Dáil Éireann Debate, Tuesday - 27 March 2018
81. Deputy Paul Murphy asked the Minister for Finance his views on the latest report of the cost of insurance working group; if the role of profit of the insurance industry in increasing premiums has been considered; and if he will make a statement on the matter. [13660/18]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, have the power to direct insurance companies on the pricing of insurance products. Indeed, the EU framework for insurance expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.
The latest Cost of Insurance Working Group Report on the Cost of Employer and Public Liability Insurance builds on the recommendations and actions set down in the Motor Report with a particular focus on increasing transparency, reviewing the level of damages in personal injury cases and improving the personal injuries litigation framework. In broad terms, one of the main objectives of both Reports is to try and address the issue of consistency of award levels, through adherence to the Book of Quantum, no matter where an award is made. If such a consistency of awards is applied in a broad sense, particularly for soft tissue injuries, it will have two very significant effects: (i) there will be less reason for cases to go to litigation, as the level of awards granted by the courts will be aligned in general with those provided by PIAB; this in turn should mean a reduction in legal costs and (ii) a stable claims and awards environment will mean that the reserves put aside by insurers to meet future claims do not have to be regularly adjusted to reflect new developments, such as increases in award levels.
Finally, while I have no doubt that higher premiums have been a contributory factor to the recent return to profitability of some companies, this has followed a number of years where in some instances significant losses have occurred. What we need is a more stable market from both a pricing and profit perspective rather than the volatility we have had in recent years. In this regard, I believe that the implementation of the Cost of Insurance Working Group’s Reports will help ensure that the insurance sector is stable and consistent, making it more attractive to new entrants, resulting in more competition and more affordable prices.
