should be a stable insurance sector and that risks to policyholders and to the wider financial system are limited. I am aware of reports on the increasing cost of motor insurance. However, the ability of the Government to influence insurance pricing 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.
I raised the issue of the cost of insurance, and particularly the rising cost of motor insurance premiums with representatives of the insurance industry, at a meeting in my Department on 3 December 2015. They indicated that a number of issues are feeding into increasing insurance costs. The insurance industry view is that High Court awards have increased and that the Personal Injuries Assessment Board (PIAB), which it believes is a very good mechanism, does not appear to have the same influence on claims awards that it used to have. The industry is also of the view that legal costs are generally up with approximately 60% of the cost of claims being apportioned to legal expenses. Furthermore, it was indicated that as economic activity speeds up claims activity also increases. Finally, the industry is estimating that that recent Setanta/Motor Insurance Bureau Ireland court ruling could add further to insurance costs.
The Central Bank advises me that competitive conditions within the insurance market intensified in recent years and that many firms focused on maintaining market share which provided impetus to lower premiums. Competition on premiums was subsidised by investment income and other measures. 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 are aimed at restoring core underwriting profitability and securing the financial position of the firms concerned for the longer term.
While the provision and the pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the longer term, lead to a better claims environment that could facilitate a reduction in claims costs.
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 which contribute to increasing costs of insurance. This work is part of an overall review of the insurance sector which my Department will undertake in consultation with the Central Bank and other Departments and Agencies. This work will continue over the coming months and will involve engagement with a number of parties, both public and private.
55. Deputy Arthur Spring asked the Minister for Finance his views that the insurance industry is within its rights in disproportionately increasing the cost of car insurance to younger adults and in excluding cars that are over 12 years old from insurance quotes; and if he will make a statement on the matter. [2588/16]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. I am aware of reports on the increasing cost of motor insurance. However, the ability of the Government to influence insurance pricing is limited as insurance companies are required under European law to price in accordance with risk and neither I, nor the Central Bank of Ireland, have the power to direct insurance companies on the pricing or the provision of insurance products.
The EU framework for insurance expressly prohibits Member States adopting rules which require the prior approval or systematic notification of certain matters, including general and special policy conditions and scales of premiums. Furthermore, the EU framework provides non-life insurers with the freedom to set premiums. This has been acknowledged by the European Court of Justice.
Insurance companies consider a number of risks when determining the premium for a proposed insurance policy, whether that is a general insurance policy such as motor or home insurance, or a life assurance policy. A premium is based on the actuarial calculation of risk.
I have again consulted with the Central Bank of Ireland on this matter. The Central Bank confirmed that it has no remit over the pricing of insurance policies or the practices of insurers in relation to underwriting particular risks. These are commercial decisions for the various insurers themselves and the Central Bank cannot force an insurer to accept particular risks.
Insurance Ireland has informed me that motor insurers make their own individual decisions on whether to offer cover and what terms to apply. They use a combination of rating factors in doing this, such as the age of the driver, the type of car, claims record, driving experience, number of drivers, how the car is used, etc. Insurers do not all use the same combination of rating factors, prices vary across the market and consumers are free to choose. Insurance companies price in accordance with its own past claims experience and, for example, where the age of a car is a factor, different insurance companies would use different age thresholds.
In the event that a person is unable to obtain a quotation for motor insurance or feels that the premium proposed or the terms are so excessive that it amounts to a refusal to give them motor insurance, they should contact Insurance Ireland (telephone +353 1 6761820) quoting the Declined Cases Agreement. Under this Agreement, the Declined Cases Committee of Insurance Ireland deals with cases of difficulty in obtaining motor insurance.
56. Deputy Áine Collins asked the Minister for Finance the cost of increasing the group A tax free thresholds (details supplied) to €308,000 and to €500,000; and if he will make a statement on the matter. [2598/16]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the costs of increasing the Capital Acquisitions Tax Group A tax free thresholds from the current €280,000 to the specified amounts are as shown in the table below.
|
Group A Tax Free Threshold |
First Year Cost €m |
Full Year cost €m |
|
€308,000 |
15 |
18 |
|
€500,000 |
65 |
75 |
57. Deputy Áine Collins asked the Minister for Finance the cost of increasing the small gift exemption from €500 to €650; and if he will make a statement on the matter. [2599/16]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the small gift exemption is an annual small benefits relief that applies to a one off benefit not exceeding €500, the value of which can be disregarded for PAYE/USC/PRSI purposes.
With a view to keeping the scheme simple and reducing administration on the part of employers, there is no notification procedure for employers involved. Accordingly, the Revenue Commissioners do not have statistics on the uptake of the scheme, and therefore there is no basis on which to provide a cost in increasing the exemption.
58. Deputy Áine Collins asked the Minister for Finance the costs arising from a reduction in capital gains tax to 10% on the first €10 million of gains arising on chargeable business assets acquired from 1 January 2017 and held for five years, in each of the years 2017 to 2021; and if he will make a statement on the matter. [2630/16]
Amharc ar fhreagra59. Deputy Áine Collins asked the Minister for Finance the costs arising from a reduction in capital gains tax from the application of a lower rate of 20% from 1 January 2017 to gains arising on investment in companies availing of the employment and investment incentive; and if he will make a statement on the matter. [2631/16]
Amharc ar fhreagraI propose to take Questions Nos. 58 and 59 together.
I am informed by the Revenue Commissioners that there is no basis from returns filed or other information available to Revenue to estimate the level of chargeable business assets that may be acquired from 1 January 2017 and held for five years. Therefore, no estimate is available of the cost of introducing a rate of 10% on the first €10 million of gains on chargeable business assets acquired from 1 January 2017 and held for five years.
I am further informed by the Revenue Commissioners that as information in respect of potential gains from investments in the Employment and Investment Incentive scheme is not available, it is not possible to indicate the potential cost of lowering the CGT rate to 20%.
60. Deputy Brendan Griffin asked the Minister for Finance the revenues from the introduction of a higher income contribution of 5% on incomes over €100,000 per year, applying only on the excess, using the current universal social charge base; and if he will make a statement on the matter. [2663/16]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the estimated first & full year yield to the Exchequer from an additional 5% charge on the portion of gross incomes over €100,000 would be in the order of €207 million and €347 million respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
